BY FIDELITY MHLANGA
GOLD output surged by 29% during the nine months ended September 30, 2021 after robust international prices improved Zimbabwean producers’ cashflows, as fresh throughput from previously dormant assets started flowing into the market, official data showed this week.
The data released by Fidelity Printers and Refiners (FPR) showed output rising to 18,9 tonnes during the review period, from 14,65 tonnes during the same period last year.
It has been a good year for gold investors across markets, who have seen prices rise to US$1 887,98 per ounce during the review period, from US$1 773,73 per ounce during the first nine months of 2020.
But this week’s data also means Zimbabwe could struggle to reach its targeted 32 tonnes annual output, from 19,05 tonnes delivered last year, when Covid–19 induced hard lockdowns disrupted vital international value chains.
FPR is a unit of the Reserve Bank of Zimbabwe (RBZ) with the sole mandate to buy gold in the country.
Improved payments, following government’s intervention to bolster FPR’s capacity to pay for delivered bullion, also gave miners confidence to ship output to the official market, according to Irvine Chinyenze, chief executive officer at the Gold Miners Association of Zimbabwe (GMAZ).
Leading economists said fresh investment by firms like Dallagio, a unit of the Zimbabwe Stock Exchange-listed crocodile skins producer, Padenga Holdings Limited, underpinned the rise.
“It is a combination of factors,” economist Victor Bhoroma told businessdigest. “Improvement in global prices has necessitated investment into mining plants with players such as Caledonia and Dallagio ramping up production. Similarly, existing and new players are coming on board resuscitating defunct gold mines.”
Dallagio has recently emerged as one of the fastest growing mining sector investors after acquiring two gold assets — Dalny Mine near Kadoma and the Mashonaland Central based Eureka Gold Mine, which is expected to return to production soon, following a significant injection.
The Jersey-listed Caledonia has commissioned its US$67 million central shaft at Gwanda-based Blanket Mine, giving it impetus to ramp up output to 80 000 ounces per annum, while a new resources outfit, Kuvimba has boosted gold production across several previously closed or troubled producers in the past year.
Chinyenze told this publication that while government had put efforts to pay on time gold miners were still facing several problems.
“I appreciate that a lot of effort has been put towards channelling resources into mining and more specifically small-scale mining,” Chinyenze said.
“This is why you have witnessed an upsurge in delivery. Government has been very proactive and I must say all other stakeholders have been very proactive to make sure that miners are capacitated.
“Some of the issues that were on the periphery that needed to be dealt with have been attended to. I am speaking about more specifically the payment regime at FPR where we previously had some delays regarding payments.”
He said there was a lot of side-marketing and rampant smuggling as a result.
Chinyenze said miners were generally disgruntled over delays in payments after deliveries.
“So, we seem to have noted an improvement in that respect. There is still room for improvement bearing in mind that we are not getting 100% foreign currency,” he said.
“The local currency component is still problematic given that the disparity between the official rate and that obtaining on the parallel market is quite huge.”
The FPR data said large scale gold miners contributed eight tonnes to the total output during the review period, with small scale producers coming in with 10 tonnes.
There has been a steady rise in gold output since January, when the industry produced 997,6 grammes before increasing to 1,17 tonnes in February.
Output further increased to 1,8 tonnes in March, then to 2,92 tonnes in June, 2,94 tonnes in August and reached the all year high monthly output of 3,17 tonnes in September.
Mines were affected by heavy flooding of shafts during the first quarter of this year, which forced thousands of artisanal and small-scale players to suspend or reduce production.
Large scale miners, including Blanket, said they were also affected.
Gold is one of the key minerals expected to drive government’s ambitious plan of a US$12 billion mining industry by 2023.
Gold production, alongside platinum group of metals, hydrocarbons like oil and gas, coal, gold, lithium, chrome and ferrochrome, are expected to be the major contributors.
Gold deliveries last year plunged 31% to 19,05 tonnes as compared to 27,66 tonnes during the same period in 2019.