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Zimbabwe gold support review to boost delivery

The recent review of gold support price in Zimbabwe to $700 million per gram up from $100 million is a stimulant to the mining sector.

According to the Reserve Bank of Zimbabwe, the country's gold output declined by 38% from 10.9 tons in 2006 to 6,8 tons in 2007.

Experts say lack of substantial funding and gold price disparities was contributory to the decline.

These factors among others, they say, promoted the side marketing of minerals.

Gold price reviews were taking too long and thus being swiftly eroded by the inflationary environment.

Stakeholders in the sector interviewed by Herald Business said that the price review was a landmark development for the sector, adding that the central bank should implement monthly reviews to sustain the impact of inflation and contain side marketing of the precious mineral.

Zimbabwe National Chamber of Commerce senior executive Douglas Verden said, “Gold support price review should be done in line with the inflation rate to ensure a meaningful effect.”

He said monthly review would be ideal to beat the effects of run-away inflation.

Zimbabwe Confederation of Miners Association president Rangani Chauke echoed the same sentiments saying the prices offered were taking long to be reviewed and was seriously affecting production.

Zimbabwe Miners Federation chief executive Wellington Takavarasha was upbeat by the commitment shown by Reserve Bank saying this would go a long way in redressing the challenges in the gold sector.

Confederation of Zimbabwe Industry president Callisto Jokonya said the price review was commendable suggesting that it was better for miners to be paid in foreign currency.

Meanwhile, gold was pegged at $700 million per gram at the parallel market as of last week.

The gold price has reached an all-time high of $904.6 per ounce on the international market, gaining 7.9% this year as the US dollar fell almost 2% against the euro.

Mining contributes 4% of the Zimbabwe's Gross Domestic Product. (allAfrica)