Mines Losing Half of 25% ZiG Export Proceeds to Exchange Rate Disparities
Mining companies are losing half of their 25% local currency surrender portion due to exchange rate disparities, according to the 2025 Mining Industry Prospects report, which incorporates findings from the State of the Mining Industry Survey.
By Rudairo Mapuranga
The report highlights that the 25% local currency surrender portion is converted at the official exchange rate, while actual input costs are based on the parallel market rate, often double the official rate. This mismatch in rates creates a significant financial loss for mining companies, effectively acting as a tax on exporters’ gross proceeds.
“Survey findings show that respondent mining executives were losing almost half of their mandatory 25% surrender portion of export proceeds due to exchange rate disparities. They further indicated that the 25% surrender portion is liquidated at the official exchange rate, while actual input costs are valued at the parallel market rate, which in some instances is double the official rate. The loss arising from the parallel market premiums is a direct cost and is akin to a tax on exporters’ gross proceeds,” the report states.
Protecting miners from such losses due to unstable monetary policies is crucial, as these policies expose them to foreign exchange risks.
The current 75/25 foreign currency retention policy hinders mining sector growth, failing to meet demands for an 80% retention rate, which would better support miners’ sustainability.
The impact of reduced forex retention goes beyond monetary policy, affecting various economic sectors. Limited foreign currency availability can restrict import-dependent industries, leading to supply shortages and price increases. Furthermore, the depreciation of the ZiG against major currencies can erode purchasing power and reduce consumer confidence.
To address these challenges, the government must pursue a balanced approach that tackles immediate issues while implementing long-term structural reforms. Enhancing export competitiveness and fostering a conducive business environment is essential for the mining sector’s resilience and growth.