THE Reserve Bank of Zimbabwe (RBZ) has reviewed upwards the retention thresholds of foreign currency for miners in a bid to avert a collapse of the extractive sector.
At a meeting held between government officials, RBZ bosses and the Chamber of Mines officials on Tuesday, it was agreed that gold miners be allowed to retain 55% of their export earnings in foreign currency, up from the previous 30%.
Under the new arrangement, government will now get 35%, while the remaining 10% will be paid to authorised dealers.
The move follows an outcry by mining houses that they were facing viability challenges owing to the central bank policy of retaining upwards of 70% of foreign exchange.
Mining contributes more than 60% of the country’s foreign earnings, but foreign currency is centrally controlled by the RBZ.
In recent months, a worsening shortage of US dollars has seen the central bank failing to allocate foreign currency to mines.
The outlook for the mining industry, particularly the gold sub-sector, appeared gloomy after one of the country’s major producers, RioZim Ltd, shut down three of its mines over the forex retention concerns while numerous other mines downsized and put their operations on hold.
RioZim sent an SOS to the central bank last week after failing to procure key consumables for operations. The company had even failed to access the 30% for 30 months. It got only 14% during the period.
The RBZ also increased retention thresholds for export receipts on all the other minerals from 30% to 50%. What this means is that the miners will be paid the remainder in Real-Time Gross Settlements (RTGS).
The export incentive was also doubled to 20%.
In addition, sources close to developments said a fund will be established to help the mining sector deal with any other critical requirements as and when they arise.
The central bank also acceded to the miners’ request to keep their forex threshold in their nostro foreign currency accounts to allow for easier procurement of the materials they require.
“The meeting was held at the RBZ on Tuesday to discuss problems currently affecting the mining sector. The meeting looked at production and viability issues with special attention on forex availability and retention on their receipts. Miners were concerned that operations have come under extreme pressure because of lack of foreign currency which was making it difficult for them to acquire mining inputs such as imported consumables and spares which are critical in the mining industry. So companies wanted their forex threshold to be reviewed upwards,” a senior RBZ official who attended the meeting said.
“After the discussions, it was agreed that government, through its structures, will help the miners.”
Sources said there were also specific arrangements to address issues raised by RioZim, which include its request for a once-off exception to allow it to retain 100% forex for the first delivery of gold after the mining company resumes operations at its three closed mines — Renco Mine in Masvingo, Cam & Motor and Dalny in Kadoma.
Officials who attended the meeting were not available for comment.