PRESIDENT Emmerson Mnangagwa, his deputy Constantino Chiwenga and Foreign Affairs minister Sibusiso Moyo, locked in a vicious duel to wrest and consolidate state power, are manoeuvring to control the lucrative gold sector, in a country where US$1,5 billion in potential revenue is lost through smuggling of the precious mineral.
This was revealed by research think-tank International Crisis Group (ICG) in its latest report titled: All that glitters is not gold: Turmoil in Zimbabwe’s Mining Sector.
Chiwenga served as the Zimbabwe Defence Forces commander, while Moyo was a senior commander when Mnangagwa rose to power through a military coup that brought the late former president Robert Mugabe’s rule to a close in 2017.
The report by ICG comes after the First Lady Auxillia Mnangagwa and her son Collins were implicated in the high-profile trial of Henrietta Rushwaya, who was arrested while attempting to smuggle a 6kg gold contraband, worth
US$330 000, to Dubai.
In the report, ICG highlights that the trio have been making power play moves to gain control of the gold industry to outmanoeuvre each other politically. The three strong men are reportedly leading competing factions within Zanu PF and the government.
“On the other hand, artisanal miners are an important constituency in Zimbabwe’s patronage politics, particularly as practiced by the ruling Zimbabwe African National Union-Patriotic Front (Zanu PF). Several Zanu PF politicians have been fingered as ‘patrons’ of illegally encroaching artisanal miners, or even machete gangs, and some mobilise such groups against rivals,” it says.
“Some observers contend that ‘whoever controls the gold, will control and rule Zimbabwe’, referring to power struggles between party factions loyal to Mnangagwa, on one side, and his Vice President Constantino Chiwenga, on the other . . . The latter is seemingly positioning himself to challenge Mnangagwa for Zanu PF leadership ahead of the 2023 elections, although another, possibly stronger challenger, Foreign Affairs minister Sibusiso Moyo, has also emerged.”
ICG highlights that gold smuggling has thrived in Zimbabwe largely due to the monopoly to buy the precious metal the Central Bank enjoys through Fidelity Printers and Refiners (FPR).
It reads: “Several factors contribute to instability in Zimbabwe’s gold mining sector. A centralised gold buying scheme depresses government gold revenues, encourages smuggling and contributes to industrial mine closures. All gold producers in Zimbabwe, whether artisanal, small-scale or industrial, must, by law, sell to the Reserve Bank of Zimbabwe via its subsidiary gold buyer, Fidelity Printers and Refiners (FPR).
“This requirement has several deleterious effects on the gold sector. The main problem is that FPR underpays and sometimes pays late for gold. The body pays producers partially in US dollars and partially in amounts of Zimbabwe dollars determined by the official exchange rate.”
The bulk of the smuggled gold, according to ICG, is spirited to Dubai.
In yet another report by the Southern Africa Resource Watch (SARW), the research body advances that argument that gold production and its attendant marketing system in Zimbabwe presents an opportunity for cartels to launder money through smuggling of the precious metal.
The SARW report is called Artisanal Miners Robbed in Broad Daylight: Zimbabwe Gold Monopoly as a Conduit to Canalise Forex and Cannibalise Bodies.
As part of its investigation to cast light on the systemic gold smuggling in Zimbabwe fuelled by cartels with strong political ties, SARW emphasises that FPR declined to disclose the identity of its gold producers and the size of their sales.
“Though Securities and Exchange Commission documents show FPR as a supplier for US companies, from Acer to Control4, this is increasingly rare as the recourse to Dubai shifts origin to provenance allowing for companies to displace supplier origin with refiners. In addition, FPR declined to provide lists or details of enterprise names, jurisdiction, private external turnover and debt,” the report released last week reads.
“This extreme legal and financial secrecy works in tandem with Dubai’s hosting of the world’s only cash-for-gold market, where refiners can buy gold using only a receipt, thus eliminating origin on export. Bearing in mind that Dubai’s gold trade (estimated to be worth US$75-billion a year) refines more than 40% of the world’s gold, which is often exported to Switzerland, we have a major commodity market shielded from examination and legal oversight.”
In 2013, before legislation which monopolised gold buying in the hands of FPR, Zimbabwe produced 14 001kg of gold. Output rose to 20 022kg in 2015.
In 2018, production rose to over 35 042kg.
SARW attributes the upswing of gold output from 2013 to 2018, largely to the contribution of artisanal miners, whose mining operations are opaque.
“But this rapid turnaround in accumulated volume was not due to an increase in corporate production, efficiency by the state or fair dealing. If anything, the state deepened financial opacity and control by strategically canalising the hungry and desperate will of Zimbabwe’s artisanal miners who were the producers of such output,” the SARW report reads.