The World Bank says Zimbabwe may miss its 2017 gold production target of 28 t because most small-scale producers remain vulnerable to the country’s harsh macroeconomic environment.
Zimbabwe’s macroeconomic environment has deteriorated since late last year, amid severe foreign exchange shortages.
The World Bank says in its latest forecast for the sector that, this year, Zimbabwe’s gold production will increase by only 10% to about 25.3 t.
“The mining sector is expected to continue growing, but it will remain vulnerable to the [prevailing] macroeconomic conditions. Gold production is
expected to increase by 10% and global gold prices are projected to remain broadly stable,” the Bretton Woods institution states.
The Zimbabwe government previously stated that small-scale miners were expected to lead an expected surge in gold production, which, it forecast, would reach 28 t this year.
In 2015, small-scale miners accounted for 36% of the country’s gold production, with the proportion rising to 40% in 2016 on the back of government cash incentives and a relaxation of legislative constraints.
Government is continuing to pay cash for gold deliveries. However, because they are not recognised as exporters, small-scale gold miners
do not qualify for any options to access cash from offshore sources.
“The gold producers are not legally regarded as exporters and cannot hold [foreign-currency- denominated] accounts, which leaves them
particularly exposed to the liquidity constraints in the country,” the World Bank report states.
After missing the 2016 small-scale mine gold production target of 10 t, the Reserve Bank of Zimbabwe’s gold buying subsidiary, Fidelity Printers & Refiners, unveiled a $40-million mine capitalisation loan facility. Of this amount, $29-million has already been disbursed. Collateral for the loans include livestock and a wide range of movable and immovable property.