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Zimbabwe’s Platinum Group Metals (PGM) sector, a major foreign currency earner second only to gold, is reeling from a combination of suppressed global prices, power supply fragility, and a punishing effective tax burden now estimated at a staggering 77%, Mining Zimbabwe can report.

By Rudairo Mapuranga

Speaking during the Chamber of Mines Annual General Meeting in Victoria Falls, Chamber CEO Isaac Kwesu painted a sobering picture of the industry’s current struggles. He warned that despite Zimbabwe’s enviable geology—boasting the third-largest PGM reserves in the world—the sector’s contribution to national exports had dropped to 26% in 2024, down from previous highs, due largely to subdued prices and operational hurdles.

“Gold is now contributing more than 43% to national exports, a figure previously shared with PGMs, which have been severely affected by price declines and rising production costs,” Kwesu said.

The CEO noted that formal employment in the sector remains around 10,000, roughly 20% of total formal mining jobs in the country, with current producers still running robust local enterprise development and community empowerment programs.

However, he stressed that these contributions were under threat.

“The sector has seen effective tax rates rise from 70% to 77% when factoring in all payments to government and its related entities. This is happening in an environment where revenues are falling, viability is under pressure, and price recovery remains uncertain,” Kwesu warned.

Electricity Crisis and Power-Hungry Smelters

One of the most pressing challenges, Kwesu said, is Zimbabwe’s fragile power supply. Some PGM smelters were suspended in late 2024 due to electricity shortages.

“Smelting capacity has expanded significantly over the past year, and power demand is projected to surge beyond 500 megawatts in the coming years—up from the current average of 200 megawatts,” he revealed.

While some producers have turned to alternative energy solutions, the Chamber is pushing for industry prioritization in electricity allocation through ongoing engagements with ZESA and government authorities.

Foreign Currency Shortages and Implicit Taxes

Kwesu also decried the foreign currency retention framework, highlighting that the disparity between the official and black market exchange rates erodes the value of forex retained through official channels.

“The forced liquidation of a portion of export earnings at the official rate effectively acts as an implicit tax on miners,” he said, adding that this has significantly undermined the sector’s ability to procure imported inputs.

Output and Revenue Drop

In terms of production, the Chamber noted slight declines in output year-on-year: palladium production dropped from 19.1 tonnes in 2023 to 18.9 tonnes in 2024, while platinum output dipped from 15.9 tonnes to 15.6 tonnes over the same period.

These production losses, coupled with price pressure, saw total PGM export revenues fall from US$1.55 billion in 2023 to US$1.5 billion in 2024.

Hope in Expansion Projects and New Entrants

Despite these setbacks, Kwesu remained cautiously optimistic. He highlighted new PGM projects underway by Karo Resources, Great Dyke Investments, Bravura, and Todal Mining. He also noted ongoing expansion projects at existing giants—Zimplats, Mimosa, and Unki—which are investing in beneficiation and smelting capacity.

“Zimbabwe has over 32 million ounces of PGM reserves—comparable to North America and parts of South Africa’s Bushveld Complex. This provides long-term opportunities if we can survive this difficult phase,” Kwesu emphasized.

Regulatory Bottlenecks

On the regulatory front, the CEO lamented delays in VAT registration processes for new projects, which he said were tying up capital required to begin operations.

He urged the government to refine policy clarity, stabilize the operating environment, and reduce the cost of doing business for the PGM sector to retain investor interest.

A Call for Urgent Support

With expansion efforts underway and billions of dollars in investment potential on the line, Kwesu said the sector urgently needs government support.

“Our producers are doing all they can to remain afloat and expand. But without a more investor-friendly fiscal and policy framework, the sector risks stagnation,” he warned.

As Zimbabwe eyes Vision 2030, the message from the Chamber of Mines is loud and clear: the PGM sector remains a pillar of the mining economy—but it cannot bear the burden of high taxes, poor infrastructure, and policy uncertainty alone.

A sharp spike in global copper prices has dealt a heavy blow to CAFCA Limited’s bottom line, slashing its profit after tax by a staggering 72% for the half-year ended March 31, 2025.

By Ryan Chigoche

Despite a robust 76% rise in revenue to ZWG478.5 million, profits tumbled to just ZWG15.7 million from ZWG58.2 million recorded in the same period last year.

The drastic drop in profitability underscores the immense cost pressures facing the country’s only listed cable manufacturer, largely driven by copper price volatility.

Copper, which is the ZSE-listed entity’s primary raw material, has surged 30% this year alone, spurred by tariff fears, rising global demand in the energy and technology sectors, and sustained appetite from China.

This spike has intensified a bullish trend that began in 2023, with copper prices rising 18% into 2024 and now outpacing even gold’s 16% rise this March.

With the world projected to meet only 70% of copper demand by 2035, price pressures are expected to persist.

CAFCA, unable to pass rising input costs to customers due to an influx of counterfeit and informal competitors, was forced to absorb the cost increase.

The situation was exacerbated by a 30% hike in foreign currency surrender requirements to the Reserve Bank of Zimbabwe, further eating into export earnings.

To mitigate the copper burden, CAFCA has shifted focus to aluminium—an abundant, cost-stable alternative.

This strategic pivot drove volume growth in key sectors, with utilities up 75% and commercial business increasing by 39% year-on-year.

Aluminium’s affordability and adaptability to infrastructure projects made it an appealing substitute.

Yet, the transition isn’t without trade-offs. Aluminium’s lower conductivity demands thicker cables, complicating precision-dependent applications such as industrial machinery.

Additionally, retooling production lines for aluminium introduced short-term costs and operational strain.

