FPR unbundling to drive gold industry
THE Zimbabwe Environment Law Association (ZELA) says plans by the Government to unbundle Fidelity Printers and Refiners (FPR) has potential to improve local beneficiation and investments in the gold sector.
FPR is in the process of being unbundled into two business entities, namely gold refining under Fidelity Gold Refinery and printing and minting under the Printing and Mining Company of Zimbabwe (PMCZ).
“Furthermore, by allowing private companies to be part of the gold refinery process, the country stands a good chance to comply with the London Bullion Market Association (LBMA),” Zela said in a statement.
In terms of the unbundling structure, the RBZ will retain 40 percent shareholding in Fidelity and dispose of 60 percent shareholding to both the large scale and small-scale gold producers, based on the volumes of each individual’s deliveries.
Cumulatively, 50 percent of the shareholding will be offered to primary gold producers while three percent will be offered to main FPR gold buying agents and the balance of seven percent to small scale producers through their representative bodies such as the Gold Producers Association and the Zimbabwe Miners Federation (ZMF).
While presenting the Mid Term Budget Review last month, Finance Minister Professor Mthuli Ncube said the government was moving ahead with its plans to cede its controlling stake in FPR.
Zela’s works cuts across different environmental sectors such as mining, forest management, wildlife management services and urban agriculture, among others. The country lost its LBMA membership in 2008 after it failed to meet the prerequisite gold production levels and for it to be re-admitted into the LBMA, it needs to be producing 10
tonnes of gold per year.“Basing on FPR’s gold production and deliveries for the past few years, it is now very easy
for the country to re-join the LBMA. The Government should be persuaded to get readmitted into the LBMA as this will attract international investments,” Zela said.
It added that officially, FPR sells its gold to international markets mainly through South Africa and Dubai refineries.
However, Zela noted that the value Zimbabwe gets from selling its gold to Rand Refineries in South Africa is lower than the value that it would get if the gold export stocks were to be sold directly to LBMA and one of the major reasons is that these refiners charge for the refinery process which they do on the country’s gold exports.
Zimbabwe is targeting to produce 100 tonnes of gold per year by 2023, which is part of a drive to achieve a US$12 billion mining industry by that time.
Of the US$12 billion, gold, platinum diamonds will contribute US$4 billion, US$3 billion and US$1 billion respectively. Chrome, iron ore and carbon steel will contribute US$$1 billion while coal and hydrocarbons will contribute the same. Lithium at US$500 000 while other minerals will constitute US$1,5 billion.
Zela also indicated that the Government should also consider making it mandatory for all shareholders who are going to take up equity in FPR to list on the Zimbabwe Stock Exchange (ZSE) or the Victoria Falls Stock Exchange (VFS).
It said this will open a window for citizens to hold the companies to account on mineral revenue transparency since companies will be expected to publicly disclose their Environmental, Social and Governance (ESG) information in line with international best practices.-ebusinessweekly.czw
