Zimbabwe’s Ministry of Finance and Economic Development has taken over a long-standing $50-million debt that Reserve Bank of Zimbabwe (RBZ) gold-dealing subsidiary Fidelity Refineries & Printers (FRP) owed local miners and has undertaken to settle it in the short term.
The RBZ subsidiary enjoys a statutory monopoly as the sole legal buyer and miller of the gold produced in Zimbabwe. RBZ acting governor Dr Charity Dliwayo says government is already assessing the debt, which dates back to 2007, when FRP collapsed. It reopened its doors in January.
The nonpayment of the royalties worsened a dire financial crisis that forced some mines to cease operations.
Dliwayo says the push for the payment of the debt is part of the central bank’s efforts to restore confidence by the country’s leading gold producers in FRP.
“Fidelity owes local gold producers $50-million, most of which was accrued during the hyper-inflation era, and efforts are being made to repay the money. The debt has been assumed by the government and all the necessary evidence is being presented to the Ministry for the settlement of all payments.”
Dliwayo says FRP wants to boost its capacity to buy and refine gold as Zimbabwe struggles to produce enough to be re-admitted to the London Bullion Market, the world’s top gold trading counter.
Zimbabwe was ejected from the group in 2008, when its yearly gold production plummeted to less than 3 000 kg as some mines succumbed to hyperinflationary pressures.
“Fidelity has the capacity to refine gold and offer competitive prices. It can buy all the gold from primary and artisanal miners. At present, the company buys 100% of its gold requirements from primary producers and we wish to extend our buying to small-scale miners,” she says.
Further, Dliwayo says the RBZ has no gold reserves at present and will work on raising the country’s revenue base to predetermined levels before it can consider restocking.
“We are working on getting the country’s revenue to a certain level, [after which we] can talk of gold reserves. Currently, we are engaged with other stakeholders to ensure that we can bring more gold to FRP.”
Meanwhile, FRP gold operations director Frederick Kunaka says the company has no information on the gold that was traded in the five-year period between 2009 and 2013 because the free market system, which was introduced by the previous unity government, ended its sole-buyer status and allowed gold producers to sell to buyers of their choice.
Addressing members of the Parliamentary Portfolio Committee on Mines and Energy in Parliament recently, Kunaka said the change in policy rendered the FRP incapable of determining how much the country lost through gold leakages.
“The result is that we cannot account for the gold that was traded in that five-year period because it was not done through us, but the RBZ division of gold exports,” Kunaka said.