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Oliver Kazunga, Senior Business Reporter
THE mining industry has proposed an increase in the foreign currency retention threshold to 85 percent to enable miners to meet their funding requirements for ongoing and planned expansion projects.
In the 2024 Monetary Policy Statement presented in April, the Reserve Bank of Zimbabwe (RBZ), maintained the export earnings retention threshold for all businesses, except small-scale miners at 75 percent.
Last year, the central bank increased the foreign currency retention threshold by exporters to 75 percent.
Previously, exporters retained 60 percent of the foreign currency from their exports and often complained that high export surrender requirements made it difficult to access forex for critical expenditure and financing operations.
Mining firms require forex currency, among others, to pay for electricity, which is paid in hard currency as well as to import critical inputs for production and procurement of local inputs which are predominantly priced in forex.
In its latest report on the state of the mining industry and prospects for 2025, the Chamber of Mines of Zimbabwe said the sector planned to spend US$600 million on capital expenditure projects while mineral exports were projected at US$6 billion from US$5,5 billion this year.
It is also expected that the Mining Business Confidence Index (MBCI) for 2025 will be positive at +5,4, which means that players in the sector are generally confident about their businesses’ prospects next year.
This positive MBCI forecast was driven by variables such as commodity market outlook and mining industry growth.
The mining sector is one of Zimbabwe’s major economic sectors and accounts for over 70 percent of Foreign Direct Investment (FDI), 80 percent of exports, 19 percent of Government revenues, 3 percent of direct formal employment and 13,5 percent of national income.
“The current 75 percent foreign currency retention is inadequate to meet operational requirements and funding of expansion projects.
“The average foreign exchange retention that meets the mining industry’s foreign currency requirements is at least 85 percent,” said the chamber.
Due to the ongoing expansion projects, the number of formal jobs in the mining industry is anticipated to increase by close to 3 percent next year to 58 700 from 57 000 at present.
It is anticipated that mineral revenue for 2025 will increase by almost 10 percent to an estimated US$6 billion from about US$5,5 billion this year.
The growth trajectory in mineral revenue is on account of the envisaged improved output and the anticipated commodity price recovery on some minerals in 2025.
“Commodity market conditions are expected to improve with commodity prices of key minerals to gradually pick up in 2025,” said the chamber.
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