A recent report by the Southern Africa Resource Watch (SARW) reveals that Zimbabwe is losing approximately US$100 million every month in critical battery metals crucial for energy transitions due to illicit trade which is a result of weak regulatory enforcement, Mining Zimbabwe reports.
By Ryan Chigoche
In addition to the losses in critical minerals, Zimbabwe is also losing at least US$100 million worth of gold every month, which is being smuggled out of the country through its porous borders. When combined with the losses from critical minerals, it is estimated that approximately US$200 million worth of minerals are being illicitly exported from Zimbabwe every month. This further undermines the country’s ability to fully leverage its natural resources for economic development.
This alarming figure underscores the country’s struggles to capitalize on its vast mineral wealth, particularly in essential resources like lithium, nickel, and rare earth elements, which are crucial for the global green energy transition.
Zimbabwe is a major player in the global minerals market, holding the second-largest platinum reserves in the world, along with high-grade chromium ores. The country also boasts the second-largest lithium reserves in Africa and the fifth-largest globally.
These critical minerals are essential for green technologies such as electric vehicles and renewable energy systems. However, Zimbabwe is failing to benefit from these resources due to revenue leakages driven by illicit financial flows (IFFs).
The SARW report estimates that Zimbabwe is losing around US$100 million per month in critical battery metals, primarily due to sophisticated syndicates exploiting gaps in the current systems.
“Critical minerals, such as lithium, nickel, and rare earth elements, are essential for green technologies, including electric vehicles and renewable energy systems. However, illicit financial flows (IFFs) often undermine financial benefits from these resources. Skills limitations to evaluate mining data and lack of verification and assaying processes have provided sophisticated mining companies with loopholes to engage in illicit activities…. Can the government detect illicit trade in minerals and machinery to distinguish minerals such as silica from lithium exports? Border controls are important, but small airplanes may still be a menace. Zimbabwe reportedly loses about $100 million monthly in leakages through sophisticated syndicates.” a part of the report read.
SARW also underscored how the ineffective implementation of taxation laws, combined with poor enforcement and a lack of legislative oversight on parliament’s resolutions concerning revenue leakages, has exacerbated the problem. This includes the inadequacy of weighbridges, which has made it easier for illicit trade to thrive without detection.
The report also highlights the lack of capacity within Zimbabwe’s regulatory bodies to effectively monitor and enforce compliance in the mining sector. With insufficient oversight, mining companies have been able to exploit weaknesses in the system to conduct illicit activities. The report further emphasizes the inadequacy of Zimbabwe’s weighbridge systems and border controls, pointing out that small aircraft are frequently used to smuggle minerals out of the country through unmonitored airstrips.
Illicit financial flows are not only draining Zimbabwe’s economy but are also hampering the country’s development. The report links these illicit activities to a loss of foreign exchange, stifled trade, and a reduction in domestic resources. The United Nations Conference on Trade and Development (UNCTAD) notes that such financial flows exacerbate poverty and inequality, making it even more difficult for Zimbabwe to leverage its mineral wealth for sustainable development.
In light of these challenges, the SARW report calls for stronger regulatory frameworks and improved technological solutions to track and control illicit activities. One key recommendation is enhancing air surveillance with new radar control systems to monitor aircraft entering and leaving Zimbabwe’s airspace. The report stresses that addressing illicit financial flows is critical for Zimbabwe to ensure that its critical mineral resources contribute to both domestic economic growth and global renewable energy efforts.
SARW, is an independent, non-profit organization that monitors natural resource extraction in the region
