Zimbabwe’s gold mines are dusting themselves off after the unity government deregulated the industry, ending a two-decade state monopoly on buying the precious metal after years of plunging production.
Gold remains one of Zimbabwe’s top exports, but output has tumbled as miners complained that the Reserve Bank — the only authorized buyer for 21 years — offered unfair prices and then delayed payments or failed to pay.
Mining operations have also been hamstrung over the last decade by nationwide power cuts and severe shortages of foreign currency, needed to buy and maintain equipment.
That’s been slowly changing since the unity government between long-ruling Zimbabwean President Robert Mugabe and his one-time rival, Zimbabwean Prime Minister Morgan Tsvangirai, deregulated the industry in March.
Now miners are allowed to market their gold freely and to retain all their earnings, whereas previously the Reserve Bank pocketed a percentage.
“During the first three months of the year nothing was happening in the gold mining industry, but there is renewed confidence and optimism in the gold mining sector since the deregulation,” Chamber of Mines chief executive officer Joseph Malaba said.
“There is increased output when compared to the start of the year when there was nothing,” he said.
No gold was lodged for sale in the first quarter of the year, but in April and last month miners brought in 600kg, the chamber said.
Last year the country produced only 3,576kg of gold — compared with a peak of 27,108kg in 1999.
Some miners are selling their gold through the chamber. Other firms are exporting directly to South Africa, and local banks have also indicated their interest in becoming gold buyers.
Blanket Mine, which shut down last year, resumed operations in April and expects to produce 680kg by September this year.
The mine, owned by Canada’s Caledonia Mining, has so far sold 21.7kg of gold to Rand Refineries in South Africa.
The president and chief executive officer of Caledonia, Stefan Hayden, said he hoped there would not be a policy shift by the government.
“Provided a stable operating and monetary environment is maintained in Zimbabwe, it is hoped that commercial lending activities can resume which will allow Blanket to realize its next operating goal of becoming a 40,000 ounce [1,134kg] per annum gold producer in 2010,” he said.
Turk mine, owned by Canada’s New Dawn Mining, has returned to full operations and plans to produce at least 32.6kg of gold by October.
The uptick gives a glimmer of hope in a country desperately searching for signs of a turnaround in a once-vibrant economy that collapsed over the last decade under world-record hyperinflation that impoverished the country.
Since joining the unity government, Tsvangirai has pledged to rebuild the economy in a nation where unemployment is at 94 percent and half the population depends on international food aid.
He will ne embarking on a foreign tour this week to convince Western donors to open their pocketbooks despite their reservations about Mugabe.
Zimbabwe says it needs US$8.5 billion over three years to revive the economy and the civil service, including schools and hospitals, but has yet to win major direct aid to the government.
Reviving key industries like gold mining would help Zimbabwe earn more revenue itself, if it can keep policy on a steady course.
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