Zim gold miners threaten to shut down, despite record production | Fin24
 
  • Labour trends

    Here's where you're most likely to find a job.

  • High returns

    SA's dagga belt could bring high returns for horticulture, says Wandile Sihlobo.

  • State capture

    8 things to know about Gordhan's first day at the state capture inquiry.

Loading...

Zim gold miners threaten to shut down, despite record production

Oct 29 2018 20:01
Crecey Kuyedzwa, Fin24

Zimbabwean gold miners reached record production levels this year but are now threatening to shut down operations as the cash-strapped Zimbabwean government has failed to avail foreign currency to cover production costs.

By end of September, gold deliveries to state owned Fidelity Printers and Refiners had breached 28 tonnes, a level last seen in 1999, as miners ramped up production.

But efforts to do even more are now under threat as miners struggle to access foreign currency, in spite of them being the country’s biggest foreign currency earner after tobacco.

Of the export proceeds by gold miners, 70% is retained by treasury, while the balance of 30% which ordinarily should be paid in foreign currency, has of late been paid in the form of real-time gross settlement (RTGS).

However, the majority of suppliers and service providers are no longer amenable to RTGS as a form of payment, a situation miners say is threatening their viability. 

“In isolated instances where RTGS are still accepted, the local input prices have moved upwards as much as six times,” said the Gold Producers Committee of Zimbabwe (COMZ), an affiliate of the Chamber of Mines of Zimbabwe.

In a report submitted to the central bank of Zimbabwe, COMZ went on to warn the government that many mining companies are on the verge of shutting down as they are struggling to meet operating costs.

“If this situation is not addressed majority of (gold) mining houses’ whose going concern has been undermined, may find it impossible to continue in production.”

In order to restore viability, the miners proposed an upward revision of foreign currency allocation to mineral producers in line with the actual US$ costs in the market.

“Most mining companies total cost to income ratio ranges between 70% and 95%. This situation will be reviewed as and when the situation is brought back to normalcy.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Follow Fin24 on Twitter and Facebook. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

zimbabwe  |  gold  |  africa economy  |  mining
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Was Momentum fair when rejecting R2.4m insurance claim?

Previous results · Suggest a vote

Loading...