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Zimbabwe's Gold Mines On Verge Of Collapse Due To Low Bullion Prices
To say that Zimbabwe has not had much luck in its recent, post Robert Mugabe-goes-berserk, history with fiat money is putting it lightly.
But did you know that with gold trading at prevailing depressed prices, driven over the past several years not by physical demand but by paper supply, Zimbabwe is about to have another "money" moment, only this time not with fiat but with real money.
The reason: the same one why every so often we show the gold cost curve: because some miners simply can not continue operating if the "market" price of gold, with or without central bank and BIS intervention, is below their blended cost.
And while not shown explicitly on the chart above, unfortunately for the south African country, the cost curve of the entire Zimbabwe gold mining industry is on the wrong side of the gold price line.
According to Reuters, Zimbabwe's gold mining firms are suffering huge losses due to low gold prices "and could collapse unless the government reduces royalties for producers, the Chamber of Mines said."
The problem for Zimbabwe is that after relying too much on paper printing, it is now all too reliant on gold mining: gold is the single largest export earner in the southern African country, whose economy is flatlining as a result of lack of investment, electricity shortages and high cost of capital. Losing the mining sector would likely result in another major economic and financial crisis, although the local population is quite used to these by now.
So while gold trades based entirely on where the Bank of International Settlements decides any given morning where it should close that day, physical gold production is about to lose a major source, something which in a normal world would result in a huge surge in the price and, as a reminder, is the entire premise behind Saudi Arabia's strategy to crush the US shale industry:
More from Reuters:
In a report issued in December the mining chamber said that mines were making losses of up to $100 an ounce due to weak gold prices and high electricity charges.
Mines are charged higher electricity tariffs to ensure continuous supplies but this is not always the case in a country that produces 1,200 MW against a peak demand of 2,200 MW.
In the report by the mining chamber seen by Reuters on Tuesday, the group said lower power tariffs and uninterrupted supplies would save gold mines up to $55 an ounce.
"The above measures would have ensured the gold mining companies operate on a cash break-even basis and avert gold industry from collapse," the chamber said.
Chinamasa said in November the mining sector, which brings in more than half of Zimbabwe's export earnings, shrank for the first time in five years in 2014 due to low metal prices.
The government has set an ambitious target of 28 tonnes of gold in the next five years, to match a record set in 1990. Chinamasa has forecast that gold output could rise to 16 tonnes this year from 14 tonnes in 2014.
"If no immediate measures are taken, the likelihood of production reaching 1990 levels is very slim and in the extreme mines will go under care and maintenance to preserve assets," the mining chamber said.
And even though none of this is surprising, we certainly can't wait to see the price of gold to plummet once the news that one of Africa's largest producers of the yellow metal turns the lights of its gold miners out. Because when it comes to that metal most hated by central planners and bankers everywhere, the laws of supply and demand have long since become inverted.
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Here is a good read about Zimbabwe, formerly Rhodesia.
Rhodesia was called the Switzerland of Africa.
Wonder what changed;)
It was also called the "bread basket of Africa" at one time.
Agricultural policy: A strong negative trend in the national maize production, which accounts for the major part of food production, over the last 15 years is evident (see Figure 1). A more recent (since 2000) decline is partly due to the structural change precipitated by land tenure changes and partly due to the overriding economic deterioration and reduced profitability of maize production. The newly settled farmers cultivate only about 30 to 55 percent (CFSAM 2007) of the total arable land allocated to them owing to shortages of tractor/draught power, fuel, and investment in infrastructure/improvements and absenteeism on the part of some new settler beneficiaries.
http://www.fao.org/docrep/010/ai469e/ai469e00.htm
Maybe Zimbabwe's Gold Mines are On Verge Of Collapse not Due To Low Bullion Prices, but instead due to, "absenteeism on the part of some new settler beneficiaries?"
Have you ever used the term "that place is a gold mine?"
Seems that Zim's can even fuck that up.
pods
Detroit was indeed once a beautiful, wealthy, and prosperous city.
Rhodesia had one HELL of an anthem too.
https://www.youtube.com/watch?v=GQMrD53Jofc
That is not a Motown Recording.
TIME For USA To Print $1 Trillion Notes!
That Will Fix Everything.
They Want Keynesian Fiats, Then Lets Fucking Get Going With It...
Yes, yes, racist, I know, but their problems started when they started killing white farmers.
Period. Bottomline. End of story.
Here at Zero Hedge we can handle the truth.
