KEY POINTS
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Zimbabwe’s gold production jumped 33 percent in Q3, reaching 10.3 metric tons, driven by a VAT reversal on gold deliveries.
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Gold output for the first nine months of 2024 rose 7.2 percent, hitting 24.1 metric tons, with small-scale miners delivering 60 percent.
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Key industry challenges, including high fees and energy shortages, remain despite increased gold revenues and government incentives.
Zimbabwe’s gold production surged by 33 percent in the third quarter, reaching 10.3 metric tons compared to 7.7 metric tons in the second quarter, according to Fidelity Gold Refinery, the country’s official buyer of gold.
The recent increase in production marks a significant boost for Zimbabwe’s gold sector, driven largely by the government’s decision to reverse a 15 percent Value Added Tax (VAT) on gold deliveries earlier this year.
Gold VAT removal spurs production amid challenges
The policy shift, executed through Statutory Instrument 105 in July, followed consultations between the government and mining industry stakeholders.
The decision was aimed at reducing side-marketing of gold and encouraging formal sales to the national refinery. “Removing the VAT on gold has definitely incentivized production,” said Chipo Warikandwa, an economic analyst. “However, the government and industry still face challenges, such as Zimbabwe’s persistent energy shortages, which need to be addressed to sustain these production levels.”
Nine-month production up 7.2 percent
Gold production in Zimbabwe surged by 7.2 percent in the first nine months of 2024, 24.1 metric tons compared to 22.4 metric tons in 2023. Small-scale miners, representing 60 percent, have a pivotal role in the sector’s output, delivering 14.5 metric tons this year compared to 9.6 metric tons from primary producers.
Gold is Zimbabwe’s largest export earner, generating an annual value of around $3 billion. With a production target of 35 metric tons by the end of the year, the government expects revenues from gold to rise to $4 billion by 2025.
Long-term industry challenges
While the reversal of VAT has fostered short-term gains, the Chamber of Mines of Zimbabwe points to some inherent challenges in the sector such as high royalties, infrastructural challenges and multiple taxes.
Zimbabwe’s mining sector represents its economic cornerstone, contributing 70 percent of foreign direct investment, 80 percent of export revenue and 19 percent of national income. Addressing these enduring challenges faced by the sector could further boost the productivity of the sector and improve the nation’s economic stability.
