Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Gold continues its upward climb,
heading close to three thousand dollars per ounce, with many
analysts thinking the only way is.
Speaker 2 (00:17):
Up tarif escalation by gold, their fizz by gold, cheer
politics by gold.
Speaker 3 (00:22):
We also like having gold as a position in the
alternative space.
Speaker 1 (00:26):
With Africa responsible for around twenty five percent of the
world's total gold, will the continent start to see the
benefits of the staring price.
Speaker 3 (00:34):
What we've got to do in the morning industry is
catch up with the price of gold.
Speaker 4 (00:38):
We're a long term player.
Speaker 3 (00:40):
We invest heavily in growth, organic growth. We are pointing
to a thirty percent increase in production.
Speaker 1 (00:48):
On today's podcast, we'll look at the impact the price
of gold is having on the continent and why Zimbabwe's
gold linked currency is just not able to keep up.
I'm Jennifer Zabasanja and this is the Next Africa Podcast,
bringing you one story each week from the continent, driving
the future of global growth with the context only Bloomberg
(01:11):
can provide. Later on, we'll hear from Mark Bristow. He's
the CEO of Barrett Gold, Africa's biggest gold producer, but
first to talk all things ZIG and Zimbabwe. I'm joined
by Bloomberg's Ray and Lovu, who is in Bulawio and
joining us back on the show. Ray, always great to
get you on the show. Thanks so much for joining us.
(01:32):
Can you first explain how Zimbabwe's currency, the ZIG, which
we've talked about on the show before, is supposed to
be linked to gold. This was meant to stop currency inflation, right.
Has it actually panned out that way?
Speaker 2 (01:45):
It's really been a mixed bag in terms of its performance,
particularly the fact that that was the key selling point
that it's gold bagged. The idea of being gold bagged
really is, as the central Bank has put it, gold
is the main primary resource that's used to support and
anchor the currency, including other precious minerals like diamonds and
(02:08):
also cash foreign currency that's held by the central bank.
So that's really the essence of it being gold backed
in that sense. But I think in terms of the
expectation that it would and the crisis that has been
a common feature in Zimbabwe for the last few years,
(02:29):
which we've seen with previous currencies, that really hasn't taken
off as expected. So I think, you know, on the ground,
a lot of people are beginning to question that actual claim.
You know, that it's gold backed, but yet the currency
has lost value and the currency has been unable to
arrest inflation. In fact, they've been in the last quarter
(02:51):
of the year, you know, sharp rise in inflation and
pressures almost you know, inflation effect going back to double djil.
So that already has really spilt a lot of doubt
in the minds of ordinary citizens and also you know,
among the business community about the claims of the currency
being gold backed.
Speaker 1 (03:11):
Yeah, and ry happening at the same time, we've been
watching over the past few days just gold continue to
hit new records. If you take a look at you know,
a chart on the terminal, it's close to topping three thousand.
So you're saying the ZIG has not been able to
get to those records in this similar way that we're
seeing gold performing right now.
Speaker 2 (03:34):
Yeah, I mean, like you're pointing out. I looked as
well at the charts for perspective, when the ZIG was
launched on April five, up to date, it's lost about
ninety five percent of its value against the US dollar.
In the same period of time from April five up
to date, you know, gold has risen some twenty four percent,
(03:56):
so there's been no correlation between the movement of the
gold price and the rally that we're seeing in the
markets and essentially the performance of the currency. In fact,
in September last year, we saw the Zig being devalued
by forty three percent by authorities in an attempt to
try and stabilize it because you know, it was really
losing value. So I think that disconnected has been clear
(04:19):
that there are other factors that move this marveling currency,
and essentially it's not gold. And what we've seen is
that the irony has been that gold back currency, which
is the Zig, you know, is missing out on this
gold rarely. So there are other factors which really are
affecting the exchange rate and affecting the currency beyond just
the gold price.
Speaker 1 (04:40):
What are those other factors ray.
