Gold export earnings plummeted from $361.1M in Nov 2024 to $216.8M in Feb 2025 despite soaring global prices

Several factors likely contribute including Illicit trade, intermediary costs, and raw exports

Policy reforms are needed to address suppressed prices, forex retention, and smuggling

Source: Zimstat, Equity Axis Research

Harare- Zimbabwe’s gold export earnings have inexplicably plunged for three consecutive months slipping from a record high of US$361.1 million in November 2024 to US$291.8 million in December, US$291.4 million in January 2025, and a sharp drop to US$216.8 million in February 2025 despite global gold prices breaking the historic US$3,000 per ounce mark on the London Bullion Market Association (LBMA) spot prices in 2025.

This downward trajectory is particularly perplexing given the soaring international prices, which should theoretically bolster earnings even with reduced production.

Zimbabwe, however, does not sell directly to the LBMA and exports its gold primarily in unwrought, semi-manufactured, or powder form through agents, notably South Africa.

This structural setup, combined with pervasive smuggling and policy missteps, appears to be undermining the country’s ability to capitalise on the gold price surge. This analysis interrogates the policies driving this decline, explores the role of illicit trade and intermediary costs, and proposes actionable reforms, drawing lessons from case studies in Botswana, South Africa, and Ghana.

Gold prices escalated from US$2,800 per ounce in January 2025 to nearly US$3,000 per ounce by February, peaking in March. Yet, Zimbabwe’s export earnings have not mirrored this upward trend.

Production data reveals a decline from 4.2 tonnes in November 2024 to 3.8 tonnes in December, 3.1 tonnes in January 2025, and 2.6 tonnes in February. While this reduction partially explains the earnings drop, the high prices should have acted as a hedge, offsetting the output decline.

Zimbabwe’s declining gold production should, in theory, be offset by soaring global prices, yet the numbers tell a baffling story of lost opportunity. In October 2024, the country produced 4.2 tonnes of gold, but by November, output dipped to 3.8 tonnes a 200kg deficit. Despite this drop, November saw Zimbabwe’s highest export earnings ever at US$361.1 million, capitalising on rising gold prices that weren’t present in September, when 4.2 tonnes yielded less despite higher volume.

The price surge more than compensated for the shortfall. Fast forward to December, and the plot thickens: production held steady at 3.8 tonnes, matching November, but earnings crashed to US$291.8 million a US$69.3 million plunge despite prices climbing higher than in November.

This pattern persists into 2025. January’s output fell to 3.1 tonnes and February’s to 2.6 tonnes, with a 700kg deficit from January hitting February’s earnings, dragging them down to US$216.8 million.

Yet, with prices peaking near US$3,000 per ounce by March, these declines should have been cushioned. They weren’t. The consistent downward spiral since December, even when production stabilised, points to more than just output woes. Three culprits stand out: illicit trade siphoning off profits, steep intermediary costs bleeding value, and the export of semi-manufactured gold fetching pitiful rates despite a global price boom. Rising prices are Zimbabwe’s lifeline, but something or someone is cutting it short.

Zimbabwe’s gold sector is governed by a monopoly where the Reserve Bank of Zimbabwe (RBZ), through its subsidiary Fidelity Printers and Refiners (FPR), is the sole legal buyer. This centralisation, intended to streamline revenue collection, has instead fostered market distortions. FPR’s suppressed prices typically 3-5% below global spot rates create an arbitrage opportunity, incentivising miners, particularly artisanal ones, to sell to informal buyers offering immediate cash at higher rates.

Reports, including the Al Jazeera documentary from 2023, allege that much of Zimbabwe’s gold is smuggled to the United Arab Emirates (UAE) via corrupt networks, with cash later funneled back to RBZ coffers a claim refuted by then-governor John Mangudya but supported by the Swissaid report estimating 32-41% of Africa’s gold production goes unreported, funneling US$120 billion to hubs like the UAE, Turkey, and Switzerland from 2012-2023.

The government’s recent mine-to-market tracing system, effective September 30, 2024, aims to track gold from production to sale, integrating informal miners into formal channels and offering a 100% payout in US dollars.

