RBZ allows exporters to keep more forex, but still falls short of miners’ demands

Worker at Shamva Mine: Chamber of Mines worried by rising costs

By Nelson Banya

Zimbabwe’s central bank on Thursday said it will allow exporters, including miners, to keep 75% of their export earnings in foreign currency after the current cap of 60% drew complaints from the industry. The new measure, however, falls short of miners’ demands to keep 80% of their export earnings in foreign currency.

The foreign currency-starved economy requires all exporters to convert part of their export earnings into local currency at an official exchange rate significantly higher than the widely used black market exchange rate, leading to losses for businesses.

Some international miners with operations in Zimbabwe include Anglo American Platinum, Impala Platinum, Sibanye Stillwater, Zhejiang Huayou Cobalt, Sinomine Resource Group, Tsingshan Holding Group and Sinosteel Corporation.

“Export retentions have been increased and standardized at 75% across all sectors,” the Reserve Bank of Zimbabwe (RBZ) said in a monetary policy statement on Thursday.

Last year, the Chamber of Mines, which represents the country’s major mining firms, lobbied for retention levels to be moved to at least 80%.

“Given that the multicurrency system was embedded into law, we are of the view that there is need to review the foreign exchange retention framework in line with the new policy changes. We are proposing an upward review of the minimum retentions from 60% to 80%,” the Chamber of Mines said in proposals to the Ministry of Finance.

It added: “Information gathered from mining houses shows that mining companies now require at least 80% of their foreign currency earnings to meet the increased demand for forex and fund their operational requirements and expansion projects.”

With over 70% of transactions in Zimbabwe now in USD, which means suppliers are now charging in forex, mine executives had expected RBZ to either raise the retention threshold more, or drop it entirely.

An industry report published by Zimbabwe’s Chamber of Mines says the sector will experience a slower 7% growth in 2022, from a projected 8% last year. Mining costs are projected to increase by 15% in 2023, with energy being the main driver, the report said. ZESA tariffs for miners, paid in USD, went up by 40% last year, increasing pressure on the industry.

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Reuters (additional reporting by newZWire)