External factors sustain gold demand: unabated demand from Asia, sluggish economies and low interest rates in the west - and uncertainty about the value of the dollar - continue to drive gold prices upwards, much to the relief of African producers.

Author:Morgan, MJ

Zimbabwe gold's output is set to significantly rise this year. Last year the country mined 9.6t of the yellow metal, over three times more than the 3t mined in 2008 at the height of the country's hyperinflation.


Production for next year is forecast at between 12t and 15t - an increase of between 25-56%. However, funding and power supplies remain an issue. The president of Zimbabwe's Chamber of Mines, Victor Gapare, has said that $1bn a year is needed over the next five years for production to reach 50t a year.

Mwana Africa, which mines gold in Zimbabwe, the DR Congo and South Africa, has announced a $15m share placement to fund exploration in the DR Congo and to expand production at the Freda Rebecca mine in Zimbabwe. New Dawn Mining is also resuming production, at the Golden Quarry Mine 180km north west of Bulawayo, Zimbabwe, which it purchased last June - its fourth producing mine. The company expects to produce 38-40,000 oz over 2011, 50-60,000 oz the following year, and is aiming to produce some 100,000 oz within five years.

RioZim, which mines gold at the Renco Mine in Masvingo, is currently restructuring its $5om of debt. It has also announced it will be reopening its Cam and Motor mine in 2012, which closed in 1968, with production expected to reach capacity in 2014.

The company has criticised the country's Indigenisation and Economic Empowerment Act, which required all foreign companies to produce proposals for 51% ownership by either black Zimbabweans or state-owned companies by [2.sup.nd] June and has also argued that it should be regarded as an indigenous producer - an argument which has yet to be formally accepted by the government. Companies' equity must be divested by [25.sup.th] September. Zimbabwe's Chamber of Mines is keen to see more miners go public to both comply with the new law and to further enable fund raising for expansion - the later opinion is one shared by research consultancy GFMS's MD Paul Burton, who also believes going public will assist the country's miners with necessary capital raising.


Tanzania's Finance Minister Mustafa Mkulo is contemplating imposing a supertax on profits in furtherance of its five-year development plan, as the country looks to increase tax revenues from 15% to 19% of GDP.

This has troubled some investors, with African Barrick Gold (ABG) - set up by the world's largest gold miner, Canada's Barrick Gold, in February 2010 - shares falling 10% as the news...

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