Despite efforts to cushion the impact, copper’s central role in premium and high-performance products means CAFCA could not completely sidestep its pricing pains.

Copper cable volumes fell 12%, contributing to an overall 5% decline in total sales volumes. Aluminium volumes also dropped by 10%, reflecting worsening market conditions in the second quarter.

The retail and distribution segment was particularly hard-hit, suffering a 27% volume plunge due to the spread of counterfeit products and competition from informal markets.

Amid these headwinds, CAFCA maintained its delivery efficiency, achieving hit rates above 100% even as production scaled down. However, the company’s future resilience may hinge on adopting advanced technologies.

Artificial intelligence could help CAFCA navigate commodity price swings and streamline production transitions between copper and aluminium.

AI-enabled quality control might also differentiate CAFCA’s genuine products from counterfeits.

As copper’s soaring cost has sharply narrowed CAFCA’s margins, this illustrates the challenges manufacturers face when core input costs spiral beyond control even in the face of strong revenue growth.

Zimbabwe’s economic strategy of de-dollarisation will only succeed if the mining sector remains viable, profitable, and competitive, Deputy Minister of Finance and Investment Promotion, David Kudakwashe Mnangagwa, told delegates at the 2025 Chamber of Mines Annual Mining Conference and Exhibition in Victoria Falls last Friday.

By Rudairo Mapuranga

Addressing mining executives, government officials, and industry leaders during a high-level plenary at the 86th AGM, the Deputy Minister underscored the critical role of mining in Zimbabwe’s economic recovery and monetary reform efforts.

“There seemed to be a bit of anxiety during the Deputy Governor’s presentation,” he joked, referencing the Reserve Bank’s outline of de-dollarisation steps. “But the message has driven home: de-dollarisation is not an event; it is a process. And stability in the mining sector is key to achieving that.”

Mnangagwa emphasised that the mining industry, which accounted for over 70% of export revenues in 2024 and nearly 10% of GDP, must be placed at the centre of economic planning if Zimbabwe is to move away from dollar dependence without disrupting growth.

“Gold alone contributed 38% of that foreign currency, with 60% coming from small-scale miners,” he noted. “That should tell us where the lifeblood of our economy lies and where our policy efforts must focus.”

The Deputy Minister said that while Zimbabwe is blessed with abundant resources—from lithium and platinum to gold and diamonds—the full value of these endowments can only be realised if the fiscal environment enables growth.

“We must balance the tax and incentive framework so that mining companies are profitable, especially when commodity prices soften, as they inevitably do.”

Balancing the Tax Burden and Incentives

Responding to Chamber President Thomas Gono’s earlier remarks lamenting the high cost of doing business in Zimbabwe, Mnangagwa acknowledged the tension between collecting adequate state revenue and maintaining sectoral viability.

“On one side, miners say the tax burden is too high. On the other hand, you have stakeholders saying the government isn’t collecting enough from the sector,” he said. “So Treasury finds itself in the middle. But profitability and viability must always be at the centre of our policy.”

To support this balance, the Deputy Minister outlined a range of fiscal tools already in place: VAT deferment on imported capital equipment, accelerated depreciation, indefinite carry-forward of losses, and up to 70% foreign currency retention.

“These incentives exist to provide cash flow relief in a capital-intensive industry,” he said. “But many small-scale miners remain informal and unaware of these benefits. We urge them to formalise. You cannot scale up running informally.”

5% Gold Incentive and Small-Scale Formalisation

Mnangagwa lauded the 5% gold incentive introduced for small-scale producers delivering to Fidelity Gold Refinery as a successful move to increase formalisation and boost official deliveries. The incentive, paid in USD, provides additional returns over and above the standard price and has helped lift small-scale miners’ contribution to over 60% of Zimbabwe’s gold output.

“We are already seeing the results,” he said. “But we want to hear from miners—how is it working? What can we improve? Because incentives must be accessible and impactful.”

Mining Cadastral System and Transparency Drive

The Deputy Minister also highlighted the operationalisation of the new Mining Cadastral Information Management System, calling it a “transformative” step toward transparency, efficiency, and fairness in mining title management.

“This system shifts us from manual paper-based licensing to a digital platform. Claims are processed in real time with GIS mapping and first-come, first-served applications,” he said. “It will curb corruption, eliminate overlapping claims, and improve investor confidence.”

Treasury, he confirmed, remains committed to funding and supporting the full rollout of the cadastral system and resolving any technical issues that may arise during its implementation.

Value Addition and Beneficiation: The Future

The government’s long-term vision for mining, Mnangagwa said, goes beyond extraction. He called for intensified investment in value addition and beneficiation, arguing that downstream processing is the only path to sustainable economic transformation.

“We must move beyond raw exports. Let us unlock the full economic value of our minerals through local transformation. This creates jobs, transfers technology, and boosts our industrial base,” he said. “Value addition is not optional—it is the future.”

A Call to Shared Responsibility

Ending on a note of partnership, Mnangagwa appealed to mining companies to work closely with the government in designing a fair, effective fiscal regime. “Let’s assess and implement an optimum tax structure together. We want one that balances national revenue needs with investor confidence and long-term sector growth.”

He also reaffirmed the government’s commitment to responsible and sustainable mining, pledging support for environmental stewardship, community share ownership schemes, and inclusive development.

“Together, we can ensure that Zimbabwe’s mining sector not only recovers, but thrives—contributing to national prosperity and global competitiveness.”

In an address that drew nods and applause from industry veterans and newcomers alike, the Deputy Minister made clear that de-dollarisation, economic reform, and national recovery all begin with a strong, viable, and inclusive mining sector.