After taking gold as royalties, RBZ builds reserves of 793kg

Gold bullion at Fidelity: RBZ seeks to build reserves

By Godfrey Marawanyika

Zimbabwe’s central bank accumulated 793 kilograms of gold reserves since introducing a law that compels mining companies to pay part of their royalties using the metal.

The reserves were collected after mines produced 30.1 tonnes of gold last year, compared with a record 35.3 tonnes a year earlier, Reserve Bank of Zimbabwe Governor John Mangudya said on Tuesday. The build-up comes as the authorities consider using gold to back the nation’s battered currency to end persistent exchange-rate instability.

Zimbabwe’s finance ministry introduced the royalties measure in September 2022 to help build the nation’s mineral reserves. Apart from gold, Zimbabwe has the world’s third-largest reserves of platinum, and also mines diamonds, nickel, chrome, lithium and coal.

Gold plans

Gold is one of the country’s biggest exports, but the country has not kept any in reserve in recent years. In his 2024 national budget, Finance Minister Mthuli Ncube said he would appoint agents to collect minerals on behalf of banks.

“Financial institutions have encountered challenges in collecting mining royalties in kind, since they require physical collection, security, insurance, and expertise on valuation,” Ncube said.

Earlier this week, Ncube said Zimbabwe could soon link the Zimbabwe dollar to gold, as part of reforms to shore up the currency. However, at current prices, the gold reserve built so far is worth just US$50 million.

South Africa, one Africa’s biggest gold producers, has 125.3 tonnes of gold reserves, worth US$8.3 billion. Ghana, the continent’s leading producer, has 8.74 tonnes. In 2022, Ghana started compelling gold producers to sell part of their output to central bank. Ghana uses the gold to pay for oil, which officials say has reduced demand for US dollars. By December, US$900 million worth of gold had been bartered for fuel.

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Bloomberg (Additional Reporting by newZWire)