Gold deliveries to Fidelity Printers and Refiners plunged sharply in June this year, owing to a lack of confidence among small-scale miners — the biggest producers — following government’s decision to outlaw the multi-currency system.
A schedule of deliveries seen by the Zimbabwe Independent shows that the total amount of gold delivered to Fidelity Printers, which is the sole buyer of the mineral, nosedived from 2 323 kilogrammes in May 2019 to just 1 658 in June.
The massive decline in June coincided with the introduction of Statutory Instrument 142 of 2019 in the same month which barred the use of the multi-currency regime and made the Zimbabwean dollar the sole legal tender.
The drastic decline was most prevalent among small-scale producers. Deliveries from small-scale producers, who are the major gold producers, plunged from 1 278 kilogrammes in May to just 687 kgs in June.
Small-scale miners delivered less gold than large-scale producers in June, the first time it has happened since the beginning of the year. Gold delivered in January was 1 926 kgs worth US$79 million, while 2 274 kgs gold worth US$96 million was delivered in February.
In March, 2 764 kgs of gold worth US$115 million was delivered while in April 2 279 kgs of gold worth US$94 million made its way to Fidelity Printers.
Gold delivered in May was 2 323 kgs worth US$95 million before the massive drop in June when only 1 658 kgs was delivered worth US$65 million..
Zimbabwe Miners Federation chief executive Wellington Takavarasha told the Zimbabwe Independent that the decline in gold deliveries is due to loss of confidence.
“I will not beat about the bush, the decline is because of a lack of confidence in the system,” Takavarasha said.
“It is also about lack of discipline in the sector. There are too many middlemen. Government needs to come up with incentives for small-scale miners.”
The drop in gold deliveries comes at a time there has been a drop in the production of the country’s major minerals.
The mining sector registered a 15% decline in mineral production in the first quarter of 2019 due to a depressed operating environment. The decline was mainly attributed to prolonged power outages at the mines with some going for between four to seven days without electricity.
According to a Chamber of Mines production report unveiled at the organisation’s annual general meeting held in May, there was overall production decline across all key minerals except for a marginal 2% increase in chrome ore.
Gold output declined 10% to 7 tonnes in the first quarter from 7,7 tonnes in the corresponding period in 2018, driven by a reduced contribution by both large-scale and small-scale producers.
Diamond production declined by 49% to 461 348 carats from 897 369 last year, while platinum output declined to 3,4 tonnes compared to 3,7 tonnes in the same period last year.
Nickel production declined by 7% during the period while coal production slumped to 374 753 tonnes compared to 655 477 tonnes in the same period last year.
Chrome ore however increased by a marginal 2% in the first quarter compared to the corresponding period last year.