HomeBusiness DigestMineral leakages cost Zim billions of dollars

Mineral leakages cost Zim billions of dollars

ZIMBABWE appears to be a long way from plugging mineral leakages that have cost the economy billions in potential revenue as it emerged the Reserve Bank of Zimbabwe’s wholly owned printing and gold buying subsidiary — Fidelity Printers — has not received gold seized by police for prosecution purposes.

Taurai Mangudhla

Parliament’s Mines and Energy portfolio committee was this week stunned to learn Fidelity Printers has been unable to follow up on impounded gold as it has no power even after government declared it the sole buyer and exporter of the precious metal effective January 2014.

Gold that is seized by the police mostly at various ports is supposed to be declared to Fidelity Printers, but this has not been happening, Fidelity Printers CEO Alen Marimbe said in response to the committee’s inquiry.

Committee members alleged police often stole the exhibits to line their pockets, replacing the valuable metal with cheaper minerals like brass.

“It is an issue we need to closely liaise with the police so that we have a mechanism that links what ZRP is doing and us expecting the gold to be brought to us,” Marimbe said.

“What we need to do is to follow up on the gold.”

By the end of the session, the committee was considering inviting Police commissioner general Augustine Chihuri to give a brief on the whereabouts of all the impounded gold.

Fidelity gold production director Fred Kunaka said gold leakages have been worsened by government’s decision to liberalise the sector on introduction of a multiple currency regime in 2009 and formation of the GNU as the gold buying company had no mechanism to account for activities of each and every player under the free for all set up.

In an update of Fidelity’s progress towards performing its sole gold buyer, refiner and exporter function, Marimbe said the company had made significant progress around the country with a licensing process at an advanced stage.

The first phase targets millers while the second phase is looking at establishment of mobile agents to reduce traveling distances and security risks to miners.

“We have enough money to buy all the gold and all those who make deliveries are being paid on the spot,” Marimbe said.

However, the black market remains a threat to Fidelity as it offers higher prices.

“The black market price is exactly the difference between the taxes we pay otherwise our price is guided by the London Bullion Market Association (LBMA),” he said.

Going forward, Fidelity wants to grow output and create room for gold reserves, added Marimbe.

Zimbabwe is keen to re-enter the LBMA after it lost its membership in 2007 due to depressed gold output.

The association requires at least 10 tonnes annual production for membership.

Last year Zimbabwe produced 11 tonnes of gold.

This year, according to Acting RBZ Governor Charity Dhliwayo, Fidelity has refined 2,5 tonnes of gold.

Dhliwayo said erratic power supply and high cost of capital are among major challenges to gold mining.

Ministry of Mines figures show gold production for the period under review was 14,065.22kg down from 14,742.9939kg in the prior year. The initial 2013 gold production forecast of 17,000kg was revised downwards owing to slipping international prices as well as the high mineral leakages due to the lack of a sound buyer locally.

Small scale producers, who accounted for 30% of volumes in 2012, also lack capacity to produce.

Zimbabwe Miners Federation statistics indicate gold production by small scale miners has slumped 17 tonnes at peak in 2004 to 959kg in 2013 despite growth in the number of players, an indication the yellow metal finds its way out of the country illegally.

Mineral leakages have been a headache for government with the Zimbabwe Revenue Authority (Zimra) acquiring new state-of-the-art mobile scanners in 2013 and fixed scanners that are being installed at various ports of entry as part of an initiative to plug revenue leakages from minerals that are finding their way outside the country through illegal means.

“We are also going to acquire body scanners in due course and this should help in terms of mineral leakages,” Pasi said.

“Our staff is being trained continuously, especially on minerals because it’s a bit complex and also new minerals are being discovered in the country.”

Zimra is now empowered to monitor the receipting, storage, evaluation, grading and polishing as well as auctioning of minerals and the processing of export documents.

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