A tight-knit web of local and foreign dealers is reported to be smuggling gold worth nearly US$500 million out of the country every month, leading to calls for Government to formalise small-scale mining and offer competitive market-driven prices.
Investigations carried out in the sector show that 12 tonnes of the mineral are being exported illegally every month. A gramme of gold fetches an international average price of US$40, according to calculations based on the London Bullion Market Association (LBMA).
This means Zimbabwe is losing US$480 million per month on account of the clandestine activities involving panners, specialised middlemen and foreign nationals.
An estimated 1,5 million unregistered miners operate on various claims countrywide and are keen to sell the mineral at lucrative prices.
However, Fidelity Printers and Refiners (FPR), the country’s sole legal gold purchaser, offers an average price of US$31 per gramme. The figure is arrived at after tax deductions amounting to 11,2 percent of the prevailing global price.
These taxes cover duty resumption (2 percent), royalties (3 percent) and FPR charges (6,2 percent).
It is understood unregistered miners — because of such an unattractive return structure — have no reason to sell the mineral to the Reserve Bank subsidiary.
Instead, they continue turning to the more attractive parallel market where prices are normally 5 percent less than the international price. The foreign buyers — predominantly from Asia, the Middle East and South Africa — offer at least US$35 per gramme.
They then smuggle the mineral into South Africa which serves as a springboard to more lucrative markets in Europe. It is estimated substantial quantities are taken out of the country daily. Statistics released by the Zimbabwe Miners’ Federation show small-scale production plummeted from a peak of 17 tonnes in 2004 to 959,5 kilograms last year, indicating massive illegal exports.
Even the 1 300 small-scale miners registered with FPR are not making consistent deliveries. Zimbabwe Artisanal and Small Scale Miners’ Council (ZASSMC) president Mr Wellington Takavarasha told The Sunday Mail last week that latest internal investigations covering the operations of the sector revealed the massive mineral leakage.
Mr Takavarasha said the country stands to retain billions of United States dollars if Government formalised the operations of unregistered panners.
“There are 1,5 million unregistered panners operating in all the country’s 10 provinces; they are not forwarding gold to Fidelity Printers and Refiners. The internal investigations we conducted revealed that at least 12 tonnes of gold are being smuggled out of the country on a monthly basis.
“These illegal panners should be formalised immediately and the country will rake in billions of dollars annually. If we were to compel these 1,5 million artisanal miners to bring at least five grammes to FPR every month, the country would have an average of 80 tonnes in its reserves every month.”
FPR chief executive officer Mr Allen Marimbe said the 1 300 small-scale miners registered with his institution were not supplying gold consistently.
He indicated steps to ensure increased gold deliveries would soon be taken.
“The FPR pricing model for primary producers is 1,5 percent less than the London Bullion Market Association price. A total of 85 percent of the money is paid within 48 hours of delivery and the balance is paid based on actual sale value.
“The 1,5 percent margin factors for costs including but not limited to insurance, freight, security, and the overheads related to the mobilisation of gold. However, the net amount paid to the miner is also subjected to royalties and taxes.
“In respect of small-scale miners, there is the additional cash withdrawal charge levied by banks. Another factor caters for the quickest gold determination process (specific gravity method), which does not yield accurate results; hence, the pricing model for this sector is 5 percent less than the LBMA.
“The aspect relating to the black market offering better prices is a function of the black marketers not being subject to royalties and taxes . . . At present, we have in excess of 1 300 registered small-scale miners in our database, but the deliveries from these players are inconsistent.”
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