Zimbabwe doubles gold prices

Zimbabwe doubles gold prices

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By MacDonald Dzirutwe

ZIMBABWE'S central bank has more than doubled the local price of gold in a bid to shore up official deliveries, which plunged by 40% last year, local media reported Tuesday.

Gold is a key foreign currency earner for Zimbabwe’s struggling economy and accounts for about 52% of total mineral production and a third of export earnings.

But the sector has been hit by mine closures in the last five years, as operating costs soared in a recession marked by triple-digit inflation and shortages of fuel and foreign currency.

Zimbabwe gold producers surrender their gold to sole purchaser and refiner, Fidelity, a wholly owned central bank firm, and are paid mostly in Zimbabwe dollars.

Under the arrangement, they get only 40% in hard currency.

Gold deliveries fell to 13,000kg last year from 21,300kg the previous year with the central bank saying the mineral was finding its way to the black market, where earnings are higher and subsequently smuggled to neighbouring countries.

The official Herald newspaper said gold now fetched 2,5 million Zimbabwe dollars ($25,20) per gram, up from 1,2 million.

This compares with more than 2,7 million Zimbabwe dollars on the black market.

The central bank could not be immediately reached for comment.

"This is a good development and we hope it will promote more deliveries to Fidelity Printers and Refiners who are the established producers," David Murangari, Chamber of Mines chief executive told the Herald.

Gold miners have complained that they have suffered from delays by the central bank to adjust the local price of gold at a time when inflation is spiralling. Annual inflation raced to a new 782% record in February from 613,2 in January - Reuters
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