RBZ increases forex allocation to gold miners  - Zimbabwe Situation

RBZ increases forex allocation to gold miners 

Source: RBZ increases forex allocation to gold miners – DailyNews Live

Bloomberg      17 November 2018

HARARE – The Reserve Bank of Zimbabwe (RBZ) has increased the amount of
foreign exchange that gold companies can retain after a shortage forced
some mines to close.

Metal producers in Zimbabwe have been struggling to meet production costs
because of the shortage of hard currency. That forced RioZim to
temporarily shutter three of its mines last month, curbing a key source of
the country’s export earnings.

Gold miners will be allowed to retain 55 percent of their foreign-exchange
earnings, up from 30 percent previously, central bank governor John
Mangudya said in a phone interview on Thursday.

“We have reached an agreement with the Chamber of Mines,” he added.

“We will continue to monitor the situation on the ground to ensure
viability for the sector.”

This was after the country’s gold producers had threatened to suspend
operations because foreign-exchange shortage has left them with
insufficient funds to cover production costs, the main industry lobby
group said.

Curbing output would deprive the country of a key source of export
earnings as Finance minister Mthuli Ncube tries to stabilise an economy
wrecked by the misrule of former leader Robert Mugabe.

Zimbabwe’s mining industry is facing “severe viability challenges” because
of the shortage of hard currency, the Gold Producers Committee, an
affiliate of the Chamber of Mines of Zimbabwe, said in a report to be
submitted to the central bank.

“If this situation is not addressed the majority of (gold) mining houses,
whose going concern have been undermined, may find it impossible to
continue in production,” the committee said.

It proposed allowing mineral producers to retain a larger share of the
proceeds from metal sales.

Zimbabwe produced 30,3 metric tonnes of gold in the 10 months through
October, surpassing the government’s target for the full year.

The metal is Zimbabwe’s second-largest export after tobacco, according to
the World Trade Organisation.

Under Zimbabwean law, producers including RioZim and Metallon Corp are
required to sell all of their gold to Fidelity Printers and Refiners, a
unit of the central bank. – with Bloomberg