Zimbabwe extended an incentive for the country’s biggest gold miners to produce above state-set output targets.

Large producers that exceed their goals will receive 80% of the payment for the additional output in foreign currency, Deputy Mines Minister Polite Kambamura said in an interview. That compares with the existing 60-40 split between foreign and local currency payments for gold produced in the southern African country.

“Overall, it’s a good policy,” said Isaac Kwesu, chief executive officer of the Chamber of Mines. “But for those that are already operating at full throttle, they will not be able to benefit from it.” 

Zimbabwe’s gold miners say they can only make the investments required to help reboot the country’s economy if they can retain a larger share of their foreign currency earnings. Gold exports are the No. 3 foreign currency earner, after platinum and remittances, in a nation that suffers from an acute shortage of dollars.

Kambamura said the government has identified two local lenders that could help provide the US$1 billion of funding needed by the gold industry over the next five years.

Kuvimba Mining House Ltd., 65% owned by the state, plans a fivefold increase in production at its Shamva Gold operation by next year, the deputy minister said.

“Shamva is coming up with a massive expansion project which will see them doing open cast mining,” he said. Mothballed state-owned gold mines will be reopened, while those not fully operational will be recapitalized, Kambamura said. 

Gold output in Zimbabwe climbed 47% in the first seven months of this year. The government wants the gold sector to account for a third of the targeted US$12 billion the mining industry will generate next year, the deputy minister said.- Bloomberg/Insider