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'Cash-rich' gold buyer invades Zimbabwe?

by Staff reporter
19 Jun 2020 at 08:30hrs | Views
Confusion is reigning supreme in the gold sector over the existence of a licenced gold buyer who is reportedly paying more than the official price set by the country's repository authority, Fidelity Printers & Refiners (FPR).

FPR is buying gold at US$45 per gram but there are reports that a local bank is paying US$48 and government seems to be in the dark about this new development.

The matter was raised on Wednesday's Question and Answer Session of the National Assembly when Kwekwe Central Masango Matambanadzo asked Finance and Economic Development Deputy Minister Clemence Chiduwa to clarify reports that the sector had been opened to buyers including banks.

The legislator also queried reports that the bank was somehow paying a much better price than Fidelity Printers and Refiners and this spelt trouble for the sector as black-market dealers had adjusted their prices to US$50-52. World prices are currently at US$55.43

"Fidelity - the company that buys gold - is buying at US$45 and for a short while there was a small difference between black market and Fidelity rates but right now that CBZ has been given a gold buying licence they are buying at US$48 and this had pushed up black market prices. How can the country stabilise when its main economic driver is in shambles?  You are not going to get gold; it will be smuggled" he said.

The deputy minister refused to confirm the development saying in terms of the new gold framework the small producer was being paid a fixed price of US$45 while the bigger producers are being paid at the market price. The same question was put to Finance and Economic Development Minister Mthuli Ncube who professed ignorance over the issue.

"I am not aware of the full facts in terms of the awarding of the licence to the bank (that he mentioned which is CBZ). I am not aware of the full facts, but I will endeavour to investigate and then I will be able to answer the question once I have the facts," he said.

Mines and Mining Development deputy minister Polite Kambamura said while he was aware of an arrangement between the ZB Bank and FPR he was not aware of the new arrangement with CBZ.

In an interview with FinX, Matambanadzo said government had set a bad precedence by licensing CBZ as a buyer and exporter of gold because they have no obligation to sell the same to the RBZ.

Zimbabwe Miners Federation president Henrietta Rushwaya said although they have heard of the licencing of ‘banks' as gold buyers, no official communication had been issued to them. "We have heard about that, but I cannot say for certain what the position is because it has not been confirmed to us. We are waiting for official communication whether that is the position taken by the authorities," she said.

Further inquiries however revealed that FPR had licenced the country's single largest gold producer Freda Rebecca as a buyer and had an agents' funding arrangement with CBZ Bank. Freda Rebecca, together with Bindura Nickel Corporation, are now under the control of Sortic International, a company linked to CBZ Holdings major shareholder.
FPR general manager Fradreck Kunaka said while the company had an arrangement with ZB Bank, licenced agents are allowed to have their own private arrangements for funding through the banks.

Kunaka further indicated that any arrangement from the banking sector that would see agents paying more than his company would be in breach of set regulations.

"These agents would definitely lose their licenses if they are paying more than us," he said.

Meanwhile gold earnings have improved 2.96% to US$409.7m in the year to May 2020 from the US$398.7m realised in the same period last year. The yellow metal fetched US$98m in January 2020 which was 39.20% higher than the US$70m the country got in 2019. In February proceeds fell 42.85% to US$56m month on month and 28.11% year on year as February 2019 gold brought in US$77.9m.

March 2020 saw gold to the value of US$71.9m being exported a 28.39% higher than the value exported a month earlier. However, in the same month in 2019 US$88m which is 18.30% higher was cashed in from gold exports, according to statistics gathered from FPR. US$63.4m, which was 11.82% lower than the March figure was realised in April. The sum was 17.02% lower than US$76.4m of April 2019. May 2020 saw a year on year rise of 39.93% to US$120.2m from US$85.9m recorded a year earlier. The May sales figure was 61.20% higher than the sales revenue of the previous month.

FPR has actually sold less tonnes than the same period in 2019. In the period January to May 2019 the country sold 9.6t which is 1.8t or 18.75% more than the 7.8t sold in the same period last year.  In terms of tonnage sold, in January 2020, the country sold 1.9t which was 260kgs more than 1.6t sold in the same month a year earlier. February 2020 year on year sales were 742kgs lower at 1.09t from 2019 February's 1.8t

The surge in value sold is as a result of an average 20.09% increase in gold prices in the first five months of 2020. Prices averaged US$8 774 higher at US$52 456.40 per kilogram than the average price of US$43 682.40 per kilogram in the first five months of 2019.

Source - finx