Monday, 10th July 2006 (3138 views)

According to the Zimbabwean Chamber of Mines (CoM), an uncompetitive exchange rate for gold could see the industry going bust in the troubled African nation unless the government intervenes.

Officials from the CoM have appealed to the Mugabe administration to release the precious metal from its fixed rate of Zim$2.5 million per gram to reflect the rising costs of production in the current gold industry.

The Central Bank of Zimbabwe has so far resisted calls for a review but the CoM says that urgent action is needed to avert a crisis in what is the chief industry for Zimbabwean foreign currency earnings, bringing in approximately one-third of the annual total.

"Gold production volume has been declining since 1999," the CoM said in a letter to the Central Bank. "Production for the first four months of 2006 at 3,725.25kg is 32.14 per cent lower than that of the same period last year.

"While the Chamber of Mines has repeatedly advised the relevant authorities of the need to liberalise gold trading arrangements in line with other exporters, these calls have not received any consideration and production [has] continued to fall."

The CoM argues that gold is a "reserve asset" and so should be given "favourable conditions" in which to operate otherwise the industry, and potentially the entire national economy, could be under threat.

 

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