INCENTIVE schemes announced early this year to boost gold deliveries to the State-run Fidelity Printers and Refiners (FPR) have bolstered shipments into the formal market, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said on Friday, projecting higher year-end output.
Speaking during a mid-term monetary policy statement (MPS) review webinar organised by the country’s biggest circulating business weekly, Zimbabwe Independent, Mangudya said the strategy helped the country halt high-level smuggling.
Mangudya said following the introduction of incentives, small-scale miners alone boosted output by 1,3 tonnes between May and July this year.
“Gold deliveries have been going up,” Mangudya said in his keynote address.
“It was higher in June and July. That was the impact of the gold delivery incentive scheme which was implemented by government. If you look at the totals from January to May and you look at June and July totals, you can see the immediate impact of an incentive of 5%.
“If you remove that incentive, (you can see) incidents of smuggling gold out of Zimbabwe.
“It means that all that gold has been produced in Zimbabwe all along, but instead of bringing it to the formal market, to Fidelity Printers, it has been going out of the country.
“People (small-scale miners) produced 1,8 tonnes in July, almost two tonnes. But they were producing only about 700kg in May, it means that difference between 700kg and two tonnes, 1,3 tonnes, was just going out of the country.
“It was not going to the formal market. The incentive is a motivation for them to bring gold to the formal market,” the central bank chief noted.
The MPS announced early this month projected stronger gold output and exports this year, underpinned by the incentives, which range between 2,5% and 5%.
Finance minister Mthuli Ncube’s package of incentives include incremental output schemes, which will see mining firms that opt to list on the Victoria Falls Stock Exchange earning much higher incentives on their incremental output. Easing of COVID-19-induced restrictions that prevailed most of last year have also boosted gold output as markets reopened and supply chains got back on track.
“There was a remarkable surge in gold deliveries to Fidelity Printers and Refiners (FPR) in the months of June and July 2021.
“June 2021 gold deliveries to FPR were 2 924,3 kg compared to 1 409,6kg delivered in June 2020. Similarly, gold deliveries for July 2021 stood at 2 824,6 kg compared to July 2020 deliveries of 1 406,4 kg,” Mangudya said in the MPS.
He said small-scale gold producers contributed 52,8% of the total gold deliveries to FPR during the first seven months of 2021, which compared favourably with the 55,8% delivered for the same period in 2020.
Mines minister Winston Chitando has announced an ambitious plan to transform the sector into a US$12 billion industry by 2023, from the current total revenue of about US$2,5 billion.
Gold mines are expected to play a big role in this strategy.