Zimbabwe is intensifying its drive to formalise the artisanal and small-scale gold mining (ASGM) sector to curb widespread smuggling and reduce the environmental degradation caused by unregulated mining activities.
The government is targeting the capture of a larger share of gold output, which currently sees significant volumes diverted through illicit channels to neighbouring countries and international hubs such as Dubai.
The effort is led by the Ministry of Mines and Mining Development in coordination with the Fidelity Gold Refinery (FGR), the sole authorised buyer and refiner of gold in the country.
Gold serves as Zimbabwe’s primary export earner, making the leakages from the ASGM sector a critical blow to the country’s foreign currency reserves and overall fiscal stability.
While the ASGM sector is a vital source of livelihood for hundreds of thousands of Zimbabweans, its informal nature allows miners to evade taxes and ignore environmental regulations, leading to widespread mercury pollution and land degradation.
To incentivise formalisation, the state is exploring the creation of mining cooperatives and simplifying the licensing process. The objective is to transition “wildcat” miners into registered entities that can access formal financing and industrial equipment.
Fiscal Constraints and Miner Resistance
Despite government incentives, the transition faces stiff resistance from miners who argue that formalisation introduces prohibitive operating costs. Registration fees, royalties, and corporate taxes often outweigh the immediate benefits of legal status.
For many artisanal miners, the immediate cash payout from smugglers is more attractive than the processed payments from the FGR, which can be delayed by bureaucratic hurdles.
Smuggling operations have become increasingly sophisticated, involving networks that transport gold across borders to avoid the official exchange rates and taxes imposed by the Reserve Bank of Zimbabwe.
The World Bank has previously highlighted the need for better governance in Zimbabwe’s extractive industries to ensure that mineral wealth translates into sustainable economic growth rather than private gain for illicit actors.
Environmental agencies have also raised alarms over the continued use of mercury in artisanal gold processing. The government’s formalisation push includes mandates for the adoption of mercury-free technologies, though adoption remains slow due to a lack of capital among small-scale operators.
The strategy also involves the deployment of gold buying centres in remote areas to bring the official market closer to the miners, reducing the logistical barriers that make smuggling more appealing.
Previous attempts at formalisation were hampered by reports of corruption within regulatory agencies and a deep-seated lack of trust between the mining community and the state.
The government is now attempting to rebuild this trust through direct dialogue and the promise of technical support and training for small-scale operators to improve their yields.
However, the success of these measures depends on whether the state can offer a competitive price and payment speed that rivals the efficiency of the black market.
The Ministry of Mines is expected to review the current royalty structure for small-scale miners in the coming months to further lower the barrier to entry for formal registration.
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