RBZ bid to boost depleted gold reserves (26-07-07)

IN a bid to curb side marketing and boost the country's depleted gold reserves, the Reserve Bank of Zimbabwe has hiked the gold support price by over 750 percent.

In a statement, RBZ governor,Gideon Gono said producers will get Z$3 million per gram compared to Z$350 000 wh

ich they were getting since his last monetary policy in April.

Gono said the new price, which will be back-dated to the first of July,was effective immediately and
urged producers to start delivering their produce to the central bank.

“As a country,our gold production levels have lately fallen victim to escalating operating costs, as well as elements of indiscipline, side-marketing and smuggling.

“Against this background of escalating operating costs, it has become imperative that the current gold support price be further enhanced”, Gono said.

Deliveries of the precious metal, which is the main source of hard currency for the economically embattled southern African country and accounting for a third of its export earnings, had dwindled to less than 10 percent of government expectations owing to distorted pricing policy.

The increase follows after the country’s Chamber of Mines warned that gold producers were operating below 20 percent capacity and that some had suspended operations due to, among others, the gold support price which they felt was uneconomical.

Although the central bank is the sole authorised purchaser and refiner of gold in Zimbabwe, producers were seen to be resorting to side marketing,famous for its lucrative prices.

This saw gold deliveries to the central bank maintaining a steady decline since the beginning of 2007,with the chamber of mines projecting that output was expected to be about 8 700 kg this year,a huge drop from the 11 tonnes produced last year.

Among other problems,Zimbabwe’s gold producers have been hit hard by the hyper-inflationary pressures,foreign currency shortages, lack of fuel, massive power cuts and exhorbitant prices of spare parts and equipment.

Gono pleaded with producers to unite in the fight against forces suspected to be aimed at undermining the survival of the gold industry.

“As monetary authorities, we call upon the gold industry to unite and come up with innovative ways of countering the predatory practices by middle dealers in inputs and consumables in the gold industry.

“What we have noted with serious concern is a callous pattern whereupon each enhancement in the gold support price triggers a wave of unjustified increases in these dealers’ prices and charges.

“It is, therefore, upon the gold industry to unite as one force to dismantle the predatory monopolies and cartels in their input supply chain, through pooled procurement of their inputs”-CAJ News.

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