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confidentially speaking

The Africa Confidential Blog

  • 3rd December 2020

Zimbabwe's gold rush

Blue Lines

For a government so desperate to boost foreign currency reserves, Zimbabwe's gold industry should be a cash cow, especially with spot prices up to around US$2,000 an ounce, boosted by the uncertainty of Covid-19.

Official gold exports fell 23% to less than $700 million, according to the Reserve Bank. But an estimated $1.5 billion of gold is smuggled out every year, according to a new report by the International Crisis Group. The politically charged case of Henrietta Rushawaya, the suspended President of the Zimbabwe Miners' Federation, arrested for gold smuggling at Harare airport is slowly making its way through the courts. She has denied all charges and says she is in business with President Emmerson Mnangagwa's family.

Miners complain that the country's centralised gold-buying scheme underpays them by forcing them to accept 30% of the payment in local currency, at an exchange rate well below the free market. The ICG report agrees, contending that the law 'encourages smuggling and erodes industrial mining profits, leading companies to close mines.' Payments to small-scale miners are considerably lower than the spot price of gold.

'Idle industrial mines become targets for intrusion by artisanal miners,' the ICG found. The result has been a surge in attacks by politically connected gangs. Such attacks and dangerous working conditions in the artisanal mines have killed dozens of miners in recent weeks.