Gold output seen below target at 22 tonnes

Gold output seen below target at 22 tonnes

HARARE, December 5 (The Source) – Zimbabwe’s gold output is this year seen at 22 tonnes, lower than the target of 24 tonnes after government failed to pay small-scale miners for gold deliveries because of the ongoing cash shortages, mines minister Walter Chidhakwa said on Monday.

“Somewhere in September we slipped because of the cash shortages….the miners told me that if you do not pay us cash we will sell elsewhere and that is where we lost it otherwise we could have been at 23 tonnes or 24 tonnes,” said Chidhakwa at the launch of the Chamber of Mine’s report on the state of the mining sector.

Chidhakwa said illegal gold sales by small scale miners, who produced nearly 40 percent of the total gold output in the first half of the year, were on the rise.

All gold produced in Zimbabwe is required to be sold to Fidelity Printers and Refiners, a company wholly owned by the central bank.

Gold is Zimbabwe’s main export and, along with tobacco and platinum, accounts for the bulk of the country’s foreign currency earnings.

The southern African nation produced 21 tonnes of gold in 2015, and remains well below the peak output of 30.2 tonnes achieved in 1999.

The report showed that average capacity utilisation for the mining sector had increased from 60 percent in 2015, to 64 percent in 2016.

“The Platinum sector continues to operate at full capacity, while gold recorded an increase to 79 percent, from 77 percent in 2015. Declines in capacity utilization levels were recorded in respect of coal from 50 percent to 30 percent as well as Nickel 55 percent to 41 percent,” reads the report.

Average profitability in the gold and the nickel subsectors increased in 2016 compared to 2015 while that for Platinum producers remained subdued. But 90 percent of respondents expect to improve their profitability next year.

In 2016, payments to Government and government related institutions averaged 13 percent of revenues and around 17 percent of total costs.

Shortage of capital and the high cost of power were identified as the main challenges to growth of the sector.

Headcount for the surveyed companies declined by 11 percent with 60 percent of the respondents having reduced their headcount in 2016 by an average of 17 percent.

The survey also showed that 30 percent of the mines embarked on new mine developments during 2016 and 60 percent indicated that they would carry out new mine developments in the next five years.