Zimbabwe miners say the increase in the export surrender requirement to 40% is hurting production, resulting in serious shortfalls as they battle to sustain operations in the capital intensive sector.
The mining sector generates more than 60% of Zimbabwe’s foreign currency revenue.
On January 7 this year, the central bank’s Monetary Policy Committee (MPC) increased the export surrender requirement on all export receipts to 40% from 30%.
Miners say they are already battling serious shortfalls in meeting their obligations that require forex as well as finding it difficult to sustain production.
The auction system, several miners say, was failing to adequately supply the greenback to the miners.
Chamber of Mines of Zimbabwe chief executive Isaac Kwesu said the sector was engaging the central bank over the matter.
“We are engaging with the view that the retention may be reviewed. It’s the matter we are seized with,” Kwesu said.
Central bank chief John Mangudya had not responded to enquiries by Business Times by the time of going to print.
Recently, Mangudya said that exporters facing shortfalls were now allowed to participate in the forex auction system.
But, some miners were saying they were not getting sufficient forex from the auction system.
Kwesu said the Chamber was still assessing the situation at the auction system.
“Our engagements with the monetary authorities on the matter are ongoing. The current position of the RBZ on the issue is as announced in the latest Monetary Policy Committee and also highlights that in the meantime exporters who have shortfalls in their forex requirements will be allowed to participate at the auction market,” Kwesu said.
“Thus we will also be engaging to ensure the efficiency of the auction market is such that all genuine exporter bids get priority in accessing forex timeously and in adequate volumes.”
Previously, the miners were forced to liquidate all unutilised export proceeds after 60 days.
But, the MPC scrapped the compulsory requirement in January this year.
Instead, the apex bank increased the surrender threshold to 40% from 30% with the central bank saying this would fund the forex auction system.
In his monetary policy statement, Mangudya said the bank would maintain and sustain the auction system through the 40% export surrender requirement, 20% domestic foreign exchange sales surrender requirement and 15% foreign exchange contribution from the fiscus.
He said the bank would continue refining the foreign exchange auction system taking into account fundamentals as well as closely monitoring the utilisation of funds.
The capital intensive mining sector requires over US$3bn to increase production.
However, miners believe the monetary authority’s decision to increase the surrender requirements were severely affecting their production cycle.
The ministry of Mines and Mining Development is working on a plan to transform mining into a US$12bn by 2023 from about US$3bn.
This would be achieved through the creation of an enabling environment, removal of restrictions, increased exploration, expansion of existing mining projects, and resuscitation of closed mines, opening of new mines and mineral beneficiation and value addition.
The mining sector is projected to rebound by 11% this year driven by planned expansion programmes aimed at increasing production by miners. The sector is projected to have contracted to -4.7% in 2020.