However, its early implementation has not stemmed the earnings decline, suggesting enforcement gaps or entrenched smuggling networks. Businessman Scott Sakupwanya buys gold from small-scale miners in cash and resells to FPR. Questions also persist about whether all gold is indeed channeled to FPR or diverted to capitalise on surging prices.

Zimbabwe exports gold through agents, primarily South Africa, which sells it globally for a fee. This arrangement costs Zimbabwe 10-20% of its gold value, translating to US$200-400 million annually in 2023 and 2024. While South Africa’s Rand Refinery offers a reliable export route, the fees erode earnings potential.

The Al Jazeera report further complicates this picture, alleging that smuggling to the UAE bypasses formal agents, with corrupt individuals retaining a cut before returning cash to RBZ. Even if refuted, the reliance on intermediaries formal or illicit dilutes Zimbabwe’s gains from high prices.

A significant portion of Zimbabwe’s gold is exported in semi-manufactured or unwrought form, fetching lower prices than fully refined bullion. While RBZ processes some gold, some is sold unpolished, dragging down earnings despite soaring global rates. This contrasts with countries that maximise value through domestic refining, highlighting a structural weakness in Zimbabwe’s export strategy.

The RBZ’s recent 30% retention of foreign export earnings, intended to bolster forex reserves, threatens miners reliant on US dollars for equipment and operational costs. This policy, combined with power shortages and currency volatility, has historically depressed production, as seen in 2023’s output drop from 35 tonnes to 30 tonnes. These factors compound the earnings decline, amplifying the impact of smuggling and intermediary losses.

Compare this to Botswana, where diamonds don’t just glitter, they pay. Botswana’s diamond industry offers a model for Zimbabwe. Through the state-owned Okavango Diamond Company, Botswana retains a 25% stake in rough diamond sales, bypassing intermediaries like De Beers to sell directly to global markets. This transparency and direct market access have minimised illicit trade, ensuring revenues benefit the economy. Zimbabwe could establish a state-owned gold refinery to process and sell fully manufactured gold, reducing reliance on South African agents and capturing higher prices.

South Africa itself offers another lesson . South Africa has tackled illicit gold trade by formalising artisanal mining and imposing strict export controls. The Precious Metals Act regulates gold sales, while the South African Police Service’s Minerals Unit targets smuggling routes. Zimbabwe could strengthen its mine-to-market tracing with robust enforcement, partnering with security agencies to dismantle smuggling networks, and offering competitive prices aligned with LBMA rates to deter informal sales.

Ghana, Africa’s gold kingpin, shows how to do it right. Ghana, Africa’s leading gold producer, has reduced smuggling by incentivising legal trade through the Precious Minerals Marketing Company (PMMC), which pays market rates and provides technical support to small-scale miners. The proposed Ghana Gold Board aims to further curb illicit flows with advanced tracking and anti-corruption measures. Zimbabwe could adopt a similar approach, enhancing FPR’s pricing to match global rates, providing immediate USD payments, and formalising artisanal miners with training and financial support.

So, what’s the fix? First, kill the price gap. FPR must pay global rates, or smugglers will keep winning. Second, build a refinery and sell refined gold directly; Botswana proves it works. Third, make the tracing system brutal, track every gram with tech and muscle, not promises. Fourth, slash the 30% retention; miners aren’t ATMs. Finally, audit the hell out of players who buys artisanal gold in cash and resells to FPR.  

The government swears it’s fighting smuggling, but the numbers scream otherwise. Earnings shouldn’t be crashing when prices are soaring unless someone’s pocketing the difference. Zimbabwe’s gold could be a lifeline; instead, it’s a looting spree. Without ruthless reform, this isn’t a downward trend, it’s a death spiral.

Therefore, Zimbabwe’s declining gold export earnings amid rising prices stem from a toxic mix of illicit trade, high intermediary costs, and low-value semi-manufactured exports, exacerbated by policy distortions like suppressed prices and forex retention.

While initiatives like mine-to-market tracing signal intent, their impact remains limited without robust enforcement and market-aligned incentives.

By learning from Botswana’s direct sales, South Africa’s enforcement, and Ghana’s incentives, Zimbabwe can plug revenue leakages, maximise its gold wealth, and reverse this downward spiral. The stakes are high: failure to act risks perpetuating a cycle of lost billions, environmental ruin, and economic stagnation.

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