Zimbabwe gold output to double despite hurdles

2331

Zimbabwe’s gold production this year is set to double despite a lack of capital, frequent power cuts and uncertainty over an ownership law that are stalling the sector’s recovery, an industry official said.

Mining has overtaken agriculture as Zimbabwe’s main foreign currency earner after President Robert Mugabe’s seizure of white-owned farms to resettle landless blacks in 2000, which brought the collapse of farms in the former regional breadbasket.

Under a power-sharing government set up by Mugabe and rival Morgan Tsvangirai, who is now prime minister, Zimbabwe’s economy has stabilised after a protracted political crisis ebbed, and abandoned gold mines have resumed metal production.

The Chamber of Mines president Victor Gapare said although power cuts and lack of funding had slowed down the recovery of the country’s mines — most of which closed in 2008 at the height of Zimbabwe’s economic crisis — gold output would be significantly higher than last year’s 4.2 tonnes.
“At the moment we are producing at a rate of 7 tonnes … we should produce between 7-8 tonnes this year,” Gapare told a news conference in Harare.

He said although last week’s strike had hit gold miners hardest, only a quarter of the mines were affected.

At its peak, Zimbabwe produced about 29 tonnes of gold per year, but hit a record low of just over 3 tonnes in 2008 as mines battled with high inflation and a skewed exchange rate.

But Gapare said the mining industry was unlikely to realise the 40% growth projected by Finance Minister Tendai Biti in his 2010 budget speech.
“There will be growth in the sector, yes. But not by 40 percent as the issue of capital (shortages) threatens growth,” Gapare said.
“If the perceived country risk of Zimbabwe comes down, then companies can raise capital easily to expand production. Power shortages also limit production.”

Gapare said expansion plans in the platinum and diamond sectors could be hampered by the uncertainty brought by Zimbabwe’s plan to transfer majority ownership of in foreign firms, including mines and banks.
“The majority of the mineral rights in Zimbabwe are held by blacks, but because of the economic challenges, they have not been able to unlock value from those rights,” Gapare said.
“We advocate broad-based economic empowerment, those activities that benefit the people, such as hospital construction in mining communities. That’s empowerment.”

Miners have since 2002 struggled with a political and economic crisis and foreign currency shortages, forcing mines to shut and skilled labour to flee to South Africa and Australia.

Gold producers — including the country’s biggest, Metallon Gold, London-listed Mwana Africa and Canada’s New Dawn Mining Corp — last year started re-opening mines after Zimbabwe’s central bank allowed firms for the first time to sell the metal and keep all the proceeds.

Source: www.af.reuters.com