Zim posts record gold production
In the outlook, exports are projected to sustain a positive growth trend to reach US$7.9 billion in 2025 underpinned by growth in PGMs, lithium and agriculture exports. — Ministry of Finance, Economic Development and Investment Promotion
The country’s gold production reached a record 36,48 tonnes in 2024, a 21 percent surge from 30,1 tonnes recorded in 2023, according to Fidelity Gold Refineries, Zimbabwe’s sole buyer of the precious metal. This impressive output not only exceeded the Government’s target of 35 tonnes annually, but also surpassed the previous record of 35,3 tonnes set in 2022.
According to data released by Fidelity Gold Refineries, this surge in production is a positive indicator of the sector’s growth. The month of October 2024 marked a particularly noteworthy achievement, as it recorded the highest monthly output of the year, totalling 4,3 tonnes, closely followed by December, which had a production level of 4,2 tonnes.
This boosted the fourth quarter production to reach 12,2 tonnes, which was the highest quarterly production in the year, followed by 10,4 tonnes recorded in the third quarter of 2024. Increased mining activities by artisanal and small-scale miners played a significant role as they recorded a 27 percent rise in deliveries and an 11,4 percent growth from primary producers.
Cumulatively, small-scale producers as usual produced 23,7 tonnes of the gold while primary producers produced 12,7 tonnes. In 2023, the performance of smaller mining operations had been impacted, with sales declining by 23 percent due to delays in payments from Fidelity Gold Refineries.
However, in 2024, the situation improved as Fidelity made prompt payments to the miners, and the removal of VAT on gold sales mid-year, also acted as a strong incentive for increased production. A favourable market environment, characterised by a 27 percent increase in gold prices during 2024, also encouraged miners to expand their operations, making gold mining more profitable than in previous years. Among the prominent primary gold producers in Zimbabwe was Kuvimba Mining House, Caledonia and Dallaglio, all of which demonstrated impressive production levels over the year.
Dallaglio, in particular, reported a 22 percent increase in gold sales during the nine-month period ending September 30, 2024, with production rising to 2 025 kilogrammes, a notable increase from 1 665 kilogrammes in the same period the previous year. Dallaglio has strategically directed much of its capital expenditure towards its Pickstone Mine, which is in the process of transitioning from an open-pit operation to an underground mining method aimed at boosting production capacity.
The company’s production target for the end of 2024 was set at 2 643 kilogrammes while Caledonia anticipated a full-year output of approximately 2 200 kilogrammes, and Kuvimba Mining House had a target of 3 500 kilogrammes. “This growth is attributed to increased mining activities by artisanal and small-scale miners, prompt payments for miners and favourable gold prices. “Several factors underpinned this growth and this include continued implementation of supportive policies, favourable prices and enhanced regulatory frameworks.
“Introduction of five percent gold incentives to artisanal and small-scale miners that sold 10kg of gold or more also drove deliveries,” said Zimbabwe Miners Federation (ZMF) chief executive officer, Mr Wellington Takavarasha. Said economist, Dr Prosper Chitambara: “It is generally a very positive development for the economy, not just in terms of current sustainability, given that the Zimbabwe Gold currency is anchored partly by gold, but also it is positive in terms of current account sustainability and also the overall macroeconomic stability.
“And we are expecting that increase in production, I think, to continue, not only given the incentives that authorities have put up, but also given the pricing itself. The price of gold has actually been very stable and increasing, in fact. “So yes, that is a very good incentive for gold-producing countries or for gold producers in general. So, I would say the situation has been very, very favourable for enhanced gold production and obviously the outlook is quite positive.”
This increase in gold deliveries could have significant positive implications for Zimbabwe’s foreign exchange earnings, a crucial aspect for the country’s economic stability and growth. Looking ahead, the Government is expected to maintain a supportive regulatory framework for the mining sector, reinforcing its vital role as an essential pillar for economic development. The surge in production for 2024 is anticipated to solidify the positive trend initiated by recent legislative and economic reforms.
Nevertheless, challenges remain on the horizon, particularly concerning rising production costs, with energy expenditures posing a significant concern for miners. A recent survey conducted by the Chamber of Mines of Zimbabwe late last year highlighted that miners are paying an average of USc14,21 per kilowatt-hour, with peak tariffs reaching approximately USc19 per kilowatt-hour.
During instances of power outages, miners often turn to expensive diesel generators, incurring costs that can exceed USc30 per kilowatt-hour, further stressing their financial viability.
Source: https://www.herald.co.zw/