Fidelity dangles incentive for gold

Fidelity dangles incentive for gold
Published: 14 May 2019 (119 Views)
Fidelity Printers and Refiners Limited (FPR) says it will pay an incentive for gold deliveries as government tries to ramp up output of the yellow metal.

In a statement, FPR, a subsidiary of the Reserve Bank of Zimbabwe (RBZ) mandated to buy gold on behalf of the State, said: "The incentive will be in the form of a gold support price of US$1 368,28 per ounce (US444 000,00 per kg). The gold support price and the duration of the facility will be reviewed from time to time."

Gold production in the southern African nation has been on a steady increase in recent years, but output was severely dented in the second half of 2018 when FPR started making part payments in the local bond note currency.

The payment arrangement saw a lot of the gold being sold on the informal market, while some of it was smuggled out of the country.

According to official data, deliveries to FPR during the first quarter of the year declined by 10% to 6,5 tonnes from 7,3 tonnes compared to the same period last year.

FPR said gold producers would continue to retain 55% of the price of gold delivered in US$.

"Under the current retention arrangements, all gold producers retain 55% of the price of gold delivered in their foreign currency accounts and the balance of 45% of their purchase price is paid in real time gross settlement dollars at the ruling interbank exchange rate," the government buyer said.

Officials still maintain an ambitious target of generating in excess of US$4 billion from mineral revenue up from US$3,4 billion earned last year driven by an anticipated growth in gold production.

Last year, the country's gold output reached an all-time high of 33,2 tonnes and authorities are targeting to increase production to 40 tonnes in 2019, but it remains highly unlikely given the slump in deliveries being recorded.

Gold generates over 60% of the country's export earnings together with platinum group metals.

- newsday

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