Gold prices fluctuate,EDF blames smuggling
Export Development Fund (EDF), a subsidiary of the Reserve Bank of Malawi (RBM), says most of the country’s gold is being smuggled to neighbouring countries, leading to fluctuations in prices on the market.
In a written response to a questionnaire, EDF public relations specialist Deliby Chimbalu said people are attracted by the higher prices offered in those countries as EDF pricing is guided by international prices.
She said: “The volumes are low as compared to what we anticipated. We strive to remain as competitive as possible by adjusting the pricing based on prevailing global market trends of gold.
“Besides that, we are also working with security agencies to address the issue of smuggling, and intensifying our marketing efforts to create awareness that we offer a structured market for gold and precious stones, to provide an alternative trading channel that is formal.”
Chimbalu said at the moment it is difficult to talk about the prospects of gold as up to date, there are no proven reserves as what is being mined currently is mostly alluvial gold found along the riverbanks.
The gold that EDF is buying undergoes further refining and is cast into gold bars and kept by RBM. The stored gold also forms part of the official reserves, thereby improving the country’s foreign exchange position.
The structured market for gold, launched in 2021, was introduced to sanitise the gold trading sector and capture new sources of foreign exchange generation.
Treasury data shows that EDF purchased 54 kilogrammes (kg) of assayed gold worth about K5.9 billion In 2023, a decline of 15 percent as compared to 2022 when 116 kg worth about K9.6 billion were purchased.
Geological expert Grain Malunga said that alluvial mining is seasonal and is bound to decrease in yield, observing that gold from artisanal and small-scale mining cannot contribute significantly to foreign exchange build-up.
He said: “The country is missing the point. We need to give good incentives for exploration. Exploration and mining are a gambling exercise and there is risk of losing money without returns.”
Mining, which is part of the Malawi Government’s Agriculture, Mining and Tourism (ATM) strategy, is touted to grow the economy in the short to medium-term for the country to achieve the lower-middle income status by 2030.
Treasury projects the sector to experience significant growth in 2024 and 2025, with a forecast of 5.8 percent and 6.7 percent, respectively, driven by the Ministry of Mining’s efforts to formalise the Artisanal and Small-scale Miners Act, which is anticipated to boost the production of gemstones and other minerals in 2024.
