Gold battles to regain lost glitter

AROUND seven tonnes of gold are expected this year as the sector’s anticipated revival is likely to be slow and painful.

At its peak, Zimbabwe produced 24 tonnes of the precious metal before the levels fell to just above a tonne in 2008.
The Zimbabwe Chamber of Mines said gold producers expected between six tonnes and seven tonnes this season up from the 4,2 tonnes produced last year.
Figures from the Chamber of Mines show that 519 kgs of gold were produced in January before output fell to 487 kgs in February.
Last month, gold production increased to 661 kgs.
Production during the first three months of the year were better than the comparative period in 2009 when virtually all mines were either placed under care and maintenance or had been closed.
Most gold producers resumed production after June last year and many are yet to reach full capacity or recover from the effects of the closure of the mines.
Most of the gold miners are yet to receive payment for proceeds they delivered to the Reserve Bank of Zimbabwe before the marketing of the mineral was liberalised at the beginning of last year.
It is estimated that the central bank, which was the sole buyer of the mineral before liberalisation, owes the gold sector around US$28 million in the form of bonds.
These bonds have since matured but the RBZ is not able to pay.
Most gold miners, especially the smaller ones with no access to external capital, have argued that they would be able to significantly increase production if they were to get their dues from the central bank.
Apart from the monies owed by the central bank, the gold sector is faced with a number of problems, particularly inconsistent power supply.
The Chamber of Mines has suggested that members pay more for power as a way of making sure that they have consistent supply.
Large scale gold mining companies have been investing in the sector since production resumed last year but this would not carry the sector to the pre-2000 levels when the yellow metal was the number one export in the sector.
It has since been overtaken by platinum and it could soon be the third largest export earner if the sale of diamonds was to be rationalised.
Companies which have raised funds for production include Mwana Africa which received a US$10 million loan from the Industrial Development Corporation of South Africa.
Other companies which have raised capital for refurbishment and expansion include New Dawn Mining, Metallon Gold and African Consolidated Resources.

Leonard Makombe

Top