While Zimbabwe is actively seeking investment in the mining industry to drive economic growth and achieve the Vision 2030 goals, there has been a strong call from miners and leaders alike for responsible investment, Mining Zimbabwe can report.
By Rudairo Mapuranga and Ryan Chigoche
The mining sector, particularly the gold industry, has seen an influx of foreign investors, with the majority, especially from China, investing in the artisanal and small-scale mining (ASM) sector.
Zimbabweans have expressed concerns about the involvement of foreign investors in this sector, which they believe should be reserved only for local small-scale miners.
According to Zimbabwe Miners Federation (ZMF) Mashonaland West Province Chairman Timothy Chizuzu, foreigners should not be allowed anywhere near small-scale mining. Instead, they should focus on exploration and ensure that their mining operations are world-class, allowing junior mining professionals to gain valuable experience from the activities taking place.
He emphasized that as the country strives to ensure that small-scale miners operate responsibly, it should not add another group to the sector that might leave the country with the negative consequences of their mining activities rather than benefits.
“I strongly believe that small-scale mining should be reserved for citizens of this country, not foreigners. While it’s more acceptable to witness our own citizens mining and perhaps struggling with land management, it is deeply concerning to see foreign entities mining irresponsibly, degrading our land, and leaving behind unrehabilitated pits that could cause lasting harm. Often, these foreign operators disappear, leaving us with the consequences.
“Foreigners should be responsible investors, beginning with exploration. This not only involves employing geologists and surveyors, thus increasing their experience but also contributes to our economy as they stay in our hotels and spend money locally. When they move to the mining stage, it should be done in a proper, world-class manner. This approach will create jobs for our people, including professional roles such as mining engineers, geologists, environmental scientists, and other experts, rather than the haphazard operations often seen in small-scale mining, where everything is guesswork,” Chizuzu said.
ZMF CEO Wellington Takavarasha also told Mining Zimbabwe that foreigners should not be allowed to peg land below 20 hectares, as this can lead to disputes with other small miners.
He suggested that specific areas should be designated for investors, which would require the government to invest heavily in exploration.
“What we presented to the minister, the cabinet, and especially the parliamentary portfolio on mining is that we should never allow foreigners to come and take 10 or 20 hectares, leading to disputes like the ones we see with the Chinese over 10 hectares. There should be areas specifically designated for investors.
“That’s why now when you register with the Ministry of Mines, you can’t proceed without the proper Zimbabwe Investment and Development Agency (ZIDA) papers. You can’t buy a prospecting license or start any operations unless you have proven to the government that you are serious. Being serious means showing that you have obtained a Zimbabwe Investment Licence through ZIDA,” Takavarasha said.
He further stated that foreigners intending to mine in Zimbabwe should invest a minimum of US$2 million to demonstrate that they are serious investors who understand that mining is a risky and capital-intensive business requiring significant investment.
“The Zimbabwe Investment Licence should indicate your intention to reinvest in the country, whether it’s $2 million or $5 million. It should specify the area you’ll be operating in, such as mining in Chinhoyi or Makaha, and the amount of equipment you’ll bring in,” he said.
Takavarasha also noted that for foreign investors to engage in the small-scale industry, they should partner with local small-scale miners to elevate the sector to world-class standards.
“So, those who come in unprepared will find it difficult. What we really want is for foreigners to partner with small-scale miners, forming joint ventures to help small-scale miners grow—from artisanal to small-scale, then to medium-scale, and eventually to becoming large-scale miners.
“Investment is certainly welcome, but we do not want small districts with small-scale miners over a 10-hectare area when larger investments are possible. Investors should focus on areas that are not conflicted. We’ve also proposed that specific regions be demarcated for small-scale miners, so when large mining operations are planned, they won’t interfere with or take over land in those areas,” Takavarasha said.
Most foreign-owned operations in the small-scale sector are poorly regulated, particularly regarding environmental standards and the negative impact on surrounding communities. Reports indicate that foreign-owned small-scale mines often fail to report toxic mining waste accurately. By restricting foreign investors to large-scale operations and enforcing stringent regulations, the government can more easily monitor their activities.
According to Young Miners Foundation CEO Mr. Payne Farai Kupfuwa, the country should welcome investors who bring development, growth, and technological expertise, not those who simply replicate what locals are already doing—and often doing so even less effectively.
“Going forward, as a country, and in light of the future of mining, we need to evaluate our so-called investors who are coming in to replicate ASM operations, including those from our all-weather friends from China, as well as from India, Pakistan, and other nations.
“Our minerals are depletable, so we must reflect as we progress. As it stands, our Indigenous artisanal and small-scale miners are performing much better, albeit with significant challenges, compared to those who are well-advanced in areas such as technology, machinery, and access to capital.
“We need investors who will bring growth to our country, our communities, and our people through knowledge transfer. But what’s happening on the ground is problematic. Locals employed by these foreign investors are subjected to the same mining methods used by our locals, with no new or innovative techniques being introduced,” he said.
