FXstreet.com

• Home >
• News >
• Forex News

• Send
• Print
• Add To

HARARE (Thomson Financial) - Zimbabwe's gold production plunged by 61 percent to 295.57 kg in March compared to February because wages are being held back, mining association the Chamber of Mines said.

"We have the potential to produce 30 tonnes of gold annually but right now production is going down monthly," Jack Murehwa, head of the Chamber of Mines, told Agence France-Presse.

"The major problem we have is that the Reserve Bank has not paid most miners and they have not said anything to us as to why they are not paying the miners," he added. "There is nothing coming from them."

The state controls gold production in the country and pays salaries directly to the miners, who are supposed to receive 35 percent of their wages in the local currency and 65 percent in U.S. dollars.

But the dollars are not being paid out and the local currency is hugely overvalued as the country experiences record high rates of inflation -- officially put at 165,000 percent in February.

Production went down by 47 percent in January and by 56 percent in February.

Gold has traditionally been one of Zimbabwe's main foreign currency earners but the mining sector has been hamstrung in recent months by power cuts and shortages of foreign currency for renewing equipment.

In a statement to shareholders, Falcon Gold Zimbabwe, one of the country's top gold producers, blamed power cuts, a shortage of supplies and the lower quality of the mined ore as the main reasons for lower gold production.

Falcon Gold Zimbabwe, which produced 419 kg of gold in 2007 compared to 511 kg in 2006, also said the Reserve Bank was lagging in its pricing for gold amid record highs on global markets.

tf.TFN-Europe_newsdesk@thomsonreuters.com

slj

COPYRIGHT

Copyright Thomson Financial News Limited 2008. All rights reserved.

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.