Zimbabwe’s sole gold buyer Fidelity Printers and Refineries (FPR) will from today start paying large gold producers 70% for their gold in United States dollars, while small-scale gold producers will get the full amount in US dollars.
Prior to this policy shift, the state-run gold buyer was paying gold miners 50% of their sales proceeds in foreign currency, while the balance is paid in local currency (Zimbabwe dollar).
But the Zimbabwe dollar has been fast depreciating against the US dollar, which was compelling small gold producers in particular to sell their gold on the illegal market where dealers were paying the full price in foreign currency.
Said FPR general manager Fradreck Kunaka:
“With effect from 26th May 2020, the gold trading framework in Zimbabwe has been reviewed as follows: Gold producers shall be paid under a 70/30 payment arrangement scheme in terms of which 70% of the gold sale proceeds shall be paid into the producer’s Nostro account and the balance of 30% shall be paid in local currency at the ruling exchange rate into the producer’s ZWS account.
“Small scale gold buying agents and artisanal producers shall be paid in cash at a flat price of forty-five United States dollars [USD45.00] per gram of
fine gold.
“Large gold buying agents must have a mining operation producing a
minimum of fifty (50) kilograms fine gold per month to qualify for a Fidelity Printers and Refiners (FPR) agency pemit; Small scale gold buying agents will have to enter into an Agency Agreement with FPR, which contract shall clearly spell out the terms and conditions under which the agents shall operate.
“FPR and the National Gold Monitoring Teams are enhancing surveillance to ensure that all gold is sold through FPR in line with the country’s regulations.
“All persons wishing to continue as FPR gold buying agents are advised to contact Fidelity Printers and Refiners to regularise their operations in line with the new gold trading framework.”
The move to pay all gold producers will likely have a positive impact on the country’s official gold output as it will help curb high levels of smuggling, which had been necessitated by a poor payment system on the part of FPR.
The country’s gold production dropped to 1 464,3 kilogrammes in April compared to 2 126,35 kg over the same period last year.
Over the four month period, small-scale miners produced 728,9 kilogrammes, while large-scale miners produced 735,4 kgs
Zimbabwe is targeting 35 tonnes of production this year against 27 tonnes last year, when earnings slipped to US$946 million.