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RBZ increases forex allocation to gold miners

Reserve Bank of Zimbabwe Governor John Mangudya presents his Monetary Policy Statement, while Finance and Economic Development Minister Professor Mthuli Ncube and Permanent Secretary George Tongesayi Guvamatanga look on at the RBZ in Harare yesterday. —(Picture by Tawanda Mudimu)
Reserve Bank of Zimbabwe Governor John Mangudya presents his Monetary Policy Statement, while Finance and Economic Development Minister Professor Mthuli Ncube and Permanent Secretary George Tongesayi Guvamatanga look on at the RBZ in Harare. —(Picture by Tawanda Mudimu)

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.  Daily News.