Zimbabwe Is Offering Its Biggest Gold Miner $1 Billion in Incentives To Increase Gold Production Fivefold

Zimbabwe has introduced an incentive to force the country's largest gold miners to produce more than state-set output targets, Bloomberg reported.

Large miners that exceed their targets will receive foreign currency payments for 80 percent of their additional output, deputy Mining Minister Polite Kambamura said in an interview. By contrast, gold produced in Zimbabwe is currently paid 60 per cent in foreign currency and 40 per cent in local currency.

"Overall, it is a good policy, but for businesses that are already operating at full capacity, they will not be able to benefit from it," said Isaac Kwesu, CEO of the Chamber of Mines.

Zimbabwe's gold miners say they can only make the investments needed to help revive the country's economy if they can keep a greater share of their foreign exchange earnings. In Zimbabwe, which has a severe shortage of dollars, gold exports are the third biggest foreign exchange earner after platinum and remittances.

Kambamura said the government had identified two local lenders that could provide the $1 billion needed to finance the gold industry over the next five years. Kuvimba Mining House plans to increase production at its Shamva gold operation fivefold by next year. The Zimbabwean state holds a 65 percent stake in the company.

"The Shamva gold mine is in the midst of a massive expansion project and at that time they will conduct open pit mining," he said.

Mothballed state-owned mines will reopen, while those that are not fully operational will be recapitalised, Mr Kambamura said.

Zimbabwe's gold production rose 47 percent in the first seven months of the year.

Mr Kambamura said the government wanted the gold industry to account for a third of the mining industry's target output of $12bn next year.