Zim narrowly misses 2018 gold output target

ZIMBABWE missed its revised gold output target for 2018 by two percent after closing the year with deliveries of 33,28 tonnes from the projected 34 tonnes .
Government had revised the target from 30 tonnes to 34 tonnes after deliveries surged from two tonnes in February to 3,9 tonnes in August.
Deliveries of the yellow metal however slumped from 3,5 tonnes in September to 1,4 tonnes in November as official inflation quickened from 4,8 percent in August to 31 percent in November.
Recent records from Fidelity Printers and Refiners (FPR) show that the subdued numbers carried through to December with 1,6 tonnes of bullion collected during the month as inflation spiked to 42 percent.
Following the disturbing trend, government has heightened supervision of gold activities in the country.
In emailed responses to The Financial Gazette, Fradreck Kunaka, FPR’s general manager, had expressed optimism that the enhanced monitoring would push the country through to its gold production target of 34 tonnes.
“Chances are quite high of achieving the 34 tonnes given the enhanced monitoring of gold activities by government agents working with FPR.
“The activities are directly targeted at high gold production activities such as elation plants, so as to ensure the target is reached by year end,” he said.
Kunaka attributes the slump in deliveries to government’s recent policy changes.
“It is basically the reaction of the gold industry to government policies of the FCA nostro and RTGS FCA as well as the two percent intermediated money transfer tax,” he said.
Researchers at local advisory firm, Equity Axis, say the plunge in gold deliveries at the same time as the rise in inflation “can be related given the lack of a floating exchange rate in Zimbabwe”.
“Gold miners have stated that they have been unable to fully recover their export earnings in real US dollars, with some claiming that they received as low as 15 percent in export retentions.
“In order to hedge themselves, small scale miners have resorted to side marketing,” the research firm said in a comment published recently.
Primary miners have also struggled during the year owing to the currency crisis. In October, RioZim temporarily shut down its gold mines, Cam & Motor, Renco and Dalny, due to inability to procure inputs and consumables.
Another gold miner, Falcon Gold Zimbabwe says some of its key creditors have cut off critical supplies as a result of the miner’s inability to access foreign currency.
“The inability of gold producers to access foreign currency has resulted in failure of the company to pay outstanding amounts to foreign creditors since May, 2018,” the company said in a statement recently.
Meanwhile, data from the Zimbabwe National Statistics Agency shows that the country’s gold exports in November, which amounted to $47 million, down from $110 million in November 2017, were the lowest over the past 23 months.
The decline in production during the final quarter of 2018 plunged the southern African nation into a serious shortage of foreign currency, with the country closing the year with shortages of basic necessities such as fuel and medicines.
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