Zim under pressure to end gold monopoly


GOLD mining investors are pressuring Zimbabwe to change a law forcing producers to sell their output to the
central bank, which part pays them in local currency that is worthless outside the country.
That law is making it hard to raise capital for investment projects, according to B2Gold Corp and Caledonia Mining Corp, which are considering acquiring assets in Zimbabwe.

B2Gold chief executive officer Clive Johnson said the Canadian company has held talks with the government about changing the rules to unlock investment.

While mining investment is key to rebooting Zimbabwe’s economy, the nation suffers from an acute shortage of dollars. As the rally in bullion generates more interest in the industry, the government is “weighing its options” on whether to grant investors gold-trading licences, said Deputy Mines minister Polite Kambamura.

“The ability to handle gold sales is critical to a company like ours,” said B2Gold’s Johnson. “It’s an issue that would have to be clarified first for one to buy some assets and build some gold mines.”

Zimbabwe currently forces gold miners to sell their bullion to Fidelity Printers and Refiners Ltd. It pays them 70 percent in dollars and the remainder in local currency. Payment delays of up to two weeks by Fidelity Printers and Refiners have impacted on producers, according to Chamber of Mines of Zimbabwe chief executive officer
Isaac Kwesu.

Existing mines require almost US$400 million in fresh capital, the industry lobby group said. Gold output in the southern African nation plunged 30 percent in the first 10 months of 2020 from a year earlier.

Exports of the precious metal, which the nation relies on for most of its foreign exchange earnings, slumped 23 percent to US$697,7 million during that period, according to the Reserve Bank of Zimbabwe.

To justify building new mines, Jerseybased Caledonia would need to take charge of its gold sales, said chief executive officer Steve Curtis, whose company is interested in buying one of Zimbabwe’s largest gold
operations. “Those are the conversations the authorities have to get their heads around if you want an industry to be invested in,” Curtis said.

“That legislation, if they get rid of it, the level of investment would no question be up.”
— Bloomberg

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