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(NEWZIMBABWE) Zim eyes re-admission to bullion market

Zim eyes re-admission to bullion market
by Oscar Nkala
12/08/2009 00:00:00

THE Zimbabwe Chamber of Mines (CoM) says the country could rejoin the London Bullion Market (LBM) fold within two years, but warns that this would only be possible if the current rate of recovery in the key gold-mining sector is maintained or exceeded.

Zimbabwe was kicked out of the LBM last year, when its annual gold production hit rock bottom, at just 3 072 kg, compared with slightly over 10 000 kg in 2006 and the high of 27 000 kg attained in 1999. The ouster followed numerous production problems, financial constraints, a worsening power crisis and the nonpayment of a huge debt owed to producers by Fidelity Printers & Refineries, a Reserve Bank of Zimbabwe subsidiary, which, at the time, was the sole buyer and exporter of gold in the country.

Addressing mining industry stakeholders and business leaders at the recent Mining, Transport and Engineering exhibition, in Bulawayo, CoM president Victor Gapare said the prediction of Zimbabwe’s early return to the international bullion market was based on the steadily increasing output from gold-mining since the liberalisation of the economy in February.

He said both the trading and operating environments were generally favourable for producers and this had prompted the return of more players, which had, in turn, resulted in increased gold production.

“As far as trading on the LBM is concerned, this is [based on] producing 10 t/y and there is need for us to show that consistency for two years. At the moment, gold production is picking up. Between January and June, the country saw 1 t delivered, and if this trend continues, within another year, we will be exceeding 10 t,” Gapare says.

He said Zimbabwe stood a good chance of achieving this because the favourable conditions ushered in by the deregulation of trading in the sector could lure more investors. He added that the unity government had managed to reduce the political risk factors associated with investing in the country.

Gapare, however, noted the threat presented by renewed power cuts to a quick rebound of the mining industry. Incessant power cuts had intensified over the past weeks, after Zimbabwe’s neighbours, who supplied power to the Southern African country, decided to reduce supplies by half.

Mozambique, Zambia and the Democratic Republic of Congo each cut their supplies to Zimbabwe to press for the payment of a collective US$57-million debt that has remained unpaid for more than a year. The countries had earlier decided to switch off power supplies completely, but were persuaded to relent.

Zimbabwe’s power generation capacity has been whittled down by ten years of economic meltdown, and the new unity government, comprising President Robert Mugabe’s Zanu-PF and Prime Minister Morgan Tsvangirai’s Movement for Democratic Change, says it needs more than US$600-million to revive the power sector. - Mining Weekly

Labels: CHAMBER OF MINES, GOLD MINES

posted by MrK @ 3:09 PM