Setbacks For Gold Production
Saturday, 30 August 2008 20:57
THE delay in receiving payment coupled with power outages have stymied Zimbabwe’s gold production, projected to fall further this year, players in the industry have warned.
Collen Gura, Metallon Gold Zimbabwe chief executive officer told a business meeting that power outages were rampant despite miners paying in foreign currency to power utility, ZESA Holdings.
"Most mines are getting four hours a day out of 24 hours and this affects shifts," he said.
Gura said gold miners were incurring unnecessary costs through the increased chemical consumption caused by power outages. He said power outages also led to dewatering costs caused by flooding.
"One of our mines are below Mutare River and we have closed underground mining because we have no pump space. We have equipment lying idle," he said.
Gura said gold producers are hamstrung by late payments to gold deliveries adding further agony to the sector.
"Not only are you getting it less, but you are getting it late," he said.
In its half year results ended June 30 2008, RioZim Limited said its cashflow continued to be impaired by the delay in the payment for gold deliveries to the Reserve Bank of Zimbabwe which dates back to November 2006.
Gura said gold prices have been trailing international prices. He said Zimbabwe should take a leaf from Mali and Tanzania where producers are paid in foreign currency but liquidate the proceeds to local currency.
"What is painful is when people deny that people in the gold sector are operating in misery," he said.
He said mining is a long term venture which needs clear ground rules.
He said the mining rights and indigenisation laws should be clear and consistent. Gura said Metallon has been trying to list on the London Stock Exchange for the past four years but was encountering hurdles. He said Metallon has failed to explain to potential investors the proposed indigenisation law. Under the law, locals will have 51% shareholding in foreign owned companies operating in Zimbabwe.
"The question we could not answer is to do with indigenisation. One says if I put £1 is there any insurance to compensate me for the 51 pence lost," he said.
It just stops certain things from happening and here now we are, not listed."
Zimbabwe’s gold production has declined over the years due to operational constraints and poor incentives that have made investment into the industry a tough choice. From a peak of 27 metric tonnes in 1999, gold production plummeted to seven tonnes last year. This year gold production |