Speaker 2 (04:43):
So one of the things that we've in our conversations
with investors and market managers in the country has been
money supply. They point out to a very tight liquid
discrease in the economy right now, the economy since the
devaluation of the currency last septem the central bank it's
benchmark interest rate to thirty five percent from twenty percent
(05:05):
to deal with excessive liquidity in the market, and that
really creamed money supply in the economy, so there's generally
a very very thin volumes of zek liquidity. We've seen
really the business environment becoming very very difficult because companies
are struggling bying large to conduct commerce in light of
(05:26):
very stringent liquidity circumstances. So the consensus really then has
been that money supply is what drives the exchange rate
in Zimbabwe.
Speaker 1 (05:37):
Is there anything that the officials that you speak to
ray the central Bank, the finance minister, is there anything
that they can do at this point then to reassure
investors because this should be a correlation, right, you know
what what can they do now?
Speaker 2 (05:53):
I think the position from both central bank and treasury
officials that we speak to is that they are keen
to maintain this type monetary policy stance and the tight
fiscal policy position at the moment. There's no indication at
all of easing of conditions. I think the fear definitely
(06:15):
that they have is there will be a run on
the exchange rate, the currency will depreciate, that will fan inflation.
So it's almost you know, a situation where they are
just keeping everything on hold, and you know, even if
it's at the expense of the economy and commercial activity
(06:35):
and so forth. You know, the end game and in
their view, the greater good is that the is stability
that's been experienced in the markets. There's no volatility, there's
no shop spike in inflation, the things which many wings
for years they've grappled with. So companies now really need
to begin to relook and rethink, you know, in terms
(06:56):
of their workforce, in terms of pay issues, because you know,
this tight position is going to remain.
Speaker 1 (07:04):
And they're still sticking by the ZIG as far as
you know.
Speaker 2 (07:07):
Yeah, the ZIG definitely has not been abandoned by authorities.
It remains in circulation and remains supported by authorities. What
obviously remains in doubt is at least its existing side
by side with the US dollar because naturally the preference
has always been to use dollars by and large. The
(07:29):
message and communications, that's acceptance on none. You know, the
ZIG is here to stay.
Speaker 1 (07:35):
Thanks so much. Ray, that's our Bloomberg reporter Ray in Lovo,
who is in Bulawayo in Zimbabwe, and stick with us
when we come back. Well, hear from one company that's
bullish about the benefit for Africa of a high gold price.
Part of my interview with Barrett Gold CEO Mark Bristow
is after the break, we'll be right back. Welcome back. Today.
(07:58):
We're talking all things gold as global trade wars seem
to be helping push the commodity up closer and closer
towards the three thousand dollars mark. South Africa's annual mining conference,
Mining in Daba, was held along the backdrop of this
gold rally. I spoke with Mark Bristow, the CEO of
Barrett Gold, the largest gold producer in Africa, and I
(08:20):
asked him about the state of the gold mining industry
in Africa. But first I wanted to know how high
he thought gold could go.
Speaker 3 (08:28):
Everyone's trying very hard to push the gold pros up.
What we're seeing as a continuation of d dollarisation fueled
by the actions coming out of Washington.
Speaker 4 (08:39):
And on top of.
Speaker 3 (08:39):
That, you know, we've got challenges in the UK. Europe
is not in good place, with the French and the Germans,
you know, the leaders of the Free World all in
the crossis and of course Middle East and conflicts in
every continent so gold price has got a lot of upside. Still,
I always say the risk is the upside, and it's
(09:01):
very much intact that trend.
Speaker 1 (09:03):
How much further do you think it has to go?
Because some people believe potentially we've peaked.
Speaker 3 (09:07):
You know, everyone has been saying that you've seen in
the equities have been softer than the actual bullion press
over twenty twenty four. But I don't think so. And certainly,
I mean there's a lot of reason why the gold
parcus shouldn't go down if you try and look at
what it's going to take for us to get back
(09:27):
to normality in the global economy today.
Speaker 4 (09:31):
It's not an easy task.
Speaker 3 (09:33):
And I think we've seen damage to the US dollar
as a reputational currency and gold has taken that place normalized.
Speaker 1 (09:44):
What does that mean for Barrack's assets then, and especially
on the African cors.
Speaker 3 (09:47):
All the assets are very valuable, whatever assets you've got,
particularly if you're in gold and copper today.
Speaker 1 (09:53):
To exit any of the operation definitely not okay.