I'm pretty sure the Zim are dead on in the cross hairs of China given its gold and agriculture capacity and potential
The Zim better be gettin' ready to learn some Chinese.
Oooooh, which also makes Zim a great war opportunity for the MIC, so keep an eye on it for some false flag action from Langley.
Already proposed by the Jewish overlords in New York City.
http://www.nytimes.com/2013/01/11/opinion/krugman-coins-against-crazies....
It basically says, "If you won't agree to counterfeiting, we'll do it anyway!"
Black owned business.
Some love the smell of Napalm in the morning, others...
Love the smell of hostile (corporate) takeovers. Nothing like a real of manufactured crisis to pave the way for buying up vital mineral and agricultural resources on the cheap, cheap, cheap.
BTW, didn't the 'Arbusto' family buy up their "Southfork" ranch (near Crawford TX) from some guy who suddenly became desperate to sell? Or Southfork II in Paraguay? Research it, peeps.
The Swiss left.
The UK pulled out and their government became extremely crrupt. Crime went rampant and other misfortunes followed.
...their government became extremely crrupt.
Became extremely corrupt?
Robert Mugabe?
So, before he was just very corrupt?
lol
Since independence in 1980, Mugabe has been the only ruler in place. His party, ZANU-PF, evolved directly from the rebel forces fighting colonial rule. ZANU believes that it, and only it, can be allowed to govern.
So, it's not like there was some slightly less corrupt group in charge since Zim became a nation. It has always been the exact same people/group.
Blacks can't run anything. Think of the trillions of dollars that would have been saved in foreign aid and in attempts for 50 years to 'bridge the educational achievement gap' if this simple demonstrable fact would only be accepted.
Things seemed to be going just fine for the natives of Africa, the Americas, Australasia & India before the Europeans decided to colonise them.
Obligatory post, considering both your avatar and comment.
They were doing much the same as they are now, only with spears. The corrupt tribal leaders, disease and belief in fairytales all predate European expansion.
Yes, of course. They had no complex society or infrastructure to worry about. It only looks bad from our perspective because we like living beyond the grass hut. If their new colonizers (Chinese) have any sense, they'll treat them the same way the white man treated the Indians, in North America, and the Aborigines, in Australia.
1 oz gold is currently worth $464,646 Zimbabwe Dollars. 3 oz of gold and you're a millionaire. How in the world could they be going broke? <sarc>
http://www.goldpricerate.com/english/gold-price-in-zimbabwe.php
Time to print 100 QUADRILLION notes.
68 : 1
It's always comforting but sad to hear someone advance a reasonable argument as to how a hate filled mob will act.
Good luck with that!
That ZIM bank note would make a DOPE album cover.
Get me a felt version and I'll color it and put it on the wall beside the bat out of hell one I did as a kid which I got from Sam the Record Man.
EIther way, these mines just need to sell to banksters for pennies on the dollar so the prices can recover. DEEP RESERVES FTW.
A trillion here and a trillion there, pretty soon we are talking about real money.
They need to abandon those and start prospecting for dollar mines...
I am sure if they ask nicely (and hand over all of their gold) the FED will send them a printing machine (I hear Langley has one).
I wonder if they have lots of oil, but have decided not to tell anyone? You know, because if we found out, we'd bomb the shit out of them to liberate them?
They just have to add another zero to their currency.
Exponential notation would seem more efficient.
No need to spell out "quadrillion" or "quintillion", etc.
I find that I just can't overstate how much I dislike the parasitic global banking elite and the destructive path they're cutting through the world as they vacuum up everybody's wealth.
The Zimbabew Finance Minister just emailed me a great offer.
If I will just wire them $5,000 US to some Swiss account, they can "by petro we needs, mon, and you gets..."
FINALLY! The Zims and the Nigerians doing joint promotions!
Nigerians are genetically predisposed to having skills in the "marketing area". Or is it raycist to say things about genes?
One of the side-effects of the low price I see, is to make foreign gold mines desperate enough and more vulnerable to hand over their mines to the parasites at ridiculously low prices; exploition unleashed. To avoid this, China and Russia should start buying up all the production at slightly higher and fairer prices to keep the business up and running, thus more resistant to sell-it-all pressure.
Already happened in Russia during the Great Harvard Hoover-up, featuring Larry 'Looter' Summers and his tribal sidekicks.
Sometimes "Buy Low" means more than being passively opportunistic or being a corporate raider.
