Zimbabwe to let gold, platinum mines retain higher dollar earnings

FILE PHOTO: A Zimbabwean miner works underground at Mwana Africa's Freda Rebecca Gold Mine near Bindura, about 90km north of the capital Harare, September 14, 2012. REUTERS/Philimon Bulawayo/File Photo
FILE PHOTO: A Zimbabwean miner works underground at Mwana Africa’s Freda Rebecca Gold Mine near Bindura, about 90km north of the capital Harare, September 14, 2012. REUTERS/Philimon Bulawayo/File Photo

The Zimbabwean government has announced plans to allow gold and platinum mining companies to retain up to 55 percent of their earnings in dollars.

This is in an effort of boosting the viability of mining operations in the southern African nation at a time it’s facing foreign currency shortage challenges.

On Monday, Deputy mines minister Polite Kambamura said gold producers that sell their output to a central bank refining subsidiary would now keep 55 percent of their sales in dollars, up from 30 percent previously.

The threshold should gradually increase to 70 percent, he said.

Central bank governor John Mangudya said the U.S. dollar retention levels for platinum and chrome miners had been increased to 50 percent from 35 percent.

“We have made a decision that there is viability in mining by making sure we don’t kill the goose that lays the golden egg,” Mangudya said during the publication of the results of a survey on the state of mining.

Mining accounts for more than two-thirds of Zimbabwe’s export earnings but the sector has seen some companies close due to a dollar crunch that has hobbled imports of spare parts and other consumables.

The central bank plans to create a special fund to help mining companies with extra U.S. dollar requirements but did not give further details of how it would work.

The survey results showed that although mining executives were positive about the industry’s prospects in 2019, they were pessimistic about the government’s ability to maintain predictable and consistent mining policies.