Friday, November 07, 2008
This report at Commodity Online details the dire situation faced by gold mining companies in Zimbabwe where many are shutting down. Why?
Gold mining companies are obliged by law to sell their gold to the central bank, but for the past two years it has been falling behind on payments "due in terms of official policy to be made four days after delivery".Part of the problem appears to be that the Zimbabwe government agreed to pay in U.S. dollars rather than the local currency where inflation is running at about 11 million percent. Of course, paying in the local currency would have its own set of problems.
Producers get 75 percent of the proceeds. But last week, the Chamber of Mines indicated that the central bank owed miners over US$30 million that has accumulated since March this year.
Zimbabwe's position a major gold producer continues to slide as its once mainstay gold mining industry continues to decline as a result of political and social unrest.