Bond notes threaten small-scale miners

Source:NEWSDAY

SMALL-scale miners in Zimbabwe have urged the government to exercise due diligence on bond notes, as failure to do so could affect gold production.

BY MTHANDAZO NYONI/VICTORIA MTOMBA

The government on Monday gazetted Statutory Instrument 133 of 2016, which provides a legal framework for the introduction of bond notes as acceptable legal tender in Zimbabwe.

However, small scale miners expressed their displeasure, saying they would rather hold on to their gold.

“There is a serious panic within the small scale mining sector, as the fear of bond notes has gripped them. Some are saying they are not going to deposit their gold with Fidelity Printers and Refinery, while some are saying they will deposit half and remain with the other half. This, if not handled carefully, is a threat to gold production,” Zimbabwe Miners Federation spokesperson, Dosman Mangisi said.

Small-scale miners, who spoke to NewsDay, said they would prefer to keep their gold as savings rather than trading it for bond notes.

They said the government should listen to people who have suggested the use of the South African rand.

“Three quarters of our import bill is from South Africa. So we would rather use the South African rand and that will ease our way of doing business.” they said.

Industry and Bankers’ Association of Zimbabwe are on record advocating for the use of the South African rand, as the major transacting currency, as that would reduce concentration of the risk associated with heavy reliance on the United States dollar.

Miners are one of the major targets for the 5% export incentive, which would be backed by the $200 million African Export-Import Bank facility.

Gold production for 2016 is forecast at 24 tonnes buoyed mainly by the expected increase from small scale miners.a
Last year, small scale miners produced seven tonnes, while big players produced double.

There are more than 600 000 small scale miners operating in Zimbabwe, with combined figures of registered and unregistered artisanal miners pegged at 700 000.

However, despite all this, the government is failing to fully support them.

Recently, the government dangled a $20 million facility, which most small scale miners are failing to access due to its terms and conditions.

“We don’t expect that fear in an economy because it destroys everything. The government would rather embark on policies that are well-accepted by people.”

The concern by small scale miners comes as the Confederation of Zimbabwe Industries (CZI) said it would wait to see how the bond notes would work in practice, despite government’s statement that creditors were compelled to accept payments in bond notes.

A statement from Finance minister Patrick Chinamasa on Monday said that creditors owed money in United States dollars must accept payment in bond notes. Chinamasa said one could not refuse, as the creditor would have discharged his or her obligation to them.

CZI president, Busisa Moyo said: “We are aware, just like today, if somebody gives you rands you can say I cannot have it, even the pound in the multicurrency environment. With regards to bond notes, we will be looking at such because the governor said the notes will not be forced on people.”

Moyo said if the bond notes remain convertible, there would not be any problem.

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