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Caledonia Mining Corporation, a top gold producer, has praised the Zimbabwean government for responding to industry concerns, however, noting that the need for fiscal stability remains key but achievable, Mining Zimbabwe can report.
By Ryan Chigoche
Zimbabwe’s fiscal environment has long been a concern for international lenders, who worry about policy predictability and currency risks. Even U.S. dollar loans can face repayment challenges, often requiring security over both local and foreign accounts.
A recent example of this unpredictability was the proposed hike in gold royalties. Caledonia challenged the plan, which initially set a 10% rate for gold above US$2 501 per ounce, up from 5%.
Following backlash from miners, the government later amended the gold royalty proposal to apply only above US$5 000, highlighting both the risks and the responsiveness within Zimbabwe’s fiscal landscape.
Speaking on a panel at the Zimbabwe Mining Forum, held on the sidelines of the Investing in Africa Mining Indaba, Caledonia CEO Mark Learmonth emphasized how the government’s responsiveness is helping address some of these long-standing fiscal concerns.
“The government is acutely aware of its investment environment and is working to attract mining investors. Zimbabwe offers strong legal protections, skilled personnel, a good registry, and adequate utilities. However, fiscal policy can be unpredictable. When the budget proposals came out on 27 November, it caused a scramble. The positive aspect is that the government listened when we explained the issues.”
He noted that while fiscal stability is crucial for attracting investors, he remains confident that it is achievable in Zimbabwe.
“International investors understand the fiscal risks, but they also see the potential rewards. Stability in fiscal policy is key, and we believe that is achievable in Zimbabwe,” Learmonth added.
Building on this confidence, Caledonia reported notable improvements in the country’s fiscal processes. Dollar inflows are now received within about 48 hours, allowing the company to reinvest locally, with any surplus available for export.
The 30% ZWL component is used to cover taxes and domestic expenses, and while some suppliers still resist accepting ZWL, occasionally raising costs, this is gradually improving. Caledonia also noted progress among partner companies in managing debts.
However, the company acknowledged that risks remain, as holding ZWL balances can expose them to losses if exchange rates shift suddenly.
Over the past 18 months, stability has improved, with the central bank implementing tighter controls.
Hedging continues to play a crucial role, with 70% of gold exported to enable offshore hedging and lending, adding financial stability in perceived risky environments.
Caledonia added that these measures contributed to its recent $150 million fundraising in the United States, reinforcing investor confidence in Zimbabwe’s mining sector.
