ZIMBABWE is widely expected to meet prerequisites for re-admission into the London Bullion Market Association (LBMA) by the end of the year, it has been learnt.This will help the country secure a market that offers protection against price movements.
It is widely believed that the LBMA, which was established in 1987, sets the benchmark for gold and silver metal bars across the world.
In particular, the LBMA Good Delivery List is used by many precious metals exchanges around the world to identify refiners whose gold and silver bars are accepted in their own markets.
Zimbabwe dropped out of the Association in 2008 after production of the yellow metal slumped to 3,5 tonnes, which is far less than the stipulated 10 tonnes. The country’s sole buyer of the metal, Fidelity Printers and Refiners (FPR), an arm of the Reserve Bank of Zimbabwe (RBZ), has been selling its stocks to Rand Refiners of South Africa where it is levied 0,3 percent of total earnings.
Last week, FPR’s chief executive officer Mr Fradreck Kunaka said the country will meet one of the major conditions for re-admission by the end of the year.
“For us to be re-accredited, one of the major requirements is refining 10 tonnes of gold for three consecutive years.
“It appears they (LBMA) were thinking we are under sanctions. We have been refining the 10 tonnes of gold and the three years lapse this year,” said Mr Kunaka.
Local gold production has been progressively increasing from 14 tonnes in 2013 to 18 tonnes in 2015.
The country managed to rake in $685 million in exports from last year’s haul.
This year, the targeted output is 24 tonnes, which is three tonnes shy of the record 27 tonnes produced in 1999.
Experts have also been pushing Government to consider joining the Dubai Multi Commodities Centre (DMCC) or the Shanghai Gold Exchange but their relatively “restrictive” requirements are considered prohibitive.
DMCC was established in 2002 as a strategic initiative of the Dubai government with a mandate to provide the physical, market and financial infrastructure required to set up and operate a thriving commodities marketplace.
At the moment, the DMCC is recognised as the largest free zone in the United Arab Emirates with over 10 000 registered companies under license.
On the other hand, the Shanghai Gold Exchange is a membership-based and self-regulatory legal entity that was established by the People’s Bank of China upon the approval of the state council and registered with the State Administration for Industry and Commerce. It resumed operations on October 30, 2002 and as at November 2015, the Shanghai Gold Exchange counted 246 members globally, 183 domestic and 63 international members.
It also has 10 000 institutional and over 8,3 million individual clients.
Mr Kunaka noted that inquiries have been made with a view of joining either the DMCC or the Shanghai Gold Exchange.
“Yes, we have looked at the requirements of the Dubai market and we have also inquired about the Shanghai market but their requirements are not as flexible as those of the LBMA.
“With the Shanghai market, we are required to register the company in China while the DMCC has to inspect a member country’s sources of gold every year. More importantly, when the DMCC team visits for inspections, the costs for the team accrue to the refiner and we feel that the costs are too high.
“This is different from the LBMA which does the same inspections once in three years. We believe that the LBMA would be better for us to join,” explained Mr Kunaka.
Government has been constantly reviewing gold royalties, plugging leakages at border posts and conducting thorough on-site inspections at all gold producers around the country in order to improve deliveries.