Mining ZimbabweLatest Mining News, Policy and Industry Updates

Gold has long been a cornerstone of well-diversified investment portfolios, offering a combination of stability, growth, and risk mitigation. The World Gold Council emphasizes gold’s unique characteristics, making it an essential asset for investors seeking to balance long-term risk and reward.

By Ryan Chigoche

Beyond the global gold markets, Zimbabwe’s gold mining sector has gained significant traction, offering unique investment opportunities through companies listed on the Victoria Falls Stock Exchange (VFEX).

Among these are Caledonia Mining Corporation, Padenga-owned Dallaglio Investments (operating the Eureka Mine), and Pickstone Peerless, which have been performing well and attracting interest from investors eager to tap into the country’s flourishing gold industry.

As an asset free from credit risk, gold provides a reliable store of value. Unlike other investments, it is not tied to the financial health of any institution. Its rarity, combined with its ability to preserve wealth through fluctuating market conditions, strengthens its role as a resilient investment. Gold’s multifaceted demand spanning jewelry, technology, central bank reserves, and investment products further solidifies its appeal and stability.

A Long-Standing Record of Strong Returns

Gold’s track record of delivering long-term returns has been consistently impressive. Over the past five decades, gold has provided an annualized return of approximately 8% in U.S. dollar terms, often outperforming bonds and closely rivaling equities.

This performance is no accident, as the Gold Long-Term Expected Return (GLTER) model shows that gold’s returns closely track global GDP growth and consistently beat inflation. This makes gold not only a hedge against uncertainty but also a strategic asset that enhances overall portfolio returns.

In addition to its strong return potential, gold acts as a key diversifier. Unlike many traditional assets, which tend to move in tandem during market downturns, gold often behaves oppositely. It serves as a safe haven during times of economic turbulence, as demonstrated during the Global Financial Crisis (GFC) of 2008–2009 when gold surged by 21% in U.S. dollar terms, while equities and commodities saw sharp declines.

More recently, during the market pullbacks of 2020 and 2022, gold’s ability to retain value again provided a protective cushion for investors, reinforcing its role as a diversifying asset in volatile markets.

Gold as a Hedge: Inflation, Deflation, and Currency Protection

One of gold’s most valuable qualities is its ability to act as a hedge against inflation. Over the long term, gold has outpaced inflation, preserving purchasing power for investors.

During periods of high inflation, gold’s price typically accelerates as investors turn to it as a store of value when fiat currencies lose their purchasing power. On the flip side, gold also performs well during deflationary periods marked by low interest rates and financial stress, which increase demand for secure assets.

Additionally, gold serves as a hedge against currency devaluation. It has outperformed all major fiat currencies over time, making it an essential asset during periods when central banks increase money supply. As currencies weaken, gold typically appreciates, offering investors protection from currency risk.

Enhancing Portfolio Performance with Gold

Gold’s combination of strong returns, diversification benefits, and liquidity makes it an essential addition to investment portfolios. Analysis suggests that portfolios with even a small allocation to gold—typically between 2% and 10%—have historically delivered superior risk-adjusted returns over 1-, 5-, 10-, and 20-year periods.

For example, a portfolio with a 60% allocation to stocks and 40% in bonds over the past 20 years had a Sharpe ratio of 0.64. By adding just 5% in gold, the portfolio’s risk-adjusted return increased by 3.5%. The benefits were even more pronounced for portfolios with higher risk profiles. Adding gold helps reduce maximum drawdowns, increase portfolio efficiency, and target higher returns for the same level of risk.

The optimal allocation of gold varies by an investor’s risk tolerance and portfolio mix. As the risk profile of a portfolio increases, the allocation to gold should rise to maximize diversification. Even a modest gold allocation can significantly improve outcomes, particularly during periods of market stress.

Gold’s Diversification Benefits: A Hedge Across Economic Cycles

Gold’s diversification benefits extend beyond its ability to protect during downturns. Many assets, such as stocks and bonds, become more correlated during market selloffs, meaning they tend to lose value simultaneously. Gold, however, typically moves in the opposite direction, offering protection when equities fall and helping investors mitigate risk during market volatility.

