RBZ dithers on gold price

Ngoni Chanakira

UNCERTAINTY surrounds the Reserve Bank of Zimbabwe’s decision to increase the amount paid to small-scale gold producers from $7 000 to $15 000 per gramme.



“Verdana, Arial, Helvetica, sans-serif”>Insiders this week said the RBZ was now backtracking on the decision announced last week because the small-scale gold producers say the amount is “insufficient”.


Meetings have been held between the RBZ and the small-scale gold producers to review upwards the $7 000 per gramme paid to them beginning February this year when various export incentives were introduced by government to try and boost the struggling mining sector.


Last week the RBZ said following the introduction of the export incentive price of $800 to the United States dollar in February, the small-scale gold producer price, currently at $7 000 per gramme, had become “too low compared to prevailing prices”.


The bank said it therefore had become necessary that the price for small-scale gold producers be reviewed upwards to $15 000 per gramme effective May 19.


Insiders said the announcement had been made “too early because the issue had not been finalised between the parties involved in the discussions”.


They said the latest move was meant to attract small-scale gold producers who are currently selling their gold on the lucrative black market annoying the central bank.


A kilogramme of gold officially costs $9 million.


Gold production for the first quarter of 2003 has ammounted to $4,2 billion, while production stood at 2 079 kg.


The mining sector, estimated to have declined by 7,1% in 2002, was forecast to shrink by a further 5% in 2003 owing to continued low international prices, high input costs, and uncompetitive exports.


Gold prices plummeted from above US$800 an ounce in the early 1980s, to around US$260 an ounce in 2002, before recovering to US$350 an ounce in the first quarter of 2003.


However, the sector this year, to a large extent, benefited from the Gold Price Support Scheme.


Notwithstanding this initiative, which saw a cumulative utilisation of $14 billion by end of December 2002, gold production continued to be constrained by inadequate imported raw materials, rising domestic operating costs, and limited credit facilities to the sector due to reduced creditworthiness.


Insiders said the RBZ had stressed that it was therefore necessary that the price for small-scale gold producers be reviewed upwards to $15 000 immediately to increase deliveries and earn elusive and scarce foreign currency for Zimbabwe.


The RBZ is reliably understood to have informed gold concessionaries, small-scale gold producers and other stakeholders to “note this change”.


However, the Chamber of Mines of Zimbabwe is reliably understood to be unhappy about the price increase, saying it is “uneconomic”.


No comment could be secured from CMZ chief executive officer David Murangari as he was yesterday said to be attending the annual general meeting in Whange.


Nhlanhla Masuku president of the new Small-scale Miners Association was also unavailable to comment on the issue.