Speaker 3 (09:56):
No, we constantly look at our call as sets because
I'm very focused on high quality tier one assets and
so there's there's a tie and there's a market for
those non core assets. But we're you know we've been.
We're a long term player. We invest heavily in growth,
organic growth. We we are pointing to a thirty percent
(10:20):
increase in production by the end of this decade, organic.
Speaker 4 (10:24):
Growth at all of your operations.
Speaker 3 (10:26):
Across the group and that and that's going to happen
without any issuing of shares.
Speaker 4 (10:31):
In fact, we're buying back shares.
Speaker 1 (10:33):
So when are you going to start buying back shares?
Speaker 4 (10:35):
We have already started.
Speaker 1 (10:36):
Do you plan to continue doing that?
Speaker 3 (10:37):
That abolutely certainly where the chap Rus is sitting at
the moment, one of the best investments we can make
is buy back our own share.
Speaker 1 (10:46):
What do you think where do you think the share
price then has to go?
Speaker 4 (10:49):
I think the shap well it's.
Speaker 1 (10:51):
Going to go up, okay, yes, But then what is
your calls then for that?
Speaker 3 (10:54):
You know that's the market will judge that. And at
the end of the day, what we've got and we're
about to bring out our twenty twenty four results. We
have one of the strongest balance sheets in the industry.
We were able to buy back our shares and re
investing all the time in new opportunities and more importantly,
(11:15):
we're about to build out two really big mining projects,
the expansion in Zambia, doubling production and then the big
gold and copper asset in Pakistan, which is one of
the biggest gold and copper minds that haven't been developed
yet in the world.
Speaker 1 (11:33):
And Mark, I also want to talk to you about
another one of your operations that's in Mali. There's been
a lot of focus on what's happening the discussions between
the Mali and government and also Barrick where what is
the next shoot to drop? Where are we at right
now in negotiations.
Speaker 4 (11:46):
You know, Jennifer, it's been a very sad time for me.
Speaker 3 (11:50):
You know, I've been in Mali since it was really
re established as a democracy, and we said, I've worked
with any many all the governments since nineteen ninety two,
and I think we've Mini's got itself in a position where,
you know, it's really try to shake out some short
(12:13):
term cash out of the industry, and this industry is
the very foundation of its economy, and I think we
need to and so communication, to your point, is really important.
Speaker 4 (12:24):
We are in communication.
Speaker 3 (12:25):
We are working every and were making progress, not as
fast as I would expected but I'm sure everyone's a
little cautious, because that's what happens when you get on
the wrong side of everyone.
Speaker 1 (12:37):
We haven't agreed to a number to paying back.
Speaker 3 (12:39):
Any of what, we haven't reached an agreement on anything yet,
but we are making progress and I think that's the
that's the positive.
Speaker 1 (12:47):
And that was Barrett Gold CEO Mark Bristow speaking with
us at mining in Daba. And thanks so much to Mark,
and also Bloomberg's Rate and Lovu for joining us on
today's podcast. And don't forget you can read all of
our coverage on gold and all commodities, including rays reporting
across Bloomberg platforms. Now here's some of the other stories
(13:09):
we've been following across the region this week. Namibia's central
bank chief has warned that escalating tensions between the US
and South Africa could destabilize its economy, citing the close
ties it has with the two nations and the vulnerability
of the Namibian dollar, which is pegged to the rand.
President Donald Trump, in a February seventh executive order, froze
(13:32):
all usaid to South Africa over what he falsely claimed
were rights violations stemming from a new land expropriation law
and for South Africa's case in the International Court of
Justice alleging Israel's assault in the Gaza Strip was an
act of genocide. And Ghana's Special Prosecutor has declared former
(13:52):
Finance Minister ken Oforiata a wanted person after he failed
to meet with authorities to answer questions over alleged wrongdoing.
Ofori Ata, who held the position for seven years from
twenty seventeen, was replaced as minister last February by former
President Nana Akufu Adu. And you can follow these stories
(14:15):
across Bloomberg, including the Next African Newsletter. We'll put a
link to that in the show notes. This program was
produced by Adrian Bradley. Don't forget to follow and review
this show wherever you usually get your podcasts. I'm Jennifer Zabasoja.
Thanks as always for listening. We'll see you next time.