At the national level of CBs, it means cratering entire nations and their economies, until the basics of life run out (TP, soap, food), and the ultimate "buy low" conditions are created that globalist moneychangers prefer: "Blood in the streets." The globalist money changers love Debt of all kinds -- be it for 'guns or butter': be it MIC type or Welfare type... Debt is Debt. Be it Casino Capitalism, or rampant Socialism. Debt is debt, and the Oligarchs in any debt-ridden or unbalanced country win in either scenario.
You're with them or against them. You're either in their Club*, or you're not.
* Sorry George, it's not a "big club". You misspoke. It's a Small Club. A very Small and Elite Club. And "we" ("We The Sheeple" and bloggers on ZH) ain't in it. The Big Club that we're in, is neither truly wealthy, nor elite -- given that it's a Zero Sum game of asset, wealth and political ownership.
Only two rules, then:
1) Buy when there's blood in the streets.
2) Make sure that there is blood in the streets.
Always kick a man when he is down. You don't have to lift your leg as far.
Never kick a man that is down because one day the positions might be changed. If you are going to get dirty, you might as well go all the say and kill the bastard.
Kicking a man while he is down isn't much different then a one legged man entering an ass kicking contest.
A one legged man in an ass kicking contest can only win when he is lying down - by kicking his own ass!
But, doesn't Yellen have both legs?
Psst, that was a bit of gallows humor. Zimbabawe is already down because of its prolific printing, and now it is going to get its source of real money shut down. It's getting kicked.
And if you want to be realistic, if you are in a situation where you need to put somebody down, you keep on kicking until they are going to stay down.
What a sad state of affairs this world is in when gold and silver are hated and seen as enemies of the central planners and banksters.
May they all rot in hell...
It is that very hate that convinces me to trust no other asset than the despised metals.
Gold and Silver are the premier insurance against the economic malfeasance of central planners.
"The enemy of my enemy is MY friend."
Keep stacking you pirates, LAND HO !!!
...and walk the streets sans right hand and nuts....
AD.1125
"In this year sent the King Henry, before Christmas, from Normandy to
England, and bade the mint-men (original bankers of the time) that were
in England should be mutilated in their limbs; that was, that they should
lose each of them the right hand, and their testicles beneath. This was
because the man that had a pound should not lay out a penny at the
market. And the Bishop Roger of Salisbury sent over all England, and
bade them all that they should come to Winchester at Christmas. When
they came thither, then were they taken one by one, and deprived
each of the right hand and the testicles beneath. All this was done
within the twelfth night."
Gold and silver are enemies of central planners, banksters and tyrants everywhere.
Just like citizens who: are educated, own guns, independent of government largesse, live off the grid, etc.
It's financial freedom vs. debt slavery. That's why the Fed. Gov. first outlawed private ownership of gold in 1933. The only reason they decriminalized it was to reverse the outbound flow created by Charles De Gualle and other foreigners. Western folks are infinitely more enslaved now than they were in 1933. FICA, Income taxes on the middle class, state income taxes, 30 yr mortgages, sky high property taxes, Obamacare, etc. Yet, they're still stupid enough to get teary eyed over the Star Spangled Banner or other such propaganda.
The primary expense of gold mining is diesel fuel, the problem with Zimbabwe is Socialist theft, they just can't steal fast enough
well, quit printing so much paper gold!
After murdering the farmers, raping their wives and stealing the land to give to government cronies who know nothing about farming and are only looking for an easy mark to rob, I hope this whole country just dies off. Any way we could let loose a little Ebola down there?
Just amazing how "bad luck" keeps happening to Socialist countries.
I wonder why...
It's tough out there if the buisnesses with slavery built into the model are struggling.
That country has its priorities in check, down with whitey!
http://news.yahoo.com/zimbabwes-white-farmers-face-threats-evictions-133521942.html
talk about biting the hand that feeds you.
Literally.
Shouldn't crude's crash drop the costs of production for gold? Surprised to not see anything about that in this article.
It's dropped in value compared to the USD, but the USD has gone up in value compared to every other toilet paper currency. In other words, nothing has actually changed in the past few months. The Central Planners merely shook the tree for weak hands and made everything "appear" different to eliminate suspicion that the game is rigged by the masses.
i hate to say, but why should we give a rat's ass?? mugabe has been raping the country for years! those within the country continue to allow; those outside the country continue to allow; so why should anyone care? why are we all so stupid? we give money to mugabe, he buys more luxuries for himself & stashes the balance in swiss bank accounts - no morality, no feeling whatsoever regarding his countrymen/women!! just for kicks, see how he travels to paris with his entourage - 1 day could feed a multitude for a month, & i'm sure longer, depending on what day he is shopping with his wives, etc....
i guess it's good to be king - where is the outrage from others??? there is none, his fellow rulers are doing the same thing, whether it's zimbabwe or nigeria or any other african nation, & the world could care less!!!!!
