Zimbabwe in jeopardy of losing LBMA membership

Zimbabwe is at risk of losing its membership to the London Bullion Market Association (LBMA), which gives the country access to the international gold market.

Output in Zimbabwe is falling, and Fidelity Printers and Refiners, the sole buyer of all gold produced in the country, is due for assessment by the Association during 2009.

To qualify for membership, refineries are expected to produce a minimum quantity of metal per year i.e. 10 tons of gold and/or 30 tons of silver. Refineries must also have a tangible net worth of at least £10 million.

Gold accounts for 51% of total mineral output in Zimbabwe but production is plummeting because of inflation (estimated at 150,000% by the IMF last week), interruptions to power supply and erratic payments by the country’s central bank.

There is also a skills shortage and a shortage of foreign exchange, both of which have deprived Zimbabwe of gains from the recent global boom in gold prices.

Failure to qualify for LBMA membership would mean that Zimbabwe’s gold would be sold through intermediaries, many of whom charge extremely high fees.