Reserve Bank of Zimbabwe (RBZ) governor John Mangudya says the push for 100% foreign currency retention by players in the mining industry would not be considered by Treasury because the revenue was needed to fund other arms of government.

On June 24, 2019, the central bank gazetted thresholds of 55% to the producers and 45% to RBZ, but players are advocating for a review of the retention to 100% to the producers.
“The retention issue will certainly be put under review, but a 100% retention will not be possible (because) these minerals are not owned by the miners, but by the government. Several of you miners have been coming to us giving us the challenges you are facing due to the 55%:45% retention thresholds. We understand the position you are coming from in terms of the fact that you are paying all of the services rendered to you in US dollars. What I can say now is that we are willing to review this issue of retention,” Mangudya told miners at the $12 billion mining function in Harare yesterday.

Last month, President Emmerson Mnangagwa launched a strategic roadmap to propel the country’s mining sector to a US$12 billion mining industry by 2023.

Under the mining roadmap, gold is expected to contribute US$4 billion, platinum US$3 billion, while chrome, iron, steel, diamonds and coal will contribute US$1 billion.

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Lithium is expected to contribute US$500 million and $1,5 billion will come from other minerals.

Chamber of Mines of Zimbabwe president Elizabeth Nerwande said certain issues, which include provision of adequate power, allocation of ideal tax and adequate foreign exchange to sustain mining operations and the generation of capital, still need to be addressed for the $12 billion roadmap to be successful.

“Some of these challenges that need to be addressed are provision of adequate power, the optimum tax and adequate foreign exchange allocations are needed to sustain mining operations that will not undermine investment and need of capital generation for the expansion of our current production and the retention thresholds on the mining industry,” she said.

“Power outages have been our major risk at the moment, where we can go up to five hours for some mines without electricity. Once we do not have electricity, we do not have any production and it is very detrimental for the industry and its operations. We are hopeful that the Finance minister (Mthuli Ncube) will address this issue in the 2020 national budget.

Behind the scenes, we have been engaging the ministry and we have had so many success stories, so we are very hopeful that this will come through. We are opening closed mines and we need to develop new mines.”

Miners are advocating for 100% retention in order to cover production costs because they say the interbank market is not providing adequate forex to acquire imported raw materials.
Nerwande added that the mining industry also needs a good operating environment for it to unlock its potential.

“The resource base is available and the technical know-how is available. Therefore, with necessary capital and correct environment, we can easily unlock the potential for our resources.
Urgent attention is needed to be placed at identifying success factors needed to achieve this vision. Attracting and retaining critical skills to match the rapid expansion of the mining industry will also improve the working environment for the industry,” she said.