What's that background picture supposed to be on that Zimbabwe bank note?
A pile of rhinoceros turds?
Its time for Mugabe to muster his forces, get those peasants out of the fields and send them on a hunt for that most glorious and illusive of treasures- The Butt Diamond. Everybody start digging. We will begin at Dingleberry Gorge...
They can turn away from gold revenue, and utlilize the skill and intelligence of their native population to innovate, grow and modernize their econonmy.
Mmmmm...that's good satire.
"Mugabe has been raping the country for years!"
Correction - Everyone has been raping Africa for years. I say get rid of globalization and let Africa be Africa.
Get rid of the ETB cards and let America become Africa.
Obama doing his damdest in USA
Zim should join with Russia and Greece in that new currency transfer system. Another economy with large gold production should make the joint currency stronger.
You guys at Zerohedge are too funny. So Zimbabwe is going to shut its mines due to low gold prices. But of course there is strong demand for physical gold. It's only paper gold where the market is weak. So is Zimbabwe somehow mining and selling paper gold, not physical? Then you comment on how this is bullish for physical gold. A supplier shutting down due to weak prices will certainly help prices stabilize, but it isn't really long-term bullish, as now that is supply on the sidelines.
Who said paper gold demand was weak? It is what most people buy and sell with no intention of ever owning any physical. The Asians are the ones buying the physical and at a faster rate than global production. This will eventually lead to a disconnect between physical and paper prices and destruction of the paper markets.
Gold paper shorts at $1900 are making money, ABX was a good short too.
Not done yet $680 soon.
A few years ago, gold miners were saying their increased mining costs were due to increased energy costs. With the oil price drop, shouldn't the cost curve be readjusted downward?
The costs did go down in normal countries. Socialist utopias, not so much.
yes, actually. if the gold/oil ratio were to stay this high (unlikely), then look for profitability of the marginal juniors to really take off.
The government on Jan. 22 gave white crop farmers 90 days to leave their land. It gave an exemption to dairy farmers and livestock breeders.
About 300 white farmers remain on their properties after the often violent evictions of about 3,500 growers between 2000 and 2008. - See more at: http://bulawayo24.com/index-id-news-sc-national-byo-61640.html#sthash.XH...
Well, Mugabe just announced they were going to force out the few remaining white farmers, thereby gauranteeing a s successful future.
Generally known by inhabitants of Zimbabwe or South Africa : the average black guy is an absolute moron. And that's not racism, that's fact and we have history to prove it : humans exist for 3-4 million years, we all come from Africa. Where there are vast resources of any kind. The blackies have been sitting on top of all of this for all that time but only after the whities came back, things developed. And when the whities got kicked out again : back to the stone age. Look at the Congo, Zimbabwe, Mali, .... all black success stories.
Good read on the axctual experience of having your property stolen for the good of Zim.:
http://www.amazon.com/Last-Resort-Memoir-Mischief-Mayhem/dp/0307407985/r...
https://www.youtube.com/watch?v=7ubJp6rmUYM
Watching this video in 2011, I thought, the sun is shining, the grass is green, why don't these lazy fucks grow some food instead of tearing up the riverbank for a few tiny specks of gold?
Food can be grown in the same soil again and again, whereas gold can only be panned out once. But gold pays an immediate dividend, however meager, while maize takes two months to ripen if it isn't pillaged by your starving neighbors.
I once worked with a guy from Rhodesia errr... Zimbabwe, who told me about the signs in the toilets saying not to use the currency as toilet paper. Apparently it's not even useful for that purpose, blocks the plumbing. Check out...
http://www.momoneyblog.com/economic-cartoon-of-the-week-week-of-may-30th/
It's true that gold is getting harder to get. They now mine a lot of gold only due to the cost benefit of industrial scale extraction. Moving or digging mountains to sift out fine gold, even down to dust. Gold is valuable but not if it can't show a profit margine at the smelter. The fiat crowd is deperate to force gold prices down, making physical too expensive to extract and process. All I know for sure is that at some point demand for physical, in my hands, gold and the paper price fixing driving producers out of business mean at some point a massive snap back in prices. My horizon is medium, since I'm not a kid anymore, but with a strong dollar and the manipulated price of paper gold being pushed down, I'de welcome arguments "not to pick up some physical over the coming months."
Otherwise, I will add to my small, but growing position in gold.