President Mugabe and Emmerson Munangagwa
By Our Correspondent
HARARE, May 15, 2007 -The Reserve Bank of Zimbabwe's (RBZ) debt to gold mining companies now stands at over US$15 million, the president of the Zimbabwe Chamber of mines, Jack Murehwa said yesterday.
The central bank's failure to pay firms for gold deliveries has resulted in the closure of some mines in a sector that has been hit by viability problems. "The amount stands at more than US15 million. It would be good for the sector if it is paid," Murehwa said.
In a previous interview, the chamber of mines president said companies were now relying on borrowing, and the RBZ had not given any explanation over the non-payment.
In a circular sent to members last month, the chamber of mines said: "Since October last year, the Reserve Bank of Zimbabwe has been experiencing severe difficulties in paying gold producers for gold lodged with Fidelity Printers and Refiners.
"As of the beginning of April, most gold producers were not paid for gold lodged in January. The delays have impacted negatively on production."
In his recent monetary statement RBZ chief Gideon Gono raised the gold support price by 2 178 percent from Z$16 000 per gramme to Z$350 000 per gramme, but reduced producers' foreign currency retention levels from 67,5 percent to 60 percent. Gono said gold stood as the country's asset of last resort but that has since changed.
"The combined effects of viability constraints and rampant smuggling of the precious minerals have put an unfavourable dent on what traditionally stood as the country's reserve asset of last resort," Gono said.
Recently, the government-deployed police from the gold squad and the Central Intelligence Organisation (CIO) on suspicion that falling gold production was as a result of rampant smuggling.
When the RBZ upped the support price, mining firms said the increase would not be of much consequence because of the debt. Some firms have suspended operations due to shortage of foreign currency to import cyanide, a chemical required for gold processing.
Late last month Gono said the RBZ took note of the unpaid money and promised that it would be released soon. He did not give a date or timeframe. "The RBZ takes serious note of the gold sector's [unintended] restricted access to foreign currency for the importation of critical inputs, over the last few months" Gono said.
"This unfortunate phenomenon almost brought the sector to a standstill and could have seriously undermined investors' and other stake- holders' confidence in the sector."
Statistics show that gold production for January and February 2007 went down by 18 percent. Last year only 10,9 tonnes were delivered, down from 13 tonnes in 2005 in a country were production stands at over 20 tonnes a year. Last month Zimbabwe Allied Banking Group (ZABG) said in its second quarter economic outlook report government must come up with policies that stimulate growth, rather than suppress it.
"This state of affairs . . . clearly shows that the authorities should come up with policies that stimulate production, not policies that hinder the growth of the sector."
On May 10 the state- owned Herald newspaper reported that Ian Macmillan, nicknamed the "Gold Lord", who allegedly has strong links with Rural Housing Minister and presidential aspirant Emmerson Mnangagwa, had been arrested after he was found with a kilogramme of gold valued at $350 million in his possession.
The paper added that Macmillan, suspected of being one of the biggest gold smugglers in Zimbabwe, had other gold smuggling charges dropped in 2004 because the State failed to provide a trial date.
After, his latest arrest, a Harare magistrate denied him bail. "Last night there was pandemonium in the market as sellers sought to establish if the "Gold Lord" had indeed been arrested, fearing for their own safety," the Herald reported.
|Last Updated ( Tuesday, 15 May 2007 )|