Zimbabwe platinum mines hit crisis point

Zimbabwe's platinum mining industry says it is owed more than US$228 million by the government in unpaid export proceeds, a situation miners warn is straining cash flows, delaying investment projects and threatening the viability of operations.

The concerns were raised by Platinum Producers Association chairman Alexander Mhembere during the Platinum Group Metals (PGM) Producers' Indaba held alongside the Chamber of Mines of Zimbabwe Annual Mining Conference and Exhibition.

In remarks delivered on his behalf, Mhembere said delays in settling foreign currency surrender balances had become one of the most pressing challenges facing the sector.

"PGM producers have been experiencing significant delays in receiving payments for the surrender portion of export proceeds," Mhembere said.

"These delays have created serious cash-flow constraints, resulting in the postponement of some capital projects.

"The Chamber, through the PGM Producers Committee, has been engaging with the government to resolve this matter."

Under Zimbabwe's foreign currency retention framework, exporters are required to surrender 30% of their foreign currency earnings in exchange for the local currency, the Zimbabwe Gold (ZiG), at the prevailing interbank exchange rate.

Mining companies have long argued that delays in receiving payment for these surrendered proceeds negatively affect operations and investment planning.

Mhembere said ongoing engagements with authorities had yet to produce meaningful improvements.

"These engagements have not yet resulted in significant improvements. The latest statistics show that PGM producers were owed more than US$228 million as of May 2026," he said.

"We continue to call upon the government to facilitate payment of the outstanding balances and ensure that future surrender balances are paid on time to minimise operational disruptions and delays in project implementation."

The issue has been raised repeatedly by mining executives over the past year, including representatives of South African-owned platinum producers operating in Zimbabwe.

According to reports, some companies have accumulated substantial unpaid balances, although authorities have reportedly begun making partial repayments.

The platinum sector remains one of Zimbabwe's most important sources of foreign currency, accounting for more than 40% of mineral export earnings on average over the past five years.

Mhembere said the value of the industry had grown from approximately US$475 million in 2008 to a peak of US$2.2 billion in 2022 before declining below US$2 billion over the past three years due to weaker global platinum group metal prices.

"The size of the industry, measured by the value of output, increased significantly from around US$475 million in 2008 to a peak of US$2.2 billion in 2022 before declining to below US$2 billion over the past three years due to depressed PGM prices," he said.

The sector directly employs approximately 18,000 workers, representing nearly 30% of formal employment within Zimbabwe's mining industry.

In addition to employment creation, platinum producers contribute around 20% of their earnings to government through taxes, royalties and other levies.

Production, however, came under pressure during 2025 as operators grappled with high costs and operational challenges.

Platinum output declined to 17,882 kilogrammes in 2025 from 18,911 kilogrammes in 2024, while palladium production fell from 15,603 kilogrammes to 14,620 kilogrammes over the same period.

Despite lower production volumes, export earnings rose to US$1.9 billion in 2025 from US$1.5 billion in 2024, supported by stronger prices for metals within the PGM basket.

The Chamber of Mines expects output to increase by approximately 5% during 2026, with export revenues projected to reach US$2 billion.

Mhembere said the industry continued to face a number of structural challenges beyond delayed export proceeds.

"The key challenges facing the PGM industry continue to be delays in payments for the surrender portion of export proceeds, high operating costs, fragile power supplies and capital shortages," he said.

He cited the sector's 7% royalty rate, electricity tariffs averaging US$0.14 per kilowatt-hour, high borrowing costs and expensive diesel as factors undermining competitiveness.

"These challenges have adversely affected the viability of PGM operations. We appreciate government efforts to improve the ease of doing business in the mining sector and urge the authorities to fast-track reforms to ensure that the cost structure is competitive enough to support the viability of PGM projects," Mhembere said.

Despite the challenges, the industry remains optimistic about Zimbabwe's long-term prospects, underpinned by the country's vast mineral wealth.

Zimbabwe possesses the world's third-largest platinum group metal reserves after South Africa and Russia, with estimated reserves of about 32 million ounces of platinum and palladium.

Mhembere said producers remain committed to the government's beneficiation agenda and have expanded smelting capacity to ensure that all platinum concentrates are processed locally before export.