RBZ ups gold miners' forex retention threshold to 70 percent

RBZ ups gold miners’ forex retention threshold to 70 percent

Small scale ministers to be allowed to keep 100 percent of sales in cash dollars

Low deliveries ... Small scale gold producers delivered less gold to Fidelity Printers over late payments, channelling it to the black market instead

HARARE – Large-scale gold producers will now receive 70 percent of their sales proceeds in foreign currency, up from 55 percent, with the balance to be paid in local currency at the prevailing exchange rate, the Reserve Bank of Zimbabwe announced on Tuesday.

Small-scale buying agents and artisanal miners, responsible for 60 percent of the country’s gold output, will be paid the full amount in cash at US$45 per gram of fine gold, the central bank’s gold buying entity, Fidelity Printers and Refineries, said in a statement.

Fidelity has been struggling for weeks to pay miners, but RBZ governor John Mangudya said they had “found a sustainable solution to manage the availability of cash to be used to purchase the gold.”

“The challenge has been resolved,” he said, adding that paying in United States dollars meant that there would be “less creation of Zimbabwe dollars to purchase the gold, which means less pressure on the exchange rate.”

The collapse of the local currency against the United States dollar had made selling to Fidelity unattractive to miners, whose local currency component is being liquidated at a discredited exchange rate of 1:25 fixed by the RBZ in March. On the thriving parallel market, the rate was 1:65 on Tuesday.

The Fidelity statement said: “Gold producers shall be paid under a 70/30 payment arrangement scheme in terms of which 70 percent of the gold sale proceeds shall be paid into the producer’s Nostro account and the balance of 30 percent shall be paid in local currency at the ruling exchange rate into the producer’s ZW$ account.

“Small scale gold buying agents and artisanal producers shall be paid in cash at a flat price of US$45 per gram of fine gold.”

Zimbabwe announced a coronavirus lockdown at the end of March, but mines were allowed to re-open shortly after. Gold is Zimbabwe’s biggest foreign currency earner, accounting for 30 percent of the country’s export receipts.

Zimbabwe’s gold output dipped to 1,464.3kgs in April compared to 2 126.35kgs a year earlier. The country has set a target of 35 tonnes of production this year against 27 tonnes last year, when earnings dropped to US$946 million.