LIVINGSTONE MARUFU
The Reserve of Zimbabwe (RBZ) should come up with different forex retention thresholds for the mining sector rather than a one-size-fit-all approach, mining experts have said.
RBZ placed all exporters at 60% retention level.
But Fidelity Printers and Refiners (FPR) general manager Fradreck Kunaka believes the miners have different forex requirements.
“The authorities need to come up with a cost structure of each producer to cater for the requirements of each miner hence the different forex retention levels should be put in place according to the needs,” Kunaka said.
“You could find that there are some miners who could operate viably on a 60:40 basis but some could need 100% forex retention due to the extent of their requirements.”
Kunaka warned that if the threshold is maintained at 60:40%, production at some mines would suffer while others shut down operations.
He said miners that are at different stages of development and those who are struggling need 100% forex requirements or close to that percentage.
“At this point, the miners should be able to do exploration and old mines should do refurbishments to ramp up production hence the 60:40 ratio would not be ideal hence 100% will do. So there is a need for authorities to come up with a cost structure for each miner to come up with a win -win situation rather than this one size fits all [60:40 basis],” Kunaka said.
Chamber of Mines of Zimbabwe chief executive officer, Isaac Kwesu, said monetary authorities should come up with foreign exchange retention framework that caters for all miners.
“Cost structures differ from miner to miner hence there should be a differentiation in terms of forex retention in a way,” Kwesu said.
Last year, the treasury was demanding 100% forex payments on royalties.
ZESA, Environment Management Agency and District Councils were demanding 100% forex payments as well despite miners getting 70% forex payment.
The Chamber said production levels would improve across the mining sector if the authorities up their forex retention levels.
In July 2020, the government reviewed forex retention to 70% from 55% implemented last year to curb massive mineral leakages.
However, this year the government reviewed forex retention to 60% from 70% to fund the auction system.
