Home Mining FPR Forex Retention :Miners Call For A Win Win Situation.

FPR Forex Retention :Miners Call For A Win Win Situation.

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The Zimbabwe Miners Federation (ZMF) is calling for a gold trading framework that provides a win-win situation between Fidelity Printers and Refiners (FPR) and the gold miner to minimise or eradicate the discrepancy between the world price of gold and the local price of the yellow metal.

This comes after Fidelity Printers and Refiners (FPR) reviewed upwards forex to local currency ratios for paying gold producers to 70/30 with 70% of the gold sale proceeds being paid in local producer’s Nostro account and the balance of 30% being paid in local currency at the ruling rate in the producer’s ZW$ account.

According to the ZMF President Henrietta Rushwaya, the fixed price of US$45/ gram was announced at a time the world price of gold was at around US$54.8/ gram, representing almost 80% of the world price.

She added that with the world price of gold expected to continue bullish and to further increase on the back of global economic risks arising from the Covid-19 pandemic which promotes the attractiveness of gold as a safe haven, the price paid to local small scale miners will continue to shrink as a percentage of the world price.

“The unwanted consequences of the above pricing distortion are widespread side marketing and leakages as small-scale miners seek better margins from unregistered buyers offering attractive prices.

“The sustainability of such a trading framework is also questionable when the price of gold is coming down, for example to prices lower than the US$45/ gram.

“ZMF is of the view that in that situation, it will not be practically possible for FPR to continue paying the fixed US$45/ gram (which will be technically a price support scheme) given the current liquidity constraints in the economy,” she said.

According to Rushwaya, the framework curtails side marketing and gold leakages while at the same time promoting delivery of gold to FPR.

“A ratio framework as is the case for large scale producers is recommended as it enables scientific tracking of mineral prices.

“We also propose the fair compensation of any surrendered portion in line with market developments in order to converge the world and local price of gold to minimise side marketing and gold leakages or full compensation in US dollars in line with prevailing world gold price,” she said.

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