Zim expelled from bullion market


HARARE - Zimbabwe has been expelled from the London Bullion Market Association (LBMA) after failing to meet the organisation's membership requirement, the Zimbabwean on Sunday learnt last week.

LBMA accreditation certifies the quality of gold sold by members who must produce a minimum of 10 tonnes per annum to maintain membership.

Sources said Zimbabwe lost its membership of the LBMA last year after successive years of declining gold output.

The country's bullion production nose-dived from 10 960 kilogrammes in 2006 to 3 072kg last year – a massive 40 percent drop in two years.

The loss of LBMA membership means we are no longer among the elite group of gold producers in the world and have forfeited the benefits derived from trading on the London bullion market, a senior mining executive told the Zimbabwean on Sunday.

The LBMA website said Fidelity Printers and Refiners was expelled from the association on 30 June 2008 and listed the Zimbabwean company among refiners whose bars are no longer accepted as Good Delivery by the London Bullion market.

Fidelity's expulsion from the LBMA was one of the reasons behind the decision by Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono to allow Zimbabwean producers to sell gold directly to international buyers.

A directive issued by the RBZ in February set out revised export procedures for gold produced in Zimbabwe, under which gold producers were for the first time allowed to make individual arrangements for the refining and sale of gold.

Gold producers are also entitled to receive a price based on that prevailing on the international bullion market, thereby removing the historic surrender requirements to the RBZ.

A subsidiary of the RBZ, Fidelity was until now the sole authorised buyer and exporter of gold in Zimbabwe.

Fidelity would do all the refining and take 7.5 percent of all gold produced.

Gono did not reveal the loss of LBMA membership when he announced that producers could start selling gold directly to offshore clients in January.

The LBMA is the London-based trade association that represents the wholesale over-the-counter market for gold and silver in London.

The work of the Association encompasses many areas, among them refining standards, good trading practices and standard documentation.

News of the loss of Zimbabwe's LBMA membership comes at a time President Robert Mugabe's government has targeted foreign-owned mines for nationalisation in a controversial black economic empowerment initiative to benefit the ruling elite and their supporters.

Output has more than halved since the country's economic crisis began in 2000.

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