Foreign Smuggling
Chinese involvement in Zimbabwe’s small-scale gold mining sector is closely linked to the rampant smuggling of gold, undermining the country’s economy and contributing to the loss of valuable foreign exchange earnings. Smuggling has become a significant issue, with an estimated US$1.5 billion worth of gold being smuggled out of Zimbabwe annually, according to the International Crisis Group. Chinese miners and their local partners are often implicated in this illicit trade, which involves both informal channels and well-organized criminal networks.
Recently, Two Harare-based Chinese miners were nabbed by Zambian authorities in possession of 29.9 kg of gold and US$200,000 a development that highlighted that the smuggling of gold may be happening at a much larger scale than originally thought. Zimbabwe produces about 100 tons of gold annually, with 70% of that amount being smuggled, while the remaining 30% is sold through official channels.
Factors Driving the Smuggling of Gold
Offtake Agreements with Chinese Companies
Chinese nationals involved in smuggling minerals from Zimbabwe often face hurdles due to the country’s stringent export regulations. These miners usually arrive in Zimbabwe with offtake agreements with China-based companies for the delivery of gold. However, they encounter significant difficulties complying with Zimbabwe’s complex export procedures. As a result, many opt to smuggle the gold into Zambia, which offers export permits that facilitate much easier legal exports of the minerals. These permits allow smugglers to fulfil their agreements with buyers abroad while effectively circumventing Zimbabwe’s regulatory framework. This situation underscores the need for enhanced regional cooperation to combat such illicit practices.
Evading Zimbabwe’s Taxes and Levies
Chinese nationals smuggling minerals from Zimbabwe not only navigate complex export regulations but also seek to evade significant taxes imposed by the Zimbabwean government. High tax rates and stringent financial controls present a substantial financial burden. To circumvent these costs and maximize profits, many turn to smuggling gold into Zambia. Zimbabwe imposes an export levy on gold exports, typically around 5% of the value of the gold, and miners are required to pay a 5% royalty on their production as per Zimbabwe Revenue Authority (ZIMRA) guidelines. Furthermore, mining companies face a 24.72% corporate tax on profits, which adds to the overall tax burden. It was only recently that authorities removed the 15% VAT on gold exports, yet miners are still calling for further relaxation of these taxes.
Corruption and Weak Regulation
Corruption among law enforcement and mining authorities has facilitated rampant smuggling. Chinese miners, often working with local elites, have bypassed regulatory oversight, allowing them to operate illegal mines and smuggle gold with little consequence. Bribes and kickbacks ensure that smuggling operations continue unhindered, weakening Zimbabwe’s ability to curb the illicit trade.
A 2020 report by Al Jazeera’s Investigative Unit uncovered a network of gold smugglers in Zimbabwe, with Chinese nationals among those implicated. The report highlighted the deep-rooted corruption within Zimbabwe’s gold sector, where government officials were paid off to allow smuggling operations to flourish. This has had a detrimental impact on Zimbabwe’s efforts to formalize the mining sector and ensure that gold revenues benefit the country.
Meanwhile, the Chinese in their operations typically partner with locals. The gold mined by Chinese operators and their Zimbabwean partners is often sold through unofficial channels, bypassing the Zimbabwean government’s official gold-buying entity.
As a result, Chinese involvement in small-scale mining, particularly through partnerships with local operators, has intensified the scale of gold smuggling. With their financial resources and machinery, Chinese miners can extract gold more efficiently than local artisanal miners. However, the lucrative black market for gold incentivizes illegal trading, where Chinese miners and middlemen are involved in smuggling gold out of the country, often with the help of corrupt officials and border authorities.
Investigations by local watchdogs, such as ZELA, have revealed that some Chinese small-scale mining operations are linked to organized smuggling rings that transport gold across Zimbabwe’s porous borders. In 2021, several Chinese miners in areas like Kwekwe and Mazowe were reported to be working with local criminal networks to smuggle gold through unmonitored routes into Mozambique and South Africa, where it is sold for hard currency.
Economic Impact of Rampant Gold Smuggling
Gold smuggling has severely affected Zimbabwe’s economy, depriving the country of much-needed foreign currency. With the official channels undermined by the black market, Zimbabwe loses out on revenue that could have supported public services, infrastructure, and economic development. The illicit trade is one of the primary reasons why Zimbabwe’s gold production figures are significantly lower than expected, despite the increasing presence of Chinese and other foreign investors in the mining sector.
Conclusion
While Zimbabwe is eager to attract foreign investment to bolster its economy and achieve its 2030 vision, the small-scale mining sector must remain the preserve of its citizens.
Allowing foreign entities to dominate this space not only risks environmental degradation and community displacement but also undermines the potential for local empowerment, employment creation, and poverty alleviation.
The government must enforce strict regulations that ensure foreign investors contribute to the country’s long-term development, starting with exploration and transitioning to responsible, world-class mining operations.
By reserving small-scale mining for locals and carefully evaluating foreign investments, Zimbabwe can safeguard its resources, protect its communities, and ensure that its mineral wealth benefits its people first and foremost. Besides it’s likely Zimbabweans will spend their earned monies locally rather than a foreign investor who will plunder minerals and take proceeds leaving us with nothing but degradation.