Interestingly, gold’s performance is not limited to times of crisis. As both an investment asset and a consumer good, gold also performs well during periods of economic growth. When incomes rise and consumers demand more jewelry and technology, gold demand increases, providing returns during economic expansions. This dual nature allows gold to offer diversification in both bullish and bearish market conditions, making it a well-rounded asset for investors.

Gold’s Deep and Liquid Market

Gold’s liquidity is another compelling reason for its inclusion in investment portfolios. The global gold market is one of the largest and most liquid in the world, making it easy for investors to buy or sell without significantly affecting the price. With physical gold holdings by investors and central banks valued at over US$5.1 trillion, complemented by more than US$1 trillion in derivatives trading, the market depth ensures smooth transactions, even for institutional investors.

Additionally, physical gold exchange-traded funds (ETFs) trade over US$2 billion daily, further enhancing liquidity and providing investors with flexibility. This makes gold an especially attractive asset for those seeking quick access to capital.

Aligning with ESG Objectives

Gold is increasingly becoming a popular choice for investors focused on environmental, social, and governance (ESG) factors. Leading gold miners are working to minimize their environmental footprint, adhere to stringent social standards, and contribute positively to local economies. By choosing responsibly sourced gold, investors can align their portfolios with sustainable practices while mitigating exposure to climate-related risks.

Gold’s alignment with ESG objectives enhances its appeal to a broader range of investors, particularly those who wish to support responsible mining practices while maintaining solid financial returns.

Understanding the Potential Risks of Gold

As with any asset, investing in gold carries certain risks. One important consideration is that gold doesn’t generate income. Unlike stocks that pay dividends or bonds that provide interest, gold’s returns come solely from price appreciation.

Gold also experiences periods of price volatility. While it is generally less volatile than other commodities and risk assets, it can still experience substantial price swings, particularly in the short term. However, gold’s price movements are asymmetric—it tends to rise more significantly when equities fall than it loses value during equity rallies.

Key Takeaways for Investors

Gold offers numerous benefits for long-term investors:

• It has consistently delivered positive returns, outpacing inflation and performing well across various economic conditions.
• As an effective diversifier, gold provides a hedge against market downturns while delivering positive returns during economic expansions.
• The gold market is highly liquid, valued at over US$6 trillion, ensuring ample opportunities for institutional and individual investors alike.
• Adding even a modest allocation of gold to a traditional stock-and-bond portfolio has historically improved risk-adjusted returns, reduced volatility, and maximized long-term outcomes.
• Gold aligns with ESG principles, offering an ethical investment option that supports responsible mining practices.

Given its resilience, liquidity, and ability to enhance portfolio performance, gold deserves a strategic place in diversified investment portfolios. The optimal allocation will depend on individual risk preferences and portfolio goals. However, even a small allocation can significantly enhance portfolio returns and reduce volatility over time.

As Zimbabwe’s mining sector adjusts to the latest foreign currency retention policy changes, many miners are left questioning how they will manage to stay afloat under the new rules, Mining Zimbabwe can report.

By Rudairo Mapuranga

The Reserve Bank of Zimbabwe (RBZ) yesterday announced a reduction in the foreign currency retention threshold from 75% to 70%, a decision that has sparked concerns across the industry. Miners had already argued that the 75% threshold was unsustainable. With the new policy now in place, the sector faces an even greater uphill battle.

Last year, the issue of miners’ compensation under the then 75/25 retention policy was raised, which left miners with only 75% of their forex earnings. Many in the industry felt this was not enough, especially considering Zimbabwe’s heavy reliance on USD transactions. Now, with the new 70% threshold, miners are forced to give up 30% of their hard-earned forex—a move that could significantly impact their ability to cover essential costs like electricity, equipment, and operational financing.

