The Chamber of Mines of Zimbabwe (CMZ) says the country will not be able to achieve its gold production target of 15 t this year owing to power cuts, high power costs and royalty charges and labour unrest across the mining sector.

Zimbabwe has set itself a gold production target of 15 t in order to be readmitted to the London Bullion Market, after more than five years of suspension as a result of the collapse of the sector.

Says CMZ gold producers association chairperson Ian Sanders: “Gold production is falling and will continue falling. It is most likely that we will miss the target of 15 t this year. It could actually be worse if one or two producers close
down. We have deep structural issues that are affecting gold mining in this country.”

He says the major problems stifling gold production include unreliable power supplies and high power tariffs, which, he says, are 60% higher for the mining industry than for other sectors.

The Zimbabwe Electricity Supply Authority charges up to $14/kWh for dedicated, uninterrupted mine power supplies.

Gold producers say the 7% royalty levied on gross gold proceeds increases their costs.

Besides the royalties, gold producers pay additional taxes to the Minerals Marketing Corporation of Zimbabwe, the Environmental Management Authority and the Zimbabwe Revenue Authority.

Artisanal miners have not been spared, with the Zimbabwe Artisanal and Small Scale Miners Council reporting that production by small-scale miners slumped to 959 kg in 2013, compared with a peak of 17 t in 2004.

The small-scale miners say the decline in production is the result of factors that include operational incapacitation owing
to the liquidity crisis and a lack of supportive government policies.

The council has also identified gold smuggling, an unsafe operating environment and a lack of compliance with legislation as some of the problems contributing to the decline in gold production.

According to figures from the Ministry of Mines and Mining Development, gold production fell by 26% – to 6 t – between
January and July.