• Zimbabwe's gold sector surpassed its 40-tonne annual target early in 2025 with 41.4 tonnes produced by November, driven primarily by ASSM contributing 77% of output
• Despite generating $3.2 billion in export revenues, low ASSM royalties (1-2%) result in minimal treasury gains, highlighting inequities compared to large-scale miners
• A uniform 7% royalty rate could add hundreds of millions in revenue without driving smuggling, offering a balanced alternative to the recent 10% hike for greater public benefit

Sources:Zimstat, Equity Axis Research

Harare- Zimbabwe's gold sector has achieved a notable milestone in 2025, surpassing its annual production target of 40 tonnes with a cumulative year-to-date output of 41.4 tonnes as of November, exceeding projections by 1.4 tonnes.

This performance aligns closely with pre-November estimates (https://bitly.cx/F8AZX) of 3.9 to 4.2 tonnes for the month, which materialized as 4.23 tonnes in total deliveries, an incremental rise from October's 4.15 tonnes.

The uptick was predominantly propelled by the artisanal and small-scale mining (ASSM) subsector, which delivered 3.234 tonnes, a marginal 0.13% increase from its October figure of 3.230 tonnes. In contrast, large-scale mining (LSM) operations recorded a more pronounced growth of 8.13%, boosting output from 0.925 tonnes to 1 tonne.

Cumulatively, ASSM has dominated the year's production at 77%, contributing 31.75 tonnes, while LSM accounts for the remaining 23% with 10.03 tonnes. This disparity reflects ASSM's pivotal role in driving volume growth, yet it also highlights structural inefficiencies in how these contributions translate into broader economic benefits.

Financially, the sector's momentum is evident in export revenues, which reached $3.2 billion over the first 10 months, reflecting gold's outsized role in Zimbabwe's foreign exchange earnings, now comprising over 50% of total exports (only 45,2% in October) and nearly 60% of currency inflows.

However, the royalty regime reveals a stark inequity that undermines fiscal returns. ASSM, despite generating 77% of output and approximately $2.43 billion in export value, faces royalties of just 1-2% (averaging 1.5%), yielding a modest $24.3 million to $48.6 million for the Treasury.

LSM, producing only 23% of gold worth about $0.77 billion, is levied at a flat 5%, contributing $38.5 million, comparable to ASSM's upper-end payment despite a fraction of the volume. Overall, total royalties from gold exports in this period range from $62.8 million to $87.1 million, with ASSM's larger share barely edging out LSM's even at maximum rates.

This imbalance analytically exposes a policy flaw: while ASSM's low-barrier entry has scaled production, it starves the fiscus of proportional revenue, concentrating wealth among a narrow cadre of operators who retain most proceeds for personal use, with minimal reinvestment or community upliftment. The ripple effects of this asymmetry extend beyond royalties into socioeconomic outcomes, perpetuating a paradox where record outputs fail to elevate living standards.

LSM, after royalty deductions, channels substantial portions of earnings into corporate taxes (25%), National Social Security Authority (NSSA) contributions, corporate social responsibility (CSR) initiatives, and value-chain employment, fostering broader economic multipliers and community investments.

ASSM, by contrast, operates with negligible oversight, evading these obligations and often exacerbating environmental degradation through unchecked pollution and land misuse. This dynamic ensures that gold's windfall accrues to "a few hands," as artisanal miners enjoy untaxed, unrestrained gains, while the populace sees persistent poverty amid national celebrations of production highs.

Compounding the issue, leakages abound: reports indicate LSM diverting 10-15% of output to ASSM channels for 100% USD payments, circumventing the Reserve Bank of Zimbabwe's (RBZ) 30% export surrender requirement (which carries a 30% premium due to local currency overvaluation). Such practices erode intended fiscal inflows, with smuggling already costing $1.2 billion annually in illicit flows.

In response, the government escalated royalties to 10% across the board, a regional high in Africa, prompting unified condemnation from miners, who warn it will exacerbate smuggling. Yet, analytically, the prior 1-2% ASSM rate was untenable, forgoing billions in potential revenue. Royalties at 6-7% capture fairer shares without stifling growth and emerges as an optimal compromise.

It would lessen LSM's disproportionate burden (already laden with multifaceted taxes and retentions) while compelling ASSM to contribute meaningfully, projected to yield $240-294 million annually on $4 billion in exports (given the rate was applied this year ), a 2.5-3.0-fold surge over current collections.

Historical trends bolster this case: exports climbed from $1.6 billion (29.6 tonnes) in 2021 to a 2024 peak of $2.5 billion (36.48 tonnes), with 2025's 41.78 tonnes in 11 months forecasting 44-46 tonnes full-year. At prevailing prices averaging $2,500 per ounce (with 2026 forecasts from Goldman Sachs, Deutsche Bank, and others eyeing $4,000-5,300 amid central bank demand, Fed cuts, and geopolitics), undervalued royalties would amplify losses.

Historical data reflects the reclamation: In 2021 ASSM delivered $960 million worth of gold and paid $14.4 million at 1.5%; at 7% they would have paid $67.2 million, an extra $52.8 million. In 2022 they delivered $1.4 billion and paid $21 million; at 7% this would have been $98 million, an extra $77 million.

In 2023 the figure was $1.134 billion against $17 million actual; at 7% it would have been $79.4 million, an extra $62.4 million. In 2024 ASSM delivered $1.625 billion and paid $24.4 million; at 7% the treasury would have received $113.8 million, an extra $89.4 million.

Over these four years, the uniform 7% would have added a staggering $281.5 million from ASSM alone, transforming the fiscus and funding infrastructure, health, and education during the windfall.

Ultimately, while the 10% hike addresses inequities, its bluntness risks counterproductive evasion and 7% stands as the most valuable rate with also complementary incentives. To sustain formal-sector appeal, curtailing diversions to ASSM for USD perks, the regime must pair rate adjustments with tax credits, streamlined retentions, or CSR exemptions, ensuring compliance yields net gains.

Absent such balance, Zimbabwe's gold bonanza risks remaining a fiscal mirage: impressive on paper, yet toxically skewed against LSM's holistic contributions and the ASSM-driven volumes that demand equitable harnessing for national prosperity.

A recalibrated 6-7% uniform royalty, incentivized thoughtfully, could transform this into a genuine engine of inclusive growth.

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