In a report last year, Caledonia Mining Corporation reported a substantial foreign exchange loss of US$4.1 million in the first quarter of 2024, compared to a US$1.5 million gain in the same period in 2023. This loss was largely driven by the volatile exchange rate and the gap between the official rate at which miners were required to convert their earnings and the black-market rate used to purchase goods and services.

Zimbabwe’s economy is overwhelmingly forex-dependent, with more than 80% of transactions conducted in USD. Miners argue they need a larger share of their foreign currency earnings to keep their operations running smoothly. As one mining executive put it last year: “We expected the central bank to raise the retention threshold to 80% or at least drop it entirely, given the situation we’re facing.”

Gladys Mutsopotsi-Shumbambiri, an economist with deep experience in monetary policy, explained that “lower forex retentions mean reduced inflows of foreign currency into the economy. This places the burden on the RBZ to source ZWL to fulfil its obligations, potentially leading to increased money supply and inflationary pressures.” Her insights highlight the delicate balance the RBZ must maintain between building reserves and sustaining industries like mining, which rely heavily on foreign currency for operational costs.

The Gold Miners Association of Zimbabwe (GMAZ) has been vocal about the potential risks of reducing forex retention. Last year, Irvine Chinyenze, CEO of GMAZ, warned that “there was a danger that smuggling would become rampant as miners would look for more lucrative markets where they could get value for money, rather than lose value in the process.”

Chinyenze was clear: “If this policy direction isn’t reversed, the country could lose over US$2 billion in revenues due to externalised forex.” His concerns are not unfounded. If miners cannot retain enough forex to cover their costs, some may be tempted to smuggle their gold to international markets where they can get better returns, depriving Zimbabwe of much-needed foreign currency.

Additionally, smuggling opens the door to criminal enterprises. Chinyenze noted that the lowered retention threshold could “create an influx of gold mafia gangs, as the authorities would be creating a thriving environment for them to smuggle and externalise United States dollars through illicit deals.”

The mining sector is facing significant pressure. The Chamber of Mines, which represents major mining firms in Zimbabwe, had proposed that the forex retention rate be increased to 80% to ensure miners could meet rising operational costs.

“Mining companies now require at least 80% of their foreign currency earnings to meet the increased demand for forex and fund their operational requirements and expansion projects,” the Chamber said in a proposal to the Ministry of Finance.

The concerns of the mining sector go beyond day-to-day operations. A lower retention threshold means less foreign currency available for the entire economy, potentially leading to supply shortages, price hikes, and inflation. Mutsopotsi-Shumbambiri pointed out that “the demand for forex can lead to inflation, resulting in miners losing their local currency portion to inflation.”

The government now faces a crucial decision. The mining sector has been a cornerstone of Zimbabwe’s economy, and without adequate support, the industry’s growth could stall. In 2022, mining growth slowed to 7%, and mining costs rose by 15%, driven largely by energy prices. The increased cost of doing business, coupled with limited access to forex, could push the industry to a breaking point.

The RBZ’s decision to reduce the foreign currency retention threshold to 70% is a significant blow to the mining sector, which had already been struggling to survive under the 75% retention policy. Without a fair system in place, miners risk losing out on the forex they need to stay in business, potentially driving them toward illegal markets and reducing production across the board.

The government must take these concerns seriously and consider revising the forex retention policy before it’s too late. Zimbabwe’s miners deserve fair compensation for their hard work—compensation that reflects the realities of operating in a forex-dependent economy. The consequences of failing to do so could be catastrophic, not only for the mining sector but for the entire economy.

Cape Town, South Africa — CBZ Bank Ltd has signed a USD 50 million Trade and Working Capital line of credit with the African Export-Import Bank (Afreximbank) to support export-oriented businesses across Africa. The agreement, signed during the Investing in African Mining Indaba 2025 in Cape Town, is aimed at addressing the short-term trade financing needs of corporates and small-to-medium-sized enterprises (SMEs) in sectors such as mining, agro-processing, energy, manufacturing, tourism, logistics, and services.

