Local platinum producers call for review of forex retention threshold

Zimbabwe’s platinum companies are lobbying for an increase in the amount of foreign currency they can retain from their earnings, it has been learnt.

This request comes amidst a global decline in platinum prices, which is putting a strain on the industry.

According to Mines and Mining Development Minister, Minister Zhemu Soda, some platinum companies have formally submitted proposals requesting a higher foreign currency retention threshold.

Minister Soda acknowledged the importance of the issue, stating it requires consideration from “various authorities.” However, he did not disclose the specific retention thresholds proposed by the companies.

Local exporters retain 75 percent of export earnings and the remainder is liquidated at the official exchange rate.

The softening of platinum group metal prices has placed a strain on the local mining industry, which is a significant contributor to the country’s foreign currency earnings.

Platinum group metals encompass a range of valuable elements including platinum, palladium, and rhodium, primarily used in catalytic converters for automobiles and various industrial applications.

PGMs producers are now struggling to meet their production and revenue targets leading to a notable decline in profitability across the sector as reflected by Zimplats reporting losses for the first time since 2009.

The downturn is expected to result in suspension of some capital projects as well as discourage investment in new projects and exploration activities, further dampening prospects for the PGMs sector.

To minimise the impact of low prices, mining companies have taken measures to manage the cost of production, including improving efficiencies and deferring capital projects.

The Chamber of Mines of Zimbabwe has already appealed with Government for a temporary reduction in electricity tariffs for platinum miners and tax relief in response to the plummeting global prices of the metal, which threaten the industry’s survival.

“The industry is calling upon Government to intervene and assist in reducing costs specifically in areas including electricity tariff and fiscal charges to minimise mine closures and specifically to ensure that mining companies survive this difficult tide,” the Chamber of Mines chief executive Issac Kwesu said last week.

Zimbabwe has three platinum mining firms, Zimplats, which directly imports power from Zambia, Unki Mine and Mimosa Mining company.

-ebusinessweekly