Production of gold and other minerals in Zimbabwe is expected to pick up in the coming year owing to various support measures and incentives the government has extended to the industry, which is likely to bring more foreign currency to the southern African country.

Currently, the Reserve Bank of Zimbabwe is offering a gold support price of 28 US dollars per gram. Producers who want to retain part of their gold proceeds in foreign currency have also been allowed to sell 60 percent of their gold at the going support price and 40 percent at the going international price, and retain the foreign exchange proceeds in their foreign currency accounts.

Zimbabwe is expected to realize a significant increase in foreign currency inflows and see a steady growth in the local mining sector following a sharp increase in the international price of gold to over 500 US dollars per ounce.

For the past two weeks, international gold prices have been hovering above 500 US dollars owing to increased investment in gold sales.

Before the recent increase, the price had only gone as high as 400 US dollars as investors concentrated on other commodities and minerals. This was expected to have positive spinoffs on Zimbabwe's mining sector which had been facing viability problems over the past few years.

Local gold producers would benefit from the arrangement, which has seen the gold producer price significantly rising in response to the firming international gold price.

Under standing regulations, the Reserve Bank of Zimbabwe's Fidelity Printers and Refiners are the only authority allowed to purchase gold from local miners at a price based on trends on the global market.

This means that the prevailing international gold price would be multiplied by the set exchange rate, a situation likely to see local miners benefiting enormously.

Local experts said the jump in the international price of gold is certainly going to have a positive bearing on the local mining sector which had at times been facing some viability problems but what this essentially means for Zimbabwe is that more revenue will flow into the country.

Some mines that had shut down operations are expected to reopen in the interim while those that have been facing serious viability problems are tipped to benefit from strengthened profit margins.

So far, a comprehensive list of the mines that are set to directly benefit from the price jump has not yet been compiled but the government has moved in to ensure that there are no leakages from the reopened shafts.

Gold is one of Zimbabwe's major foreign currency earners and although gold production in some areas remains high, huge quantities of the mineral are suspected to be illegally finding their way out of the country.

Fidelity Printers and Refiners, a wholly owned subsidiary of the Reserve Bank of Zimbabwe, surrendered all gold buying licenses by May 27, 2005 in a move aimed at curbing rampant illegal dealings.

Licenses were issued to gold dealers in 2003 in a measure designed to decentralize the buying of the metal to all producing centers.

However, some unscrupulous dealers have descended on gold- producing areas, especially Chimanimani, Kadoma and Chegutu among others, where panning is rife and have been offering prices higher than those paid by Fidelity Printers and Refiners.

In order to protect genuine gold-buying agents from unauthorized persons, Fidelity Printers and Refiners are withdrawing all current licenses.

The Zimbabwean government was working on strategies to curb gold smuggling syndicates that could be bleeding the country of billions of dollars in foreign currency.

The government urged various stakeholders to work on a blueprint to facilitate effective measures aimed at plugging gold leakages.

Among such measures is intensive monitoring, one step which is part of others that will be made known when the blueprint will be unveiled.

In order to allow for the free inflows of free funds in offshore markets, the government had also suspended the import tracking control numbers. Gold production is expected to decline from 21,330 kg last year to an estimated 15,869 kg this year owing to persistent foreign currency shortages, high inflation and low Zimbabwean dollar prices.

The mining sector contributes 35 percent to total foreign currency earnings, with gold being the highest foreign currency earner as a single commodity.

Source: Xinhua