Gold miners want international rates

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HARARE – The Zimbabwe Miners Federation (ZMF) yesterday called on the government to peg its new gold remuneration framework in line with prevailing international rates, saying that the new offer of a fixed US$45 per gramme will be difficult to sustain given the fluctuating yellow metal prices on the global market.

This comes as State gold buyer, Fidelity Printers and Refiners (FPR), introduced a new gold trading framework which would see gold producers being paid 70 percent in US dollars and 30 percent in local currency pegged at the prevailing interbank rate at a price of US$45 per gramme, an improvement from the previous 55/45 structure.

Addressing journalists in Harare yesterday, ZMF president Henrietta Rushwaya said while the new remuneration framework was welcome, aligning it with international standards would make it more attractive to miners and plug gold leakages.

“The ZMF is of the view that this review was invariably long overdue and is a relief from the 55/45 framework that prevailed prior to the new framework. While the review is a welcome development, the fixed price of US$45 per gramme was announced at a time the world price of gold was at around US$54,08 per gramme, representing almost 80 percent of the world price.

“With the world price of gold expected to continue bullish and further increase on the back of global economic risks arising from the Covid-19 pandemic which promotes the attractiveness of gold as a safe haven, the price paid to local small-scale miners will continue to shrink as a percentage of the world.

“The unwanted consequences of the above pricing distortion are widespread side marketing and leakages as small-scale miners seek better margins from unregistered buyers offering good prices,” Rushwaya said.

She added that sustaining the US$45 per gramme would be difficult especially in the event that international gold prices increase or decrease.

“ZMF is of the view that in that situation, it will not be practically possible for FPR to continue paying the fixed US$45 per gramme, which will be technically a price support scheme, given the current liquidity constraints in the economy.

“We believe in a gold trading framework that provides a win-win situation between FPR and gold miner which minimises or eradicates the discrepancy between the world price of gold and local price of gold. This framework curtails side marketing and gold leakages while at the same time promoting delivery of gold to FPR,” Rushwaya said.

Speaking at the same event, FPR general manager Fradreck Kunaka agreed that the new remuneration would not be sustainable, but said it was just a start and would be amended to better suit the needs of gold producers and buyers.

“We are aware that the issue of a fixed price will not be sustainable in the long run, but this is just a start there is room for review.

“Very soon we will iron out these issues and come up with a sustainable solution. What we are trying to achieve is to reduce the illegal sale of gold to unauthorised and foreign buyers by tabling a better offer to gold producers,” Kunaka said.

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