Zimbabwe’s Gold Earnings Plummet Despite Surge in Global Prices

Zimbabwe’s gold export earnings have taken a baffling downward turn, dropping for three consecutive months, despite a significant surge in global gold prices. In November 2024, the country’s gold exports reached an all-time high of US$361.1 million, a record that was expected to continue as prices climbed. However, earnings slipped to US$291.8 million in December, then US$291.4 million in January 2025, before experiencing a sharp decline to US$216.8 million in February 2025, despite gold prices exceeding US$3,000 per ounce on the London Bullion Market Association (LBMA) spot market.

This unexpected earnings drop, occurring during a period of soaring global prices, is raising concerns about structural issues within the country’s gold sector. Zimbabwe does not directly sell gold to the LBMA; instead, it exports the metal, primarily in unwrought, semi-manufactured, or powder form, through intermediaries like South Africa. However, despite these favorable conditions, a complex mix of factors seems to be hindering the country’s ability to fully capitalize on the price surge.

The most glaring issue lies in Zimbabwe’s production decline. In November 2024, Zimbabwe produced 4.2 tonnes of gold, but this dropped to 3.8 tonnes in December, 3.1 tonnes in January, and further decreased to 2.6 tonnes in February 2025. While a decline in output is partly to blame for the reduced earnings, global gold prices should have provided a hedge to offset the production loss. The country’s peak earnings of US$361.1 million in November 2024, despite a production shortfall of 200kg from the previous month, underscore this paradox.

During this period, gold prices rose sharply. In January 2025, the price per ounce of gold escalated from US$2,800 to nearly US$3,000 by February, continuing to climb into March. However, Zimbabwe’s earnings did not align with this trend. Even as production remained steady at 3.8 tonnes in December, earnings plummeted by over US$69 million, falling to US$291.8 million despite higher gold prices.

By February 2025, production dropped by another 700kg to just 2.6 tonnes, contributing to a further decrease in export earnings. While Zimbabwe’s gold production has declined, the ongoing surge in global prices should have been a significant buffer. Yet, earnings continued to slide, revealing more profound systemic issues within the sector.

Several key factors appear to be driving this discrepancy. First, illicit trade continues to siphon profits away from the formal sector. Zimbabwe’s gold industry faces a persistent challenge with smuggling, as artisanal miners and other stakeholders often opt to bypass the official channels in favor of higher cash offers from informal buyers. These buyers, operating outside the regulated system, offer immediate payment at rates above the official price set by the Reserve Bank of Zimbabwe (RBZ), which buys gold through its subsidiary Fidelity Printers and Refiners (FPR). FPR’s prices are typically 3-5% lower than global spot prices, creating an arbitrage opportunity for miners, particularly those working in artisanal or informal settings.

Moreover, Zimbabwe’s gold export model, which relies heavily on intermediaries, adds another layer of inefficiency and cost. By selling gold in semi-manufactured or powder form, Zimbabwe forgoes a significant portion of the potential value. The country’s policy of centralizing gold purchases under the RBZ has inadvertently led to market distortions, as miners are incentivized to sell their gold to informal buyers offering better rates rather than going through the formal channels.

The combination of these issues—illicit trade, intermediary costs, and a flawed export model—has left Zimbabwe unable to fully benefit from the global gold price boom. Despite the rising value of gold on the global market, the country’s export earnings have stagnated, suggesting that Zimbabwe is losing out on its rightful share of the windfall. With global gold prices continuing to rise, it is crucial for Zimbabwe to address these structural challenges and implement reforms that can help unlock the true potential of its gold sector.

The situation calls for a rethinking of Zimbabwe’s gold export policies and an examination of the broader issues impacting the sector, such as policy missteps, regulatory shortcomings, and the growing influence of informal markets. With the right reforms, Zimbabwe could once again align its gold export earnings with global price trends and tap into the full potential of its rich gold reserves.