Zimbabwe Dollar (ZMW USD): New Foreign Exchange Rules Might Hurt Mining Industry

Source: Zimbabwe Dollar (ZMW USD): New Foreign Exchange Rules Might Hurt Mining Industry – Bloomberg

Platinum mining near Harare, Zimbabwe.  Photographer: Godfrey Marawanyika/Bloomberg

  •  Exporters must submit 40% of offshore earnings to central bank
  •  Mining companies say hard currency needed to pay for services

 

The Reserve Bank of Zimbabwe on Jan. 8 announced that exporters must now hand over 40% of their foreign currency earnings, up from 30%, which is then paid out in the local currency.

The country’s mining body said the move would create “a viability crisis” for the industry as members already face increased demand for payment in hard currency from various government agencies, suppliers and service providers.

“On average, 60% of gross export proceeds are now taken by government departments and agencies, leaving inadequate forex resources for the mining firms to sustain operations,” the Chamber of Mines of Zimbabwe said in a letter to the central bank dated Jan. 19 and seen by Bloomberg.

The move could lead to lower output, and the suspension of exploration, maintenance and expansion activities including investment in power projects, it said.

The Southern African nation generates more than half of its foreign exchange via mineral exports from companies including the local units of Johannesburg-based Impala Platinum Ltd. and Anglo American Platinum Ltd.

Central bank governor John Mangudya wouldn’t comment on the contents of the letter. “The retention rules are made always in mind with the foreign currency situation and needs of the country to source fuel, wheat and to pay for other goods and services,” he said by phone from the capital, Harare. “Foreign currency retention is not a right, but a privilege.”

COMMENTS

WORDPRESS: 4
  • comment-avatar
    incredulous 4 weeks ago

    great speech John: bravo! That should have investors flocking to exercise the ‘privelige’ of handing over 60% of their forex to you while the country heamorages $10M a month in illegal gold exports. Why don’t you just tighten up security at the airports on every Emirates flight out to Dubai instead of milking the golden cow?

    • comment-avatar
      Dr Ace Mukadota PhD 4 weeks ago

      Only reason Emirates flies to ZW is to take the gold and USD cash out on each flight. Very profitable business for Emirates and Dubai – all shady businesses and places but sunny comrades.

  • comment-avatar
    Sophia 4 weeks ago

    Inpired

  • comment-avatar
    Dr Ace Mukadota PhD 4 weeks ago

    The RBOZ ( ZANUPF’s financial lapdog) will impose the law on the big public companies but let their friends flout the law on exchaging USD into the suspect RTGS money or ZW dollars.
    Their plan is if the big foreign companies dont like it thay can go and comrades in ZW will simply take over the mines. This has been happening since 1980 comrades. First the insurance companies were forced out then the big fuel companies and now the final push is on for the mining companies. Oh of course I forgot the farmers were also forced out along the way & many others businesses that nobody has ever heard of. Chokwadi. Pamberi ne ZANUPF – pamberi to poverty for 99% of Zimbabweans.