Zimbabwe loses roughly US$2 billion a year to gold smuggling, most of it from small-scale miners who operate outside the formal system. Fidelity Gold Refinery, the country's sole legal gold buyer, wants to change that. General Manager Peter Magaramombe told parliament this week that a formalisation drive is expected to begin soon, aimed at making every gram of gold traceable from pit to export (New Zimbabwe, May 13 2026).
The scale of the problem is hard to overstate. Small-scale miners now deliver about 75 percent of Zimbabwe's gold, a share that has grown steadily as formal producers struggle with higher royalties and stricter compliance rules (WeMineZimbabwe, May 2026). But a significant portion of what they dig up never reaches FGR's refineries. Instead, an estimated 22 tonnes a year crosses the border through informal channels, ending up in regional smelters and eventually in markets like the UAE (WeMineZimbabwe, May 2026).
Why Formalisation Matters
For the government, the issue is not just about lost revenue. Gold is the single biggest source of foreign currency in Zimbabwe, and every tonne that leaks out of the formal system weakens the reserves backing the ZiG currency. Last year, gold exports earned US$4.48 billion, making the sector by far the country's most important export earner (Zimbabwe Situation, March 2026).
"We need to formalise the artisanal and small-scale miners so that every day we know exactly where we are, where the gold is coming from and where it is going," Magaramombe said (New Zimbabwe, May 13 2026).
The refinery's plan focuses on better monitoring systems, stricter compliance requirements, and traceability across the entire gold value chain. Details are still thin, but Magaramombe expressed confidence that the formalisation process would begin shortly.
The Production Boom
The formalisation push comes at a moment of strong production growth. Zimbabwe mined a record 46.7 tonnes of gold in 2025, up from 35.8 tonnes in 2022, and FGR is targeting 50 tonnes for 2026 (New Zimbabwe, May 13 2026). Small-scale miners contributed roughly 35 tonnes of last year's total, with the remainder coming from large-scale operations like Blanket Mine and Freda Rebecca.
Gold deliveries in the first quarter of 2026 reached 9.31 tonnes, up 8.3 percent from the same period last year, according to Fidelity data cited by the Herald. January alone saw gold exports surge 135.6 percent year-on-year to US$290.1 million, driven by both higher output and record international prices above US$4,000 per ounce (Zimbabwe Situation, March 2026).
The Policy Tension
Formalisation is not straightforward. The RBZ recently suspended a policy requiring small-scale miners to accept 10 percent of their payments in ZiG after it encountered implementation challenges. Many artisanal miners do not have bank accounts, making it difficult to process local currency payments. The Zimbabwe Miners Federation flagged this as a barrier to compliance (Zimbabwe Situation, April 2026).
There is also a structural incentive problem. Small-scale miners pay royalties of just 1 to 2 percent, while large-scale producers face rates of 5 percent or higher. That gap has reportedly encouraged some larger operations to channel gold through small-scale channels to avoid the higher burden, a practice the RBZ explicitly flagged when introducing the 90:10 retention rule (Zimbabwe Situation, March 2026).
So what does this mean for someone tracking the ZiG-to-USD rate? A more formalised gold sector means more gold flowing through FGR, higher official export earnings, and stronger reserves behind the currency. But getting there requires balancing enforcement against the reality that ZimRate's coverage of forex trends shows how quickly small-scale miners can shift to informal channels when policy feels punitive.
This article is for informational purposes only and does not constitute financial advice.
