Zimbabwe’s gold production soars following tax relief

MONTH-on-month gold output by artisanal and small-scale miners spiked by 50 percent in August this year to 2,4 tonnes, probably spurred by the recent removal of the Value Added Tax on gold deliveries.

The tax was scrapped through Statutory Instrument (SI) 105 of 2024 following a stakeholder engagement between the Government and players in the mining industry in July.

According to Zimbabwe’s sole buyer of the yellow metal, Fidelity Gold Refinery (FGR)—artisanal and small-scale miners during the period under review delivered 2,4 tonnes up from 1,6 tonnes in July this year.

Traditionally, artisanal and small-scale miners deliver at least 60 percent of the country’s gold output.

Large-scale producers in August also improved production to 1 000 kilogrammes.

“We can attribute the sharp increase in gold deliveries to the reversal of the 15 percent VAT on gold deliveries, so the miners have been sort of incentivized.

“Going forward if there are no any other challenges such as electricity challenges, we are likely to see the miners sustaining increased production and the 40-tonne target, though it’s still too early to comment about it, may be achieved,” an economic commentator Ms Wendy Mpofu, said in an interview over the phone.

The Chamber of Mines of Zimbabwe is on record stating that prior to the scrapping of the 15 percent VAT on gold, the policy was promoting side-marketing of the precious mineral.

Miners could also be taking advantage of high Gold prices to ramp up production. The gold price hit US$2,531.70, its all time highest price at the time of this writing, on August 20, 2024. This rally is not merely a temporary trend; industry experts suggest it has the potential to extend further.

Overall, gold deliveries in August increased by 36 percent to 3,4 tonnes compared to 2,5 tonnes in July this year.

This latest increase follows a strong performance in the second quarter of this year where gold deliveries improved by over 28 percent compared to the prior quarter.

Total gold output in the second quarter amounted to 7,7 tonnes up from 6 tonnes in the first quarter.

Gold is the country’s largest single export earner from which the Government targets 40 tonnes this year from 30,1 tonnes in 2023.

By next year, the yellow metal is expected to generate US$4 billion from around US$3 billion currently.-ebsinessweekl