Harare - Zimbabwe's gold mining industry is likely to remain under pressure in the short to medium term, said an office bearer from Zimbabwe Stock Exchange-listed entity Falcon Gold Zimbabwe.
In a statement accompanying the miner’s results, chairperson Ian Saunders said government’s reluctance to reduce the level of taxes and many other charges will result in the industry remaining under pressure.
Saunders noted the continued weak global price of gold as another drawback.
The gold price has fallen from a range of about US$1 600 to $1 650 per ounce in March 2013 to the current range of about $1 250 to $1 300/oz.
“At these levels, with the current tax regime, rigid labour laws and high power costs, operating profitability is non-existent,” said Saunders, adding that these high taxes and charges were sustainable in the elevated gold price regime of 2012 and early 2013, but not at current price levels.
“As a result, production at larger gold mines in the country has been falling,” he said.
Zimbabwe’s gold production in the five months to May dropped 8% to 5 517kg from 6 022kg produced last year, with a lesser value of $225.95m.
Saunders said with government digging in on the Chamber of Mines of Zimbabwe’s request to reduce prices, short-term changes to operating plans have now become embedded and development and capital replacement programmes have essentially ceased.
“These developments do not bode well for the medium to long term future of the Gold Mining Industry in Zimbabwe,” said Saunders, who is also CEO of New Dawn Mining, headquartered in the Cayman Islands.
He added that future operations and development plans could be further impacted by various other external factors.
“These include, for example, increased taxes and royalties, mining fees, the economic and business environment in Zimbabwe and potential changes to the legislative and regulatory environment."
- Fin24
In a statement accompanying the miner’s results, chairperson Ian Saunders said government’s reluctance to reduce the level of taxes and many other charges will result in the industry remaining under pressure.
Saunders noted the continued weak global price of gold as another drawback.
The gold price has fallen from a range of about US$1 600 to $1 650 per ounce in March 2013 to the current range of about $1 250 to $1 300/oz.
“At these levels, with the current tax regime, rigid labour laws and high power costs, operating profitability is non-existent,” said Saunders, adding that these high taxes and charges were sustainable in the elevated gold price regime of 2012 and early 2013, but not at current price levels.
“As a result, production at larger gold mines in the country has been falling,” he said.
Zimbabwe’s gold production in the five months to May dropped 8% to 5 517kg from 6 022kg produced last year, with a lesser value of $225.95m.
Saunders said with government digging in on the Chamber of Mines of Zimbabwe’s request to reduce prices, short-term changes to operating plans have now become embedded and development and capital replacement programmes have essentially ceased.
“These developments do not bode well for the medium to long term future of the Gold Mining Industry in Zimbabwe,” said Saunders, who is also CEO of New Dawn Mining, headquartered in the Cayman Islands.
He added that future operations and development plans could be further impacted by various other external factors.
“These include, for example, increased taxes and royalties, mining fees, the economic and business environment in Zimbabwe and potential changes to the legislative and regulatory environment."
- Fin24