Business

Mitigating Declining Mineral Revenue: The Resilience of Gold Prices

The resilience of gold prices is anticipated to offset the decline in mineral revenue amidst decreasing prices of platinum group metals (PGMs), nickel, and lithium.

Gold prices have remained stable, hitting a record high of US$2,195 per ounce this month, with gold and PGMs contributing to over half of Zimbabwe’s total government revenue.

According to the Mines and Minerals Act, miners are required to pay royalties on their output to the Zimbabwe Revenue Authority (ZIMRA), with specific guidelines outlined in the Finance Act.

While prices of key minerals like platinum, nickel, and lithium have been dropping recently, the stability in gold prices is expected to mitigate the overall decline in mineral revenue, crucial for the government’s finances.

ALSO READ: Increase in Salaries for Civil Servants in United States Dollars

Government data from the Zimbabwe National Statistics Agency indicates that tobacco, semi-manufactured gold, and nickel ores and concentrates were the primary exports in January, with South Africa, the United Arab Emirates, and China being the top destinations.

Efforts to boost gold production and meet the 40-tonne target set by stakeholders in 2019 include initiatives such as the gold mobilization exercise, establishment of gold service centers, and adoption of the Responsible Mining Audit Initiative.

Despite a drop in gold deliveries in 2023 compared to the previous year, small-scale miners maintained momentum, delivering a significant portion of the gold.

In response to the challenges, the government allocated funds to support small-scale miners and establish gold service centers. These centers provide various services to miners, aiming to enhance production and curb malpractices.

The decline in platinum prices has impacted the revenue of major producers like Zimplats, while nickel prices have fallen by over 40 percent this year. Lithium prices are also expected to decrease further due to increased supply and reduced demand.

Related Articles

Back to top button