By Ryan Chigoche

Phinebous Mutibura, Executive Director of CBZ Bank, announced the development, stating, “Today, CBZ Bank Ltd signed a USD 50 million Trade and Working Capital line of credit with the African Export-Import Bank (Afreximbank) to support corporates and SME entities that are export-oriented in the mining value chain, agro-processing, energy, manufacturing, services, tourism, and logistics, among others, to finance their short-term trade financing requirements.”

This financing initiative is designed to help businesses in critical industries access working capital to maintain and expand their trade operations, contributing to the broader goal of fostering economic growth and integration across Africa.

The initiative comes at a crucial time when suppliers in Zimbabwe’s mining sector have struggled to access long-term financing. Last year, CBZ Bank reported that loans to the mining sector accounted for only 11% of total industry loans in Zimbabwe, compared to 20% for individual loans, highlighting a significant financing gap for the sector.

The credit line will provide businesses with vital liquidity to finance both import and export activities, helping them meet immediate working capital needs and expand their operations.

The agreement was signed during the Investing in African Mining Indaba, a major event that brings together industry leaders, policymakers, and investors to discuss the future of mining in Africa. This year’s theme, “Building Unified African Mining Value Chain: Enhancing Best Practice,” emphasizes strengthening Africa’s mining sector and improving business practices across the continent.

The credit line is expected to significantly impact SMEs, which often face challenges in securing financing due to limited access to capital and collateral. By partnering with Afreximbank, CBZ Bank will offer more flexible and tailored financing options, making it easier for businesses in export-driven industries to grow and thrive.

In support of the mining sector, CBZ Bank announced at Mine Entra last year that it was working on a USD 200 million financing facility through its Enterprise Supply Chain Development (ESD) program. This initiative, designed to support suppliers in the mining sector, underscores the bank’s ongoing commitment to the industry’s growth. This follows the success of a similar arrangement with Mimosa Mining Company, where the bank financed the miner’s supplies through the Local Enterprise Development (LED) program.

Meanwhile, this new credit line aligns with broader efforts to promote intra-Africa trade and economic cooperation, particularly through initiatives such as the African Continental Free Trade Area (AfCFTA). Signed by Zimbabwe and 55 other African Union (AU) member countries along with eight Regional Economic Communities (RECs), the AfCFTA aims to create a single continental market for goods and services. By facilitating the free movement of goods across Africa, it is expected to enhance the competitiveness of intra-African trade and support the growth of export-driven industries.

The USD 50 million line of credit marks the beginning of a broader effort by CBZ Bank and Afreximbank to support trade and business development across Africa. Both institutions have expressed their commitment to exploring further opportunities for financial collaboration, which will be essential for unlocking the continent’s full economic potential.

The appetite for investing in Zimbabwe’s mining sector remains robust, as demonstrated by the overwhelming turnout at the Zimbabwe Mining Indaba, a high-profile dinner hosted by the Zimbabwean delegation on the sidelines of the Investing in African Mining Indaba in Cape Town.

By Rudairo Mapuranga

The event, organized in collaboration with Kuvimba Mining House, attracted over 90 investors, underscoring growing interest in the country’s mining industry, Mining Zimbabwe can report.

Speaking on the sidelines of the dinner, the Minister of Mines and Mining Development, Hon. Winston Chitando, said the appetite for investing in Zimbabwe’s mining sector remains strong, with an encouraging turnout of investors and stakeholders. Chitando highlighted the increasing interest in Zimbabwe’s mineral wealth as the country continues to pursue its goal of becoming an upper-middle-income economy by 2030.

Minister Chitando emphasized the critical role mining plays in Zimbabwe’s economic transformation, noting that investment and productivity are central to achieving the 2030 vision.

“We are on a journey towards the 2030 vision of Zimbabwe becoming an upper-middle-income economy. It’s defined by the income per capita, and for that, we need increased investments and increased productivity,” said Chitando.

The dinner, organized in partnership with Kuvimba Mining House, drew over 90 attendees, including current and potential investors — a turnout Chitando described as “fantastic” and reflective of the robust appetite to invest in Zimbabwe’s mining sector.

