FGR widens incentives to grow gold deliveries

FIDELITY Gold Refiners (FGR) is targeting to expand its ‘incentive regime’ by offering a loan facility to capacitate existing and new gold mining ventures as well as increasing its presence in all active regions this year.

This comes as the performance of FGR gold buying agents follows obtaining incentive trends, peaking when incentives are highly lucrative and dipping when incentives are unattractive or withdrawn

As of October 31 last year, 21,987 kg of gold was delivered to FGR by both small-scale and large-scale gold producers.

In an interview yesterday, FGR acting general manager Peter Magaramombe the country’s sole bullion buyer will this year start purchasing five grammes and below.

“We are in the process of finalising the mechanism that will result in purchasing 5 grammes and below from the artisanal and small- scale miners — implementation is set for this year,” he said.

Last year, the government made an upward price review (100 percent USD cash to small-scale miners) and reduction of royalty to one percentage point for small-scale miners and artisanal miners.

“We will retain the favourable currently obtaining incentive regime, eliminate delays in payment of producers, and lobby for policies that promote investments into the gold mining sector.

“Apart from that, we are offering a loan facility to capacitate existing and greenfield ventures in order to grow gold deliveries to FGR. We are still deliberating on the loan facility’s total funding,” he added.

Magaramombe said the target gold production for this year is at 36-40 tonnes.

“Barring any Covid 19 restrictions to be put in place, the plan is to increase gold buying centres.

“We have already identified other areas where gold buying centres will be established this year to enhance accessibility and convenience to artisanal and small-scale mining groups.

“We also have plans to open buying centres seven days a week to enhance the convenience and reduce potential leakages upon relaxation of Covid-19 restrictions.”

Outside of the Msasa head office, FGR currently has eleven gold buying centres strategically located to buy gold produced in Kadoma, Kwekwe, Chinhoyi, Bindura, Masvingo, Mutare, Zvishavane, Gweru, Bulawayo, Filabusi and Gwanda.                 

Following the ongoing unbundling of Fidelity Printers and Refiners (FPR) which started early last year, FGR is now the sole buyer and exporter of refined gold in Zimbabwe, separated from the printing company.

The move is expected to enhance gold production given that the gold producers will be involved directly in the operations of the gold refinery through their 60 percent shareholding in the gold refining business.

With regards to gold buying agents, Magaramombe said FGR would continue renewing licenses for those who deliver targeted quantities.

“We want to tighten the system to ensure that our agents will not channel gold to other markets. This is because licensed agents are permitted by law to move around with gold. So, we intend to be strict this year.

“If any of our licensed agents do not meet their targets, we will not renew their licenses unless they provide satisfactory reasons, this is because we need to ensure that all our agents deliver the gold to FPR,” he further said.

Since July 2021, FGR has been licensing between 40-45 Agents per calendar month. Magaramombe said all issued licences expire on the last day of the month and renewal is in alignment with specified delivery minimum requirements.

The FGR gold buying Agents contribution ranged 39 percent to 51 percent of total gold deliveries from 2017 to 2021.

One of FGR’s agents, Better Brands Jewellers (BBJ) said it delivered 7,8 tonnes of the precious yellow metal to FGR this year

“In 2020, we delivered 800kg of gold, while also delivering 7,8 tonnes of the yellow metal in 2021. We are also targeting to ramp up production this year and increase our gold receipts to FGR,” BBJ chief executive Scott Sakupwanya said.

Magaramombe said he was grateful for the efforts that the government is putting through incentives to meet the US$4 billion target for the mining industry by next year.

Gold deliveries declined by 16 percent and 43 percent respectively in the years 2019 and 2020, as compared to the year 2018. Last year, gold deliveries of around three tonnes per month were received.