MUTARE- A study by the Southern African Resource Watch (SARW) has laid bare how state institutions including the Reserve Bank of Zimbabwe (RBZ) are being used to rob artisanal and small-scale miners of their gold.
This study gives an account of how RBZ, since the Fidelity Printers and Refineries (FPR) 2014 gold buying monopoly, together with state institutions serve private interests, robbing half a million artisanal and small-scale miners of their gold in Zimbabwe.
The SARW, study ‘Artisanal Miners Robbed in Broad Daylight: Zimbabwe gold monopoly as a conduit to canalise forex and cannibalise bodies’, says while gold has ‘become the springboard for most of Africa’s industrialization, the social costs have been exploitative.
The study show that Dubai’s gold trade (estimated to be worth $75-billion a year) refines more than 40 per cent of the world’s gold which is often exported to Switzerland, provides a major commodity market shielded from examination and legal oversight.
Zimbabwe faces macro-economic challenges of massive inflation, currency upheaval, constant energy shortages, which triggered a process of de-industrialization, GDP shrinkage, unemployment up to 80% and a massive exodus of the country’s own residents.
The country has become heavily reliant on the bullion, in 2019 alone gems, precious metals accounted for 32.9 % of total exports amounting to US$1.4 billion.
In 2018 large producers delivered about half the value that small miners delivered, where SARW says a loss of $277 million is evident when factoring export volume and value to revenue, value earned from total tonnage.
The United Arab Emirates (UAE) in 2018 accounted for more than $600 million per annum of Zimbabwean gold exports – over 50 per cent of the country’s total export, where ‘at least 6931 tonnes formally received has disappeared’, in the first year of trading with UAE.
“Gold exports show a pattern of being sold at lower median pricing rather than at higher pricing, indicating a potential loss of $1000 to $3000 per tonne across multiple years.
“Substantive discrepancies can be perceived across all years – for example, figures for the years 2015 (1563 tonnes valued at $65.6 million), 2016 (1973 tonnes at $80 million, 2017 (4595 tonnes at $183.8 million) and 2019 (4080 tonnes at $200 million) when added to 2018 data reveals a minimum discrepancy of $800 million,” reads part of the report.
SARW also fingers the Afreximbank, for its financing role in ‘Zimbabwe’s empty surrogate-currency’ trading on the black market at a vast deficit to the United States dollar – a deal backed by gold on unknown terms.
It says this was made possible because the FPR also assumed ‘essential roles which would ordinarily fall under the control of the Ministries of Finance and Mines’ and provided leeway for gold to be secretively utilized as collateral for debt extended by Afreximbank.
SARW said this was gleaned through ‘press releases such as Afreximbank’s $600 million loan extended in 2017 to the Reserve Bank speak opaquely of the “financing of trade-related transactions” supported by “export proceeds including gold.”
Afreximbank declined to answer specific questions involving clients, collateralization of resources, and other details involving $8 billion in loans to Zimbabwe, said SARW.
“In 2013, before the gold monopoly, the country formally recorded 14 001 kilogram…by 2018, it reached pre-crisis levels of more than 35 042 kilograms. But this rapid turnaround in accumulated volume was not due to an increase in corporate production, efficiency by the state or fair dealing.
“…The state deepened financial opacity and control by strategically canalising the hungry and desperate will of Zimbabwe’s artisanal miners who were the producers of such output.
“…Under pressure to source forex, we find the emergence of a state scheme to milk the country’s 500 000 small-scale and artisanal miners. These independent, ‘unofficial’ and unprotected miners constitute a very significant source of production…
“The lack of transparency and the manipulation of the gold price by the state monopoly has cost more than 500 000 small-scale and artisanal miners dearly,” reads part of the report.
SARW said instead of reducing illicit trade in gold the FPR replicated the same scheme, bought gold for less prices compared to international market and by giving local currency, actively swindled artisanal and small scale miners.
“FPR replicated techniques of the ‘informal’ (illicit) market to integrate gold already being extracted by miners operating outside the formal system; by paying a far lesser amount (as much as 30 per cent) for the same volume of gold than offered by informal buyers; by compounding such loss through the Reserve Bank’s retention strategy to partially pay sellers using local currency (until mid-2020) and delaying payment in foreign currency
“In addition, FPR declined to provide lists or details of enterprise names, jurisdiction, private external turnover and debt. This extreme legal and financial secrecy works in tandem with Dubai’s hosting of the world’s only cash-for-gold market, where refiners can buy gold using only a receipt, thus eliminating origin on export,” read part of the report.