“The turnout is fantastic; the appetite for the country and to invest and expand our industry is absolutely great. It’s beautiful to see,” Chitando stated.

The event underscores the increasing momentum Zimbabwe has gained over the years at the Mining Indaba. Reflecting on past experiences, Chitando recalled how few Zimbabweans were involved when he first attended the Indaba in 2005.

“You could count the number of people who were investors and Zimbabweans at the event,” he said. However, he noted that the situation has dramatically improved, with the 2024 event attracting so many participants that organizers had to limit attendance.

“This shows the success of Zimbabwe’s ‘open for business’ mantra and the appetite to invest and grow our economy,” Chitando remarked.

Zimbabwe’s mining sector has been a focal point for international investors, with the government emphasizing the potential for lucrative returns due to the country’s abundant mineral resources. The sector is central to the government’s upper-middle-income economy target by 2030, a goal that has attracted substantial investment in minerals such as gold, platinum, lithium, and diamonds.

In his address, Chitando noted that increased capital is vital to expanding Zimbabwe’s mining operations and enhancing productivity and employment opportunities.

“The focus of today’s event is really interaction with investors — current and potential — to try and get additional capital to expand our industry,” he stated.

As Zimbabwe continues to push for more investment in its mining industry, events like these are crucial in facilitating networking and promoting opportunities within the sector. With the country being open for business and global interest growing, Zimbabwe’s mining industry is poised for sustained growth in the coming years.

In a landmark ruling, the Midlands Special High Court Circuit has sentenced Evans Fungato, a 32-year-old employee of Jinan Mining Company in Gweru, to 20 years in prison for the murder of 23-year-old Kudakwashe Midzi, Mining Zimbabwe can report.

By Rudairo Mapuranga

The incident, which occurred on October 19, 2019, in Dongo B Compound, Shurugwi, highlights efforts to tackle violent crimes in mining communities during the period from 2016 to 2019.

According to the National Prosecuting Authority of Zimbabwe (NPAZ), the tragic event unfolded when Fungato confronted Midzi and his friends, Witness Maroora and Cruise Professor Chandigere, while wielding an axe. Fungato ordered Midzi to stay behind and struck him on the head with the back of the axe, rendering him unconscious. He then attempted to attack Maroora but was disarmed by Chandigere. Midzi was rushed to Shurugwi Hospital and later transferred to Gweru Provincial Hospital, where he succumbed to his injuries on October 27, 2019.

The sentencing of Fungato comes as the Midlands High Court Circuit continues to make significant progress in addressing its backlog of cases, particularly those involving violent crimes in mining communities. In its first week of hearings, the court completed 60 cases, including 24 murder convictions with sentences ranging from 18 years to life imprisonment.

The NPAZ has attributed this progress to the establishment of special circuit courts, authorized by the Chief Justice, which have expedited the resolution of long-pending cases. These courts have been particularly effective in addressing the disproportionately high number of murder cases involving artisanal miners, where disputes over claims and resources often escalate into deadly confrontations.

The mining sector, especially among artisanal miners during the period from 2016 to 2019, saw a surge in violent disputes, often fueled by the use of dangerous weapons such as machetes, axes, and knives. Illegal mining hotspots, which host large numbers of unregulated miners, were becoming notorious for violent altercations, frequently resulting in fatalities.

The NPAZ has emphasized the importance of these special circuit courts in bringing justice to affected families and communities.

“These courts are critical for addressing the backlog of cases and ensuring that perpetrators of violent crimes are held accountable,” the NPAZ stated.

While the special circuit courts have made significant strides in reducing the backlog of cases, the frequency of violent incidents in the mining sector remains a pressing concern. Authorities, including the NPAZ, have called for additional interventions to address the root causes of these disputes and prevent further loss of life.

As Zimbabwe’s artisanal mining sector continues to grow, the need for regulation, conflict resolution mechanisms, and community engagement has become increasingly urgent. The success of the special circuit courts offers hope for a more efficient judicial process and a safer environment for mining communities.