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Harare on track to rejoin Bullion market



HARARE - Zimbabwe remains on course to be re-admitted into the London Bullion Market Association (LBMA) after year-on-year output to November 2012 surged by seven percent to 12 422.43 kilogrammes (kg).

The country seeks re-entry into LBMA after it was disqualified in 2008 when production dropped to an all-time low of three tonnes, a figure far below the mandatory annual production of 10 tonnes required by the prestigious market.

The upsurge is driven by improved productivity in the gold mining sector and firming international prices.
Government has projected the output to rise to 15 tonnes.

The country’s gold sector, which reached an all-time high of 29 000 kg in 1999,  is gradually recovering from a decade-long economic crisis that hit rock bottom in 2008 as hyperinflation reached 500 billion percent, and causing mine closures.

The LBMA is a wholesale market for the trading of gold and silver.

Trading is conducted among members of the LBMA, overseen by the Bank of England.

Most of the members are major international banks or bullion dealers and refiners.

Five members of the LBMA meet twice daily to “fix” the gold price in a process known as the London Gold Fixing.

Zimbabwe’s ouster followed numerous production problems, financial constraints, a worsening power crisis and the non-payment of a huge debt owed to producers by Fidelity Printers and Refineries, a Reserve Bank of Zimbabwe subsidiary, which, at the time, was the sole buyer and exporter of gold in the country.

The African Development Bank (AfDB), however, believes more investment is needed in the sector if Zimbabwe is to attain the 15 tonnes mark.

“To date gold producers have delivered 83 percent of the targeted output of 15 tonnes. The target for the year is not likely to be attained, however, given that the average monthly deliveries stood at 1 129,312kg per month,” said AfDB in its monthly economic report.

For the month of November 2012, gold deliveries by primary producers grew by 12,6 percent to 866,57 kg from 769,29 kg in 2011.

But, deliveries by small-scale miners declined by a significant margin of 30,04 percent from 348,15 kg to 246,56 kg, contributing to the 0,65 percent decline in total gold deliveries for the month of November 2012.

It is believed that the mining sector requires $10 billion in the next five years to recover. Currently, the mining sector is contributing 13 percent of the gross domestic product.

Over the years, gold has fallen behind platinum and diamonds in terms of contribution to Zimbabwe’s mineral exports, due to chronic under investment in new technology and geological knowledge.

Industry experts say the new and more favourable monetary climate creates the opportunity for the gold mining industry to catch-up on modern exploration and mine development techniques, which are expected to boost production.

Historical surveying and gold production records indicate potential for Zimbabwe to reclaim its position as one of Africa’s leading producers.

Canada-listed New Dawn Mining and Caledonia Mining, as well as the London-listed Mwana Africa and South Africa’s Metallon Gold are some 0of the major gold producers in the country. – Daily News