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Gold looting bleeds Zim’s economy



THE smuggling of gold and erratic power cuts buffeting the economy have affected Zimbabwe’s mining sector output amid indications that foreign currency earnings may drop, a local research firm has warned.


Akribos Research Services in its first-quarter research note says an exposé by international television network Al Jazeera revealed how Zimbabwe is losing millions of dollars to illicit financial flows and the smuggling of the yellow metal.

Al Jazeera said through thousands of confidential documents and exclusive interviews with whistle-blowers from within the criminal underworld, investigators obtained the blueprints of billion-dollar money laundering operations that service the political elite.

The sector accounts for about 12% of the country’s gross domestic product (GDP). According to Reserve Bank of Zimbabwe statistics, the country’s total mineral exports increased from only US$889.1 million in 2008 to US$5 085.43 million by 2021.
Gold is Zimbabwe’s single largest foreign currency earner.

Experts say mineral output growth prospects for 2023 are expected to be lower than those for 2022.

According to the Chamber of Mines, frequent power outages, high costs, shortages of foreign currency, an unstable tax framework, and capital shortages are key risks to the outlook for 2023. Energy, the chamber says, is expected to drive a 15% increase in mining costs by 2023.

Due to the frequent breakdowns of Zimbabwe’s outdated generation plants, the country’s miners frequently experience power outages. Zimbabwe’s state-owned power utility gets some electricity from neighbouring countries to plug the deficit.

Therefore, it now bills miners in foreign currency to fund the power imports, a move that mining companies claim has raised operating costs.

“Another headwind in the mining sector is the smuggling of precious metals. In the recently released Gold Mafia documentary, several prominent political officials and businesspeople were alleged to be involved in gold smuggling and money laundering,” Akribos says.

“Global research group (2020) estimated that Zimbabwe is losing at least US$1.5 billion a year through the smuggling of gold, mainly to traders in Dubai. This figure was higher than official estimates of US$1.2 billion a year.

“This amount equates to about a quarter of the Zimbabwean national budget and if it was available in the economy, macro-economic stability was likely to be achievable.”

With close to 40 different minerals, Zimbabwe’s mining sector is extremely diverse. The predominant minerals include platinum group metals, chrome, gold, coal, and diamond.