Zimbabwe’s Gold Output Drop Threatens ZiG Currency Stability

Decline in Gold Production Raises Concerns for Economic Stability

by Ikeoluwa Ogungbangbe

In the first quarter of 2024, Zimbabwe’s gold output fell by a worrying 1.9%, raising serious concerns about the stability of the recently launched Zimbabwe Gold (ZiG) currency, which is backed by gold. Concerns have been raised by the Reserve Bank of Zimbabwe and the larger economic community, which mainly depends on gold to support the newly emerging currency, which was resurrected from the ashes of the now-defunct Zimdollar that was destroyed by hyperinflation. This decline in gold production is mainly the result of massive gold leakages.

The Ministry of Mines and Mining Development launched a nationwide drive to mobilize gold in all nine mining regions of the nation as a decisive measure to counter the loss and stabilize the currency. “We have sent out fifteen teams to lead the gold mobilization exercise for the first quarter of this year,” stated Mines and Mining Development Minister Winston Chitando during the launch event.

By providing Fidelity Gold Refineries (FGR) with the most recent gold delivery numbers, Minister Chitando brought attention to how serious the issue is. “We have delivered 8.4 tonnes of gold to FGR between January and April of this year, falling short of our 40 tonnes annual goal. Compared to the 8.57 tonnes provided over the same period in 2023, this represents a modest drop,” he said. For Chitando and Polite Kambamura, his deputy, the stakes are quite high because their jobs depend on their ability to obtain enough mineral backing for the ZiG currency.

The ministry has put in place a number of initiatives to support small-scale mining businesses, which have historically made a substantial contribution to the nation’s gold production. “We are setting up gold service facilities, with the first one in Makaha, Mashonaland East province, now complete,” Chitando said. These centers aim to support small-scale miners by providing necessary resources and technologies to enhance production.

Small-scale miners’ participation has drastically decreased in spite of these efforts. According to Chitando, “small-scale miners’ deliveries of gold to FGR have decreased by 23% this year, from 5.2 tonnes in 2023 to merely 4 tonnes in 2024.” Their share of total deliveries decreased from 60% in 2023 to roughly 48% in 2024 due to this worrying trend, indicating the urgent need for investigative and corrective measures.

Large-scale miners, on the other hand, have demonstrated a strong growth in their gold output; in the first four months of 2024, they sent 4.3 tonnes to FGR, a 26% increase from 3.4 tonnes in the same time in 2023.Projects for expansion and the implementation of cutting-edge technologies, like bioleaching,” said Chitando, underscoring a silver lining amid the challenges.

The minister also addressed the broader implications of mineral leakages, which not only affect the availability of gold but also deprive the government of crucial revenue from taxes and royalties. “It’s important that we work together to ensure every ounce of gold extracted contributes to the national good,” he urged.

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