Govt acts to plug mineral leakage

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Government is seized with plugging mineral leakages, which continue to deprive the country of substantial foreign currency inflows, Finance and Economic Development Minister Professor Mthuli Ncube says.

The leakages are prevalent in the gold mining sector, especially among small and artisanal miners and reduced deliveries reflect increased leakages (amid high output) through smuggling and diversion of gold to the informal market.

Presenting the 2020 budget review last week Minister Ncube said the leakages were caused by retention issues, prior to reforms instituted in April, where gold miners retained 55 percent of sales in US dollars and received the balance in Zimbabwe dollars.

Against this background, gold deliveries are projected at 27 958 kilogrammes for the year 2020, which is lower than the 2019 gold production levels, despite the favourable international prices compared to the previous year.

Last year, Zimbabwe produced 33,2 tonnes of the yellow metal having set a target of 40 tonnes. The projected target was unattainable due to a number of factors that included intermittent power supplies.
Minister Ncube also said the second National Risk Assessment (NRA) report identified smuggling and illicit dealings in gold among the major predicate crimes that are fuelling money laundering in the country.

“Therefore, during the second half of the year and going forward, the Budget will expend more resources on capacitating security institutions engaged in monitoring and curbing mineral leakages. This will also prioritise the Minerals and Border Control Unit,” he said.

This comes after the RBZ in May increased the gold foreign currency retention threshold to 70 percent of sale proceeds, for large scale miners and 100 percent for small producers, from the previous 55 percent in a move aimed at boosting production.

Fidelity Printers and Refiners (FPR) last week announced a new gold payment regime which will see the exclusive state gold buyer and marketer paying US$52 per gram, up from US$45.

Most importantly, the new arrangement will now see prices being periodically changed in line with global market prices.
FPR chief executive Fradreck Kunaka recently said FPR and the National Gold Monitoring Teams were in the process of enhancing surveillance to ensure that all gold is sold through the unit in line with the country’s regulations.

Gold mining is Zimbabwe’s single largest source of foreign currency and is a critical component of the mining sector, which accounts for over 60 percent of export earnings and 8 percent of gross domestic product.

Mining in general is also an integral element of the Government’s vision to grow the mining sector to an US$12 billion industry by 2023 and the national vision of a middle income country by 2030.

Growth for the mining sector is now projected to slow-down to minus 4,1 percent in 2020, reflecting the impact of the Covid-19 pandemic and other challenges including perceptions around retention, erratic power supply and loss of skills in the mining sector.–

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