Miners seek higher forex retention

07 Feb, 2020 - 00:02 0 Views
Miners seek higher forex retention Wellington Takavarasha

eBusiness Weekly

Enacy Mapakame

The Zimbabwe Miners Federation (ZMF) is pressing Government for an upward increase of gold foreign currency retention threshold to above 75 percent as part of efforts to incentivise gold producers and encourage to deliver to the national gold buying entity, Fidelity Printers and Refiners.

Currently, producers are entitled to a retention threshold of 55 percent of the gold receipts, which miners argue is still low given the obtaining economic challenges that have driven cost of mining through the roof.

The sector is capital intensive, requiring foreign currency for procurement of machinery at a time the country’s foreign currency coffers are low.

Gold is the country’s top single foreign currency earner ahead of tobacco, and it anchors the country’s economic turnaround strategy that should see Zimbabwe transform into an upper middle income economy by 2030 with a per capita on over US$3500.

However, the low retention thresholds are a threat to targeted output as miners are tempted to divert gold to the illegal parallel market, fuelling smuggling.

The illegal parallel market offers 100 percent foreign currency and this part of the money that is driving the foreign currency rates on the black market.

“The issue of gold retention is still being looked at by Government, we are engaging them.

“We want at least 75 percent and above,” said ZMF chief executive officer Wellington Takavarasha by telephone.

“The parallel market offers 100 percent retention and some producers are tempted to divert their product to this market, which is why Government needs to act on an upward review so that miners have a better option,” he said.

ZMF is the apex body for artisanal small scale miners in the country.

Gold mining is expected to contribute US$4 billion, representing a third of the mining industry earnings, according to a strategic roadmap to the achievement of a US$12 billion sector by 2023.

Artisanal small scale miners are expected to play a key role in this. Already, they have eclipsed large scale producers accounting for 63 percent of the total gold that was delivered to Fidelity Printers and Refiners in 2019.

Last year artisanal small scale miners gold deliveries to Fidelity dropped 19 percent to 17 tonnes compared to 22 tonnes recorded in the previous year due to a wide range of challenges among them a poor policy environment, low retention, rampant smuggling as well as the spate of violence by machete wielding gangs.

Takavarasha said although no target had been set yet from Government for small scale miners, ZFM had set a target of 40 tonnes for 2020.

With a clear support structure from Government, Takavarasha said such a target was achievable.

Among the key issues to look at are plugging loopholes in the sale of the yellow metal, reduce smuggling and regularisation of more artisanal small scale miners to enhance their contribution to official channels.

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