Small-scale miners have expressed concern over late payment for gold delivered to Fidelity Printers and Refiners (FPR), saying the development will cripple production of the yellow metal.
FPR – the Reserve Bank of Zimbabwe’s sole gold buyer and exporter — is struggling to import cash by air transport to pay for gold deliveries due to restrictions caused by the Covid-19 pandemic.
“Fidelity Printers and Refiners is delaying to pay for gold delivered to it and this is now crippling our operations,” a miner said.
“We are struggling to source key inputs like explosives and diesel due to the late payments.”
Miners urged government to urgently deal with the matter, warning that the whole sector faced collapse.
Zimbabwe Miners’ Federation (ZMF) spokesperson Dosman Mangisi said the delay in payment would affect gold production.
“Miners are crying foul due to delays in payment,” he said. “This is now affecting their gold production because they are struggling to buy inputs like explosives.
“For instance, if someone was producing a kilogramme of gold, with these challenges, he or she is now producing half a kilogramme.”
ZMF is an umbrella body of small-scale miners in the country.
In a memo on Thursday last week following a meeting with FPR management, ZMF CEO Wellington Takavarasha, however, pleaded with miners to bear with the gold buyer.
“Pursuant to our meeting with FPR today, kindly note that FPR relies mostly on foreign exchange brought in by air transport,” Takavarasha wrote.
“Due to the Covid- 19 pandemic, there has been a limited number of flights into the country and this has adversely affected their operations.
“Kindly bear with FPR while they are making frantic efforts of ensuring that all the gold deliveries are paid for.
“By next week, we expect the situation to have normalised. Once again, as ZMF we sincerely apologise to our hard-working miners who have been adversely affected by this phenomenon.”
FPR general manager Fradreck Kunaka said the delays were due to the outbreak of Covid-19, which has affected the movement of goods and services.
“The impact of Covid-19 is being felt across the globe,” Kunaka said.
“It has affected the movement of personnel, goods and even of cash.
“Cash has to be imported but because of the fact that airlines have not been moving ordinarily as they would due to Covid-19, it has become difficult for us to import cash on time. We are, however, trying to make efforts to pay them (small-scale miners) on time.”
Countries around the world have enforced lockdowns and travel restrictions to combat the spread of Covid-19, crippling economies in the process. The disease had, as of May 21, killed more than 328 000 people globally from 5,01 million confirmed cases, with Zimbabwe recording four deaths from 56 confirmed cases.
Gold is one of Zimbabwe’s biggest foreign currency earners, having accounted for US$1,3 billion in annual forex receipts in 2019, translating to close to a
third of total export earnings. The small-scale mining sector, which accounts for more than 60% of gold deliveries to FPR, last year produced 17 tonnes of gold while major gold mines produced 10 tonnes.
In total, the country’s gold output fell 17% in 2019 to 27,66 tonnes, down from 2018’s 33,29 tonnes, according to the central bank, contributing about 37% to mineral exports, down from 43% recorded in the previous year.
The decline was attributed to electricity shortages, gold leakages and inadequate equipment for small-scale miners.
In April this year, small-scale miners extracted 0,728 tonnes of gold while primary producers delivered 0,735 tonnes, resulting in a 31% decline in total to 1,46 tonnes from 2,12 tonnes produced in April 2019.
In February, gold deliveries fell 34% to 1,403 tonnes from 2,136 tonnes during the same period in 2019. Again, in March gold deliveries dipped 32% to 1,77 tonnes.
Cumulatively, gold deliveries have plunged 17% to 7,18 tonnes in the first four months of 2020 from 8,63 tonnes extracted during the same period in 2019. The decline was attributed to bottlenecks in imports caused by Covid-19, as governments moved to combat the spread of the virus.
Last year, President Emmerson Mnangagwa launched a strategic roadmap to propel the country’s mining sector to a US$12 billion mining industry by 2023.
However, the ambitious target is under threat due to the Covid-19 pandemic and policy inconsistency.
Under the mining roadmap, gold is expected to contribute US$4 billion, platinum US$3 billion, while chrome, iron, steel, diamonds and coal contribute US$1 billion. Lithium is expected to contribute US$500 million and US$1,5 billion would come from other minerals.