Miners Seek Increase In Foreign Currency Retention Threshold To 85%
The mining industry has proposed increasing the foreign currency retention threshold from the current 75% to 85%. This change would enable miners to better meet their funding requirements, reported The Herald.
In 2023, the Reserve Bank of Zimbabwe (RBZ) had already increased the foreign currency retention threshold for exporters from 60% to 75%.
This adjustment came after exporters complained that the high export surrender requirements made it difficult to access foreign currency for critical expenditure and financing operations.
Mining companies require foreign currency to cover a range of essential expenses, including paying for electricity, which is billed in hard currency, importing critical production inputs, procuring local inputs that are priced predominantly in foreign currency and other necessary financing and operational needs.
In its latest report on the state of the mining industry and prospects for 2025, the Chamber of Mines of Zimbabwe said:
The current 75 percent foreign currency retention is inadequate to meet operational requirements and funding expansion projects.
The average foreign exchange retention that meets the mining industry’s foreign currency requirements is at least 85 percent.
According to the Chamber of Mines, the mining sector plans to spend US$600 million on capital expenditure projects. Additionally, mineral exports are projected to reach US$6 billion in the coming year, up from US$5.5 billion in the current year.
The mining industry is a crucial economic driver for Zimbabwe, accounting for:
- Over 70% of Foreign Direct Investment (FDI)
- 80% of exports
- 19% of government revenues
- 3% of direct formal employment
- 13.5% of national income
Due to ongoing expansion projects in the sector, the number of formal jobs in the mining industry is anticipated to increase by close to 3% next year, rising from the current 57,000 to around 58,700 positions.
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