Deprecated: File /var/www/wp-content/plugins/amp/includes/widgets/class-amp-widget-categories.php is deprecated since version 2.0.0 with no alternative available. in /var/www/wp-includes/functions.php on line 5579

Deprecated: File /var/www/wp-content/plugins/amp/includes/widgets/class-amp-widget-archives.php is deprecated since version 2.0.0 with no alternative available. in /var/www/wp-includes/functions.php on line 5579

Deprecated: File /var/www/wp-content/plugins/amp/includes/widgets/class-amp-widget-text.php is deprecated since version 2.0.0 with no alternative available. in /var/www/wp-includes/functions.php on line 5579
Gold Price Increase Will Not Curb Illicit Trade - Zimbabwe Today
Notice: Undefined variable: fm_appid in /var/www/wp-content/plugins/facebook-members/facebook-members.php on line 71

Notice: Undefined variable: fm_appid in /var/www/wp-content/plugins/facebook-members/facebook-members.php on line 81

Gold Price Increase Will Not Curb Illicit Trade

Notice: Undefined variable: fm_appid in /var/www/wp-content/plugins/facebook-members/facebook-members.php on line 71

By Donald Nyarota
Zimbabwe Environmental Law Association (ZELA) has said the move by government’s sole gold buyer Fidelity Printer and Refineries to improve prices for gold delivery alone without comprehensive changes, will not curb illicit trade of the bullion.

In an analysis of the new FPR gold buying framework, ZELA said prices variations alone without a complete turnaround to officially recognize Artisanal and Small-Scale Gold Miners (ASGM), ‘is not enough to remove oxygen for illicit gold market’.

In its analysis ZELA said it was biased towards the ASGM, “hinged on the fact that the sector, for the past 3 years, from 2017 to 2019, delivered more gold to FPR than Large Scale Miners (LSM). ASGM sector accounted for 63 percent (17 478,74kg) of total gold deliveries (27 650,26kg) to FPR in 2019.”

However gold deliveries have significantly shrunk with supply from ASGM having plunged in 2019 by 20%, despite contributing the lion’s share, as gold deliveries from ASGM which peaked to 21,678.42 kgs in 2018 fell to 17,478.74 kgs in 2019.

Prior to this plunge, annual gold deliveries from ASGM grew from 3.9 tonnes in 2014 to 21.7 tonnes in 2018, a 556% increase for a sector, which directly benefits over ‘1 million people and over 3 million indirect beneficiaries’, according to the Zimbabwe Miners Federation (ZMF).

This slump was attributed by ASGM players to be a result of ‘the decrease of foreign currency retention threshold of 70% from 55% introduced in 2019 mainly contributed to the plunge in gold deliveries.’

ZELA says, this decline in gold deliveries, also experienced in the first quarter of 2020, forced FPR to bend to the demands of ASGM who have always appealed for a 100% cash payment in US$.

It however says only a comprehensive reform package can stem the tide of dwindling gold deliveries, address the deliberate chocking of the ASGM by the gold mobilisation committee, and remove arbitrage opportunities.

ZELA called for policy commitments- swift amendment of the Mines and Minerals Act, enhanced transparency in administration of mining titles, and the ease of doing business in ASGM among other measures to boost production and curb the allure illicit trade.

“Ministry of Mines and Mining Development (MMMD) must chip in by enhancing transparency and accountability in the administration of mining titles through computerization of the long overdue mining cadastre system. Ease of doing business in ASGM must be given priority by government.

“Artisanal mining must be prioritised in the long overdue reform of the old Mines and Minerals Act with compliance burden being distinguished with those of LSM.

“FPR must align price for gold deliveries from ASGM with international market to promote transparency and responsiveness of its gold price. Instead of coming out with a flat fee of US$45 per gram of gold, FPR must offer prices aligned to the international market as demanded by ZMF.

“Arbitrage opportunities must be removed by ensuring that the gold payment arrangements for ASGM and LSM are not differentiated except that FPR must continue paying ASGM in cash and LSM through bank transfers.

“A comprehensive reform package is needed to remove oxygen from the illicit gold trade by expanding focus to include legal and financial support to formalize ASGM. Therefore, reform of the Mines and Mines and Mineral Act must carter for ASGM and undue delays to this reform process must be avoided,” said ZELA.

“As it stands, FPR is likely to reverse the trend of falling gold deliveries from ASGM although it might fall short of extinguishing the illicit gold market.”

While gold has been negatively impacted by Covid-19 on the commodity supply and demand chain, its price has risen as investors sought a safe haven due to the low returns in US$ denominated securities, said ZELA.

ZELA said FPR must now make strides towards rejoining the international gold market London Bullion Market Association (LBMA) whose membership was lost in 2007, and follow international standards in responsible minerals supply chains and sourcing.

“FPR must have established clear milestones for re-joining the LBMA to ensure the country benefits from refining and export of gold directly to the international market as was the case before 2007.

“FPR must seize the opportunity to align its gold trading practice in line with OECD’s Due Diligence Guidelines on Responsible Mineral Supply Chains.

“A ratio framework as is the case for large scale producers is recommended as it enables scientific tracking of mineral prices. We also propose the fair compensation of any surrendered portion in line with market developments in order to converge the world and local price of gold to minimize side marketing and gold leakages.

“Full compensation in US dollars in line with prevailing world gold price,” recommended ZELA.

Check Also

Zimbabwe: Young Women Rallied to Participate in Economy

Notice: Undefined variable: fm_appid in /var/www/wp-content/plugins/facebook-members/facebook-members.php on line 71
By Rumbidzayi Zinyuke First Lady Amai Auxillia Mnangagwa has challenged young women to actively participate …

This function has been disabled for Zimbabwe Today.