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The Government’s delay in paying local currency owed to platinum group metal (PGM) miners in an effort to maintain stability of the ZiG currency is crippling one of the country’s most vital export sectors, Mining Zimbabwe can report.
By Ryan Chigoche
Despite owing miners US$609 million in the local currency portion of export proceeds for the first half of 2025, authorities have withheld payment under the current 70:30 foreign currency retention system.
Analysts say this is part of a broader push to restrict money supply growth and preserve the value of the ZiG, but at the cost of operational cash flow in the real economy.
“This is not merely a payment delay; it signals systemic liquidity constraints and reveals the tensions between foreign currency retention policies and domestic monetary stability efforts,” development economist Chenai Mutambasere told Mining Zimbabwe.
“By starving miners of liquidity, the government risks curtailing production and exports. The mining sector is a critical foreign currency earner and tax contributor. With the sector’s growth now downgraded from 5.6% to 2.9% in 2025, fiscal projections may also underperform,” she added.
Already, the Mid-Term Budget showed a significant contraction in Q1 PGM output — platinum (-16.2%), palladium (-17.5%), and rhodium (-9.7%) — due in part to price pressures but also likely influenced by tight cash flows.
The Mid-Term Budget Review confirms that the government is prioritising control of broad money expansion as part of its strategy to stabilise the ZiG.
The result, however, has been a liquidity squeeze for exporters like the PGM miners who expect timely reimbursement of their surrendered forex for retooling needs.
Zimbabwe’s foreign currency retention model requires miners to liquidate 30% of their earnings into local currency, with the state obligated to pay that portion.
While the central bank retains the foreign currency for critical imports and debt servicing, it has not met its obligation to reimburse miners since January 2025.
Tafara Mtutu, Head of Research at Morgan & Co, described the development as worrying and said it is slowly killing the mining sector.
“The development paints a worrying picture on the success of efforts to establish a stable local currency. It signals that policymakers are not yet confident that disbursing these funds will not affect the ZiG’s stability. However, in doing so, they risk decimating the mining industry if they continue to delay payments and lower FX retentions.”
Zimbabwe is the world’s third-largest producer of platinum group metals, after South Africa and Russia.
Major producers include Valterra Platinum, Zimplats (owned by Impala Platinum), and Mimosa, who all had US$690 million worth of export earnings liquidated.
Yet under the current surrender model, they have not received the local currency equivalent of 30% of their earnings.
This has triggered concerns within the industry about worsening liquidity, supply chain disruptions, and possible long-term effects on production.
PGMs are Zimbabwe’s second-largest export earner after gold.
In contrast to PGMs, gold exports surged to US$1.8 billion in the same period — but gold miners have similarly criticised the surrender policy, especially due to what they see as conversion at an overvalued official rate.
The cumulative impact, analysts warn, is a strained export sector with weakening confidence in government policy, particularly as trust in the surrender model erodes.
