RBZ Resolves Gold Forex Crisis

By Golden Sibanda
Reserve Bank of Zimbabwe (RBZ) governor, Dr John Mangudya, yesterday said the bank found a sustainable way to manage funds required to make consistent US dollar cash payments to small gold miners.

This came after RBZ unit, Fidelity Printers and Refiners, failed to pay small scale gold miners in the last two weeks, as limited flights into Zimbabwe, due to Covid-19, had affected the smooth importation of hard currency cash required to pay the miners.

Covid-19, a viral disease first detected in Wuhan, China, has killed hundreds of thousands and infected millions across the world, forcing Governments globally to enforce lockdowns to contain its spread, which have grounded airline operations and shuttered most economic sectors.

“The challenge has been resolved. We have found a sustainable solution to manage the availability of cash to be used to purchase the gold,” Dr Mangudya said.

Dr Mangudya also said paying for gold in forex will address issues around excessive money creation, which harms the exchange rate.

“The immediate benefit of paying in US dollars is that there would less creation of Zimbabwe dollars to purchase the gold, which means less pressure on the exchange rate.

“Less pressure on the exchange rate translates to its stability which result in price stability,” he said.

It was not immediately clear how much was owed to the small gold miners, but industry sources said the miners were owed significant amounts following at least two weeks of unpaid for gold deliveries.

This also comes as FPR said yesterday small scale and artisanal gold miners will now be paid 100 percent of their sales proceeds in hard currency cash, while primary producers will receive 70 percent of sales in hard currency into their nostros and the balance will be paid in local currency.

Small scale gold miners, many of whom are artisanal miners and do not have nostro or ordinary bank accounts, will now get paid entirely in cash to entice them not to smuggle out the bullion at the expense of the country. Although they are small and use rudimentary and less sophisticated mining techniques and equipment, the miners account for 60 percent Zimbabwe’s gold output.

Zimbabwe’s gold output dipped to 1 464,3kgs in April compared to 2 126,35kgs a year earlier.

During the period under review, small-scale miners produced 728,9 kgs, while large-scale miners produced 735,4 kgs. Zimbabwe targets 35 tonnes of production this year against 27 tonnes last year, when earnings dropped to US$946 million.

Gold is Zimbabwe’s single largest foreign currency earner, accounting for nearly 30 percent of total annual foreign currency earnings (US$1,3 billion in 2019) and together with platinum generate over 60 mineral exports.

Zimbabwe Miners Federation ZMF chief executive Wellington Takavarasha, said in a letter to members last week that he had been told that limited inbound flights had affected importation of cash to pay miners.

“Due to the Covid- 19 pandemic, there has been a limited number of flights into the country and this has adversely affected their operations,” Mr Takavarasha said.

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