Gold sector looking for US$1 bln, but that money can’t be found locally

17 Aug, 2022 - 00:08 0 Views
Gold sector looking for US$1 bln, but that money can’t be found locally Mr Isaac Kwesu

eBusiness Weekly

Business Writer
The local financial market has limited capacity to finance huge capital requirements needed in the gold-producing industry,  according to Chamber of Mines Zimbabwe (CoMZ) Chief Executive Officer Isaac Kwesu.

The CoMZ boss said the gold sector requires an excess of US$1 billion in the next five years to sustain growth and development.

However, this money cannot be found locally, Kwesu told the Parliamentary Portfolio Committee on Mines and Mining Development (Committee).

Speaking during a workshop on the gold sector conducted by the Committee, Kwesu said the local financial market has limited capacity to finance such huge capital requirements on the back of liquidity challenges.

He added that where the funding is available, “they are expensive.”

Looking for funding is also problematic as foreign investors are demanding that gold producers use their gold as security to secure funding, Kwesu said.

As a solution, the CoMZ boss said “there is need for Government to relax the marketing arrangement and allow gold producers to export their gold and use it for capital raising.”

There is a need for a supportive legislative framework for the gold mining industry to grow and develop, he added.

“Other critical success factors include supportive Gold Development Strategy. A supportive legislative and regulatory framework. A stable, predictable and competitive fiscal regime characterized by low royalty which is deductible for taxation as well as streamlined and low fiscal charges,” Kwesu said.

The gold sector is expected to fetch US$4 billion in revenue as its contribution to annual revenue of US$12 billion for the mining sector under the National Development Strategy_1 (NDS_1).

Mines and Mineral Development Minister Winston Chitando envisions a gold sector output growth of 60 tonnes in 2023 as the sector crafts initiatives that enhance gold mobilisation.

Speaking at an official sendoff of personnel to three of the country’s provinces where they will conduct the second gold mobilization exercise which will encompass monitoring and surveillance exercise, Minister Chitando said the intention is to enhance gold deliveries to the Fidelity Gold Refiners (FGR).

“Gold has remained one of the major foreign currency earners in Zimbabwe and is expected to contribute US$4 Billion to the US$12 Billion milestone. In this regard, our envisioned output for the gold sector is a sustainable annual gold production of 60 tonnes of gold by 2023,” said Minister Chitando.

For the seven months to July 2022 gold deliveries grew by nearly 50 percent to 18, 94 tonnes sustaining an upward trajectory in the year in comparison to 12, 8 tonnes delivered in the same period in 2021.

At 11, 4 tonnes small-scale miners made the most deliveries to FPR compared to primary producers who delivered 7, 5 tonnes in the course of the seven months.

Small scale deliveries in July stood at 1.99 tonnes, contributing 67 percent of the 2.96 tonnes, total in the month.

July deliveries were 5, 7 percent higher than the previous month and 4, 9 percent higher than the comparable month a year ago.

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