ZiG gets a boost: Govt zero-rates gold deliveries ...

ZiG gets a boost: Govt zero-rates gold deliveries to Fidelity Gold Refineries

Nyashadzashe Ndoro

In a bid to encourage more gold sales to Fidelity Gold Refineries, the government has zero-rated gold deliveries to the refinery, effective immediately.

This move comes after gold producers cried foul over a 15% Value Added Tax charge imposed by the Zimbabwe Revenue Authority earlier this year.

According to Statutory Instrument 105 of 2024, the Minister of Finance, Economic Development and Investment Promotion has amended the Value Added Tax (General) Regulations, 2003, to include a new section that zero-rates the supply of gold to Fidelity Gold Refinery (Private) Limited.

The move is expected to boost gold deliveries to the refinery, which had decreased by 5% in May compared to the same period last year. According to Fidelity Gold Refinery, gold deliveries for May stood at 2,734kg, down from 2,876kg in May last year. However, this represents a 15% increase from the 2,387kg delivered in April this year.

Large-scale miners delivered 1,056kg of gold in May, a 1% decrease from the 1,070kg delivered in May last year and a 9.6% decrease from the 1,168kg delivered in April this year. Smaller producers, who account for the majority of gold deliveries, sold 1,678kg in May, a 7% decrease from the 1,806kg delivered in May last year but a 38% increase from the 1,218kg delivered in April.

Despite firming gold prices globally, miners in Zimbabwe are facing rising production costs, which may impact the country's gold output. The southern African country expects to produce 40 tonnes of gold this year, up from the 30 tonnes produced in 2023. The increase in gold production is expected to boost Zimbabwe's foreign exchange earnings, as gold is one of the country's major export commodities.

However, reduced gold output may impact the amount of gold available to back Zimbabwe's new currency, Zimbabwe Gold, potentially weakening its value.

Gold production decreases, also due to higher production costs, leading to a decrease in Zimbabwe's foreign exchange earnings. This could impact the country's ability to import essential goods and services, potentially affecting the value of the currency, which is also backed by foreign currency.

The government's move to zero-rate gold deliveries to Fidelity Gold Refineries is expected to boost gold deliveries to the refinery and increase Zimbabwe's foreign exchange earnings.