Revoke Reserve Bank Gold Licence – Miners

GOLD producers are demanding that the Ministry of Finance immediately revokes the Reserve Bank
gold-trading licence and re-issue the permit to the Chamber of Mines of Zimbabwe (CMZ)


after accusing the RBZ of paralysing the industry through non-payment of over US$30 million worth of gold deliveries backdating to July last year.
Information to hand shows that gold miners last week wrote to Ministry of Finance secretary Willard Manungo demanding “alternative payment arrangements” and the immediate suspension of the Reserve Bank’s gold trading licence that was issued two years ago.
According to the letter, the bank’s failure to settle the ballooning debt has resulted in the chamber engaging the Ministry of Mines and the chief secretary to the president and cabinet Misheck Sibanda over the matter.
Mining officials this week told businessdigest that their demands were falling on deaf ears.
“Our proposal is that since the Reserve Bank of Zimbabwe has failed to meet its obligations as a holder of a Gold Dealing Licence and through its actions has resulted in the collapse of the gold mining industry in Zimbabwe, its license should be revoked immediately,” read the correspondence sent last week.
“A new licence should be issued to the Chamber of Mines of Zimbabwe to coordinate the sales of all gold produced in Zimbabwe.”
Under the Gold Trade Act, the Reserve Bank through its subsidiary Fidelity Refiners and Printers is authorised to purchase the precious metal from 354 registered gold workings throughout the country.
According to the documents, gold miners also criticised the Reserve Bank for “consistently enacting” unviable policies that threatened the survival and growth of the capital-intensive industry. The miners however urged government to re-capitalise the industry through productivity-based “gold loans”.
The combined effect of the regulations, sources said, had resulted in virtually all mines failing to carry out exploration and development despite favourable gold prices on the global market.
“In our view, the country should not be losing US$50 million per month due to the inability of the Reserve Bank of Zimbabwe, who are currently entrusted with the sole Gold Dealing Licence in the country, to pay producers for the delivered gold,” read the letter.
With payment delays running to nearly two years amid relegation of Fidelity Printers and Refiners from the London Bullion Market Association (LBMA) in July, industry players warned that more gold mines could soon shut down.
The LBMA is a trade association that represents the wholesale over the counter market for gold.
Last year the country’s 21 primary gold producers, 254 small-scale miners and 81 custom millers produced seven tonnes of gold that contributed 10% of the country’s foreign currency earnings.
The figure is estimated to have dropped to an all-time low of 3,5 tonnes amid reports of a 64% drop in output recorded last month and rampant cases of smuggling at the country’s borders.
Commenting on the decline past Chamber of Mines president Jack Murehwa said: “Zimbabwe was the only mineral-producing country in the world that has failed to benefit from high global metal and minerals prices.”
“Our industry continues to experience declines in volumes … despite the very buoyant mineral prices which prevailed for the past 18 months,” he said in a report in July.
World prices for gold rose from about US$275 an ounce in 2001 to above US$600 this year. Nickel, platinum and copper prices also soared.
Mining officials who spoke to businessdigest this week also revealed that so desperate was the situation in the foreign currency earning sector that 300g of the yellow metal were delivered to government.
 This would mean that the sector would have performed below the mandatory 10 tonnes that guarantees membership of the LBMA. Efforts to get comment from the Chamber of Mines were in vain while questions sent to the Reserve Bank governor Gideon Gono on Tuesday were not responded to despite being acknowledged by his personal assistant.
However Gono was this week quoted in a state newspaper admitting that he had channeled payments for gold deliveries to “grudgingly” bail out loss making national airline, Air Zimbabwe.
“Between January 2007 and November 13 2008 for instance, the Reserve Bank paid US$302,3 million for grain importation,” Gono said. “If Zimbabweans had fully utilised their land, this money could have served other critical purposes including the clearance of unpaid balances to gold producers.”

 

By Bernard Mpofu