Gold at $100 million a gramme – yet Zimbabwe production still in rapid decline (Source: Mineweb)

As Zimbabwe raises its official gold price to Z$100 million a gramme annual gold output has declined again to 7 tonnes and may almost halve again in 2008.

Author: Tawanda Karombo
Posted: Wednesday , 30 Jan 2008

HARARE -

The Zimbabwe government has increased the official gold support price to Z$100 million per gramme at a time when the country's overall gold output for 2007 has slumped to just seven tonnes
from the previous year's 11 tonnes.

The increase is however still behind the Zimbabwean parallel market gold price of around Z$160 million a gramme.

The local currency has also taken a severe knock in recent weeks with the greenback fetching Z$6 million while the official exchange rate is still pegged at Z$30,000 to the US dollar.

Mining executives who spoke to Mineweb have however stressed that "although the increase in the gold support price by the government is welcome and a step in the right direction, it will soon be further eroded by inflation".

Harare has since stopped producing inflation and related statistics, a move that analysts say is a last resort to hide the Southern African nation's humiliating inflation figures.

Announcing the output figures for gold, the chamber of mines said gold and other minerals mining houses had been hamstrung by incessant power outages and the non-availability of foreign currency.

Metallon Gold chief executive Collin Gura echoed the same sentiments. Metallon accounts for about 50 percent of the country's overall gold production.

Zimbabwe's gold output is predicted to further decline to an all time low of four tonnes for the current year.

Apart from frequent power cuts, miners in Zimbabwe - which boasts the world's second largest platinum reserves after South Africa as well as important gold, nickel and coal deposits - have had to grapple with a skewed exchange rate, foreign currency shortages and the threat of nationalization.