HomeBusiness DigestMinistry considering gold producers' submissions

Ministry considering gold producers’ submissions

Godfrey Marawanyika

THE Ministry of Energy and Mines is still considering submissions made by the country’s gold producers on the issue of paying electricity bills in foreign currency to the Zimbabwe Electri

city Supply Authority (Zesa) in line with the new Monetary Policy Statement.

The proposals were also sent to the Ministry of Finance and Economic Development.

The monetary statement said exporting firms make their payment of power in foreign currency but several firms are concerned about the exchange rate to use.

Chamber of Mines of Zimbabwe chief executive officer David Murangari confirmed that they had made their submissions to the Reserve Bank of Zimbabwe (RBZ) pertaining to the directive.

“We have our submissions on that to the authorities and they are still considering them,” said Murangari. “The issue is that we do not have problems with paying the bills, but the problem is which exchange rate would be used. But the issue is still under discussion.”

Zesa, which imports most of its power from neighbouring countries, has been failing to settle its debts to regional suppliers largely due to the foreign currency shortage, which resulted in the power utility being classified as an interruptible customer.

Last week US dollar gold price notched their best levels since February 1996 on Wednesday as the euro reached a high against the US dollar.

Gold last week was quoted at US$416,85 an ounce – up $0,97/oz from the previous close after touching an eight-year high of $417,35/oz earlier in the day.

Gold producers are allowed to retain 50% of their foreign currency for 21 days in their personal foreign currency accounts, the other 25% is sold to the RBZ at the official rate of $824.

The remaining 25% is sold on the auction market.

However, if the gold firms do not use the 50% foreign currency held in their accounts for 21 days the money would be offloaded and sold on the auction system at the prevailing rates.

The RBZ is Zimbabwe’s sole gold buyer, but its purchasing power has been greatly handicapped by the well organised syndicated gold panning which has resulted in some of the precious metal failing to find its way into the official market.

Murangari said although gold producers were facing a number of viability problems, he was hopeful that their submissions would be addressed for the sector fortunes to turn around.

Although the central bank introduced the export support rate scheme in February last year, this has so far failed to improve the fortunes of the mining sector.

The scheme resulted in the exchange rate being moved from $55 against the greenback to $824, although that is well below the then prevailing parallel markets rates.

Monthly production for gold has so far declined from 1 181,54 kg in January to 857 kg.

Gold accounts for 52% of Zimbabwe’s national mineral output.

In 1998, Zimbabwe produced 29 400 kg of gold making it the third largest producer after South Africa and Ghana.

In 2002 figures, the country produced only 15 200 kg and was ranked fifth largest producer after South Africa, (395 000 kg), Ghana (70 000 kg), Mali (55 000 kg), and Tanzania (38 600 kg).

Recent Posts

Stories you will enjoy

Recommended reading