Gold producers are now re-starting production after new rules allowed
them to sell gold directly to the world markets but uncertainty over
ownership laws is likely to keep big mining houses away from exploring
the country’s rich mineral deposits.
Chamber of Mines President, David Murangari, said the entire mining
sector was struggling due to lack of capital to re-start and increase
production.
"The major challenge to the mining sector at the moment is financing
needed to resume production as well as re-start exploration and
development of new deposits. This is particularly so for gold mines,"
Murangari said in an email in response to questions from Reuters.
Murangari said gold output between January and April this year stood at
335 kg, down from 1,407 kg during the same period in 2008.
Gold production for the whole of last year hit a record low of 3,072 kg
from 6,798 kg in 2007. At its peak, Zimbabwe produced an average of
2,400 kg of gold a month.
Gold contributes one-third to Zimbabwe’s dwindling export earnings
since the collapse of commercial agriculture after President Robert
Mugabe’s government started in 2000 forcibly taking land from white
farmers to resettle blacks.
Miners have since 2002 struggled with a political and economic crisis
and foreign currency shortages, forcing mines to shut down while
skilled labour flocked to neighbouring South Africa and as far as
Australia.
But gold producers now want to re-open their mines after Zimbabwe’s
central bank in February relinquished its role as sales agent for gold,
allowing firms for the first time to sell the metal and keep all the
proceeds.
The country’s biggest gold producer, Metallon Gold, London-listed Mwana
Africa and Canada’s New Dawn Mining Corp, have plans to re-open their
mines within months.
Formed in February, Zimbabwe’s new unity government of Mugabe and his
main political rival Morgan Tsvangirai ended a long period of
uncertainty and this has buoyed investor interest in mining, Murangari
said.
"There are several enquiries from new investors interested in investing
in the mining sector. This is more so after the formation of the
inclusive government," he said.
"The formation of the inclusive government should help encourage
investment in the mining sector as this builds confidence in the future
stability of the country."
But existing gold miners are still owed millions by the government for their past gold deliveries, Murangari said.
"A final decision (on this issue) is needed from government to assure
investors who are appearing hesitant to put new money to resuscitate
the gold sector," he said.
Mineweb/Reuters
Post published in: Economy