HomeBusinessGolden windfall for Zim's forex coffers

Golden windfall for Zim’s forex coffers

Eric Chiriga

ZIMBABWE’S dwindling foreign currency coffers could receive a minor boost from its gold production as prices of the precious metal have continued to rise, surpassing US$500 per once this week. <
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Yesterday, the gold price stood at US$517,3 per ounce from US$514,1 on Wednesday.


On November 27, the gold price was US$498,3 per ounce while on October 26 it was US$473,4.


Best Doroh, an economist at Finhold, said the continued increase in the gold price would have a positive impact on the country’s foreign currency earnings.


“The increase in gold price will benefit gold producers, particularly if the exchange rate continues to depreciate,” Doroh said.


He said this will improve gold producer viability which was currently being threatened by spiralling operational costs which had outpaced the price.


However, in the monetary policy statement for the third quarter 2005, RBZ governor Gideon Gono said gold deliveries to Fidelity Printers and Refineries (Fidelity) declined from 16,4 tonnes between January and September 2004 to 10,51 tonnes in the same period this year.


“The slowdown in gold deliveries is largely attributed to leakages into the parallel market,” Gono said.


He said in the first three quarters of 2005, mineral exports increased by 9,95% from US$592,4 million in 2004 to US$651,4 million.


In September, gold contributed US$19,1 million and a total of US$159,8 since January.


In September 2004 gold contributed US$34,7 million and a total of US$210 million between January and September the same year.


Gono also announced a new buying framework whereby gold producers would retain 40% of their proceeds in foreign currency accounts for purposes of meeting their operational requirements while the remaining 60% would be sold to the central bank at the interbank rate.


Gold marketing and dealing in Zimbabwe is regulated by Fidelity, a subsidiary of the RBZ.


Fidelity is the sole buyer of gold in the country.


In an effort to curb smuggling and promote the delivery of gold to Fidelity, the central bank recently increased the gold support price to $130 000 per gramme to $175 000 from May.


Gold contributes about 30% of net foreign currency earnings and was the major foreign currency earner in the mining industry until it was overtaken by platinum.


While the gold price stood at US$517 per ounce yesterday, platinum was at about US$987 per ounce. Both metals fall under the Platinum Group Minerals category.

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