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Zimbabwe Posted: Mon, 03 Nov 2008 [miningmx.com] -- Zimbabwe's gold mining sector, which is losing an average of US$54 million a month at current world gold prices in earnings, is on the brink of collapse, Zimbabwean newspapers reported on Monday. Both the Zimbabwe Times and the country's Financial Gazette carried reports saying that the industry would fold unless Zimbabwe's central bank paid the country's gold producers the US$30 million it owes them, I-Net Bridge reported. The money is owed to the gold producers by the Reserve Bank of Zimbabwe subsidiary Fidelity Printers and Refiners for gold deliveries, some dating back to September 2006. Under the country's laws, all gold mined locally must be sold to Fidelity Printers and Refiners. The central bank then pays 75% of the total value of the gold in US dollars directly to the producers' foreign currency account with the 25% balance being paid in local currency at an exchange rate determined by the central bank. Zimbabwe's chamber of mines said last week that the industry cannot fund the working capital and development capital needed to sustain operations as a result of the delayed payment. It said exploration work at the mines has also ceased, holding back future developments. The chamber of mines said most underground mines had flooded and it might take a "massive injection of capital" to reopen them. If no capital is secured, this may lead to permanent closure of the mines. Zimbabwe's average monthly gold production has plummeted from 2,259kg in 1999 to the current figure of 267kg. The Financial Gazette blamed the delayed payments on the "precarious foreign currency situation in the country". "The bank has had to withhold certain payments in order to meet some of the critical requirements such as drugs, electricity and fuel, all of which are imported," it said in a report at the weekend.
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