HARARE – The World Bank has forecasted that Zimbabwe will miss its ambitious 28-tonne gold production for this year, putting a dent on the country’s economic revival prospects.
This comes as Zimbabwe, which produced 23 tonnes of the yellow metal and earned over $914 million in export receipts last year, is pinning its economic hopes on the rebound of mining and agriculture sectors.
In its 2017 Economic Update, the Bretton Woods Institution said gold production — which accounts for half of the mining sector’s foreign-exchange earnings — would reach approximately 25,3 tonnes on the back of buoyant international prices.
“The mining sector is expected to continue growing, but it will remain vulnerable to macroeconomic conditions.
“Gold production is expected to increase by 10 percent, and global gold prices are projected to remain broadly stable,” the World Bank said.
Cautioning that the country’s gold miners were going to remain exposed to the country’s liquidity challenges as they cannot legally hold nostro accounts, the World Bank said despite government’s move to pay gold miners in cash, liquidity problems were going to remain a major challenge in the sector .
“However, gold producers are not legally regarded as exporters and cannot hold nostro (foreign exchange-denominated) accounts, which leaves them particularly exposed to liquidity constrains,” the World Bank said.
However, Zimbabwe anticipates to breach the 28-tonne mark as it has been promoting gold production by the small-scale gold miners who now account for over 40 percent of the total output since 2015 when government decriminalised artisanal mining.
To boost gold output, RBZ subsidiary, Fidelity Printers and Refiners, has also increased the number of registered gold buyers to 344 agents, as the apex bank moves to help the country achieve its 28-tonne projection.
In the first quarter of 2017 alone, the RBZ allocated over $5 million in cash for the sole purpose of buying gold as the country’s artisanal gold miners demand cash for the yellow metal.
Gold continues to be one of the key minerals in Zimbabwe accounting for 47 percent of mineral exports in 2016, up from 40 percent in 2015, employing in excess of 25 percent of formal employment and over 300 000 involved in artisanal gold mining.
According to the central bank governor, the expansion in gold output is underpinned by the increased contribution of the small-scale sector from an average of 25 percent realised over the past five years to about 40 percent in 2015.
Chamber of Mines Zimbabwe data indicates that primary large-scale gold producers accounted for 55 percent of gold output in 2016, marginally up from 55 percent recorded in 2015.
But, contribution of small-scale producers increased from 36 percent in 2015, to 40 percent in 2016, while that for secondary producers declined to five percent in 2016, from 10 percent in 2015.‘