Foreign-exchange shortage hamstrings Zimbabwean gold producers

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Harare — Zimbabwean gold producers may suspend operations because a foreign-exchange shortage has left them with insufficient funds to cover production costs, the main industry lobby group said.

Curbing output would deprive the country of a key source of export earnings as finance minister Mthuli Ncube tries to stabilise an economy wrecked by the misrule of former leader Robert Mugabe.

Zimbabwe’s mining industry is facing “severe viability challenges” because of the shortage of hard currency, the Gold Producers Committee, an affiliate of the Chamber of Mines of Zimbabwe, said in a report to be submitted to the central bank.

Producers are  allowed to retain only 30% of the proceeds of gold sales, which is not  adequate to cover the cost of mining the metal, it said.

“If this situation is not addressed the majority of (gold) mining houses, whose going concern have been undermined, may find it impossible to continue in production,” the committee said. It proposed allowing mineral producers to retain a larger share of the proceeds from metal sales.

Zimbabwe is projected to produce 30 tonnes of gold in 2018, up from 24.8 tonnes last year. The metal is Zimbabwe’s second-biggest export, after tobacco, according to World Trade Organisation data.