Forex shortages choke US$8,5bn mining industry

ZIMBABWE'S mining industry has issued a strong warning over persistent foreign currency shortages, saying limited access to hard currency is threatening expansion projects, beneficiation investments and the sector's long-term growth prospects despite mining remaining the country's largest source of export earnings.

Speaking at the annual conference of the Chamber of Mines of Zimbabwe in Victoria Falls, outgoing chamber president John Musekiwa said mining companies were struggling to secure adequate foreign currency to fund capital projects, import equipment and develop value-addition facilities.

The concerns come as the sector seeks to build on a strong recovery that saw mining exports reach a record US$8.5 billion last year, accounting for approximately 81 percent of Zimbabwe's total export earnings.

"Our mining houses, specifically those undertaking expansion projects and constructing beneficiation facilities, are reporting that their available foreign currency is inadequate to meet the requirements," Musekiwa said.

"It is our humble plea that government allows mining companies to participate on the willing buyer, willing seller platform for legitimate foreign currency requirements."

The industry argues that broader access to the foreign exchange market would enable producers to source critical imports and finance expansion programmes needed to sustain growth.

Zimbabwe is positioning itself as a major supplier of strategic minerals, including gold, platinum and lithium, with the Chamber projecting mining sector growth of 10 percent this year after output expanded by 7 percent in 2025, up from 2.3 percent growth recorded the previous year.

The sector's performance was underpinned by rising gold production and favourable international commodity prices, which helped push export receipts from US$5.9 billion in 2024 to a record US$8.5 billion last year.

Gold production is expected to reach about 55 tonnes this year, generating approximately US$5 billion in export earnings. Platinum exports are projected to contribute around US$2 billion, while lithium exports are expected to generate about US$700 million.

However, Musekiwa warned that these targets could be difficult to achieve if liquidity constraints continue to restrict investment and operational spending.

According to the Chamber, several mining companies have already exhausted internally generated foreign currency and are finding it increasingly difficult to fund mine development, equipment purchases and downstream processing projects.

The industry also expressed concern over delays in the payment of surrendered export proceeds, arguing that slow disbursement of funds is disrupting cash flows and delaying investment decisions, particularly among gold and platinum producers.

The foreign currency challenges form part of a broader set of operational pressures facing the sector.

Musekiwa said high royalties, multiple taxes and levies, expensive electricity tariffs and rising capital costs were undermining Zimbabwe's competitiveness at a time when other African jurisdictions are aggressively courting mining investment.

"Notwithstanding, the viability and competitiveness of our operating environment continue to be dodged by suboptimal cost structures characterised by high royalties and levies, high capital costs, and uncompetitive electricity tariffs," he said.

Electricity supply remains another major challenge. While Zesa Holdings has prioritised power supplies to mining operations, frequent outages continue to affect production, forcing many companies to rely on expensive diesel-powered generators.

The Chamber estimates that sustaining projected growth across the sector will require approximately US$10 billion in new investment over the next five years.

However, access to international capital remains constrained, leaving many mining companies reliant on retained earnings that are increasingly under pressure from foreign currency shortages and delayed export proceeds.

Musekiwa welcomed ongoing engagement between government and industry regarding amendments to the Mines and Minerals Act as well as recent clarification of Zimbabwe's critical minerals policy.

He said investors now require predictable legislation and policy certainty, particularly regarding ownership and investment rules, to unlock the long-term capital needed to support expansion and beneficiation initiatives.

The industry's warning highlights the delicate balance facing Zimbabwe's mining sector: while strong mineral prices and growing production have positioned mining as a key driver of economic growth, foreign currency constraints, rising operating costs and infrastructure challenges continue to threaten the sector's ability to fully realise its potential.