Zimbabwe’s chrome and platinum miners are pushing to have the foreign currency retention raised to at least 30 percent, saying the prescribed 20 percent threshold is not enough to meet their operational requirements.
In August this year, the RBZ directed the miners to surrender 80 percent of their earnings to itself, as the country continues to struggle with hard currency shortages.
Previously, platinum and chrome miners used to retain half of their foreign currency earnings.
The central bank said the move was to ensure effective allocation of foreign exchange, as well as to spread liquidity thereby guaranteeing equity in foreign exchange distribution.
“We are pushing for between 30 and 50 percent and the negotiations are ongoing,” said an industry official privy to the ongoing negotiations with the central bank. “This 20 percent threshold is creating serious problems and this will certainly affect production.”
Zimbabwe generates about 60 percent of foreign currency earnings from mineral exports.
While the central bank said the 20 percent was not enough to meet miners’ requirements, the RBZ pledged to avail additional foreign currency upon request, the sources said.
“The commitment was made (to provide foreign currency upon request) but the foreign payments backlog is growing and this explains why chrome and platinum miners are pushing for a higher retention. This is the sector, which is generating 65 percent of foreign currency and any policy measures should support this critical sector.”
The miners had already raised a red flag, warning the policy measure was likely to hurt production at a time when some local companies, including gold miners and manufacturers were also struggling to access foreign currency to meet operational requirements.
Analysts say the shortage of foreign currency may result in companies downsizing operations or reducing working hours, a development that may trigger massive job loses.