HomeBusinessGold exports in marginal increase as leakages persist

Gold exports in marginal increase as leakages persist


ZIMBABWE’S gold exports increased marginally to US$292,4 million during the first four months of 2021 after firming prices on the international markets helped the country offset falling output, Fidelity Printers & Refiners (FPR) data showed on Friday.

Gold mines had shipped US$289,4 million worth of bullion to the international markets during the same period last year, according to the FPR statistics.

Friday’s data came a week after a suspected Zimbabwean gold smuggler was nabbed at Oliver Tambo International Airport in South Africa attempting to sneak in with contraband estimated at over US$700 000, sparking fears by experts that the resource was benefiting powerful syndicates in the country working with domestic black market kingpins.

At the eye of the smuggling vortex that is estimated to be costing Zimbabwe US$1,5 billion annually is an elusive pool of 1,5 million artisanal miners, who now control half of national output, but are difficult to police.

Despite the smuggling crisis, however, FPR data showed a gradual rise in exports from January, with earnings rising from US$53,1 million in January before increasing to US$66,18 million in February.

The data showed Zimbabwe earned US$81,2 million from its bullion in March, before the figure increased to US$97 million last month.

FPR did not explain what drove export earnings.

But Caledonia Mining Corporation, which reported third quarter production for Blanket Mine on Thursday, said stronger gold prices were making up for an output slowdown precipitated by flooded shafts across mines.

Flooding mostly hit artisanal miners, who are ill equipped to drain underground tunnels.

“Higher revenues reflect a higher realised gold price offset by lower sales due to lower production,” Caledonia chief executive officer (CEO) Steve Curtis said in a commentary to the financial statements.

But leading economist and Zimbabwe National Chamber of Commerce CEO Christopher Mugaga said Friday’s export data was much lower than what the country is capable of generating.

“If you look closely, you might see a positive picture compared to 2020,” Mugaga told Standardbusiness.

“But we need to interrogate if this is the optimum we can get from gold. Remember that more than 40% of gold comes from artisanal miners, where there are leakages. I think these numbers are an understatement. We are not accounting for almost 40% of the numbers. If leakages were plugged and the whole accounting for export proceeds was going to be done well in terms of declarations at borders, we have the potential to have much higher numbers,” he said.

Economist Takudzwa Chisango said it was clear smuggling had serious ramifications on Zimbabwe’s gold output.

“If one person alone can be apprehended smuggling gold worth more than US$700 000, it shows the gravity of these cases where the yellow metal is being funnelled out of the country through such shenanigans,” Chisango said.

A ground-breaking report indicated in October that up to US$1,5 billion worth of gold was being spirited out of Zimbabwe through backstage markets yearly, most of it through syndicates linked to powerful individual in government and political party bigwigs.

Last week, Finance minister Mthuli Ncube moved to encourage gold miners to ramp up output with a series of measures allowing them to retain more foreign currency after exports.

Exporters, including miners, currently keep 60% of their foreign earnings in hard currency, while 40% is sold to the central bank at the official exchange rate.

But under the new policy, companies that export above their monthly average will be allowed to retain 80% of what they earn from that increased portion.

“In order to encourage gold production and deliveries to Fidelity Printers and Refiners (FPR), gold producers who deliver gold quantities above their average monthly deliveries shall be entitled to a retention level of 80% on the incremental portion of the gold delivered to FPR,” Ncube said.

“Those companies listed on the Victoria Falls Stock Exchange will be entitled to a 100% retention level of their incremental exports,” he said, noting that his sweeteners  were targeted to “encourage listing and participation of firms on the Victoria Falls Stock Exchange and Victorian Falls Offshore Financial Centre”.

“Furthermore, large-scale gold producers that qualify for the 80% retention threshold shall also be entitled to directly export the incremental portion of the gold to enable them to secure funding and gold loans to enhance their gold production. FPR will facilitate the exportation process for the qualifying gold producers under the scheme,” he said.

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