LOCAL insurance firm, Firstlink Insurance Brokers (Firstlink) has warned that the Reserve Bank of Zimbabwe’s (RBZ) decision to cut the foreign currency retention threshold by 5% will disrupt mining insurance programmes.
In the 2025 Monetary Policy Statement released last month, the foreign currency retention threshold for exporters was cut by 5% to 70%, against a plea for it to be increased to 100%.
Mining companies, already grappling with power shortages and capital constraints, face tight liquidity, which could affect their ability to maintain essential insurance cover.
Responding to questions from businessdigest, Firstlink highlighted potential repercussions of the policy shift.
“We are yet to see the full impact of the increased thresholds, as it is a recent announcement,” the firm said.
“However, based on the submissions made by miners through the Chamber of Mines last year on the old thresholds, this change will most likely have a negative impact on mining operations and viability. In turn, this could strain insurance programmes for miners.”
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Beyond financial constraints, miners are also contending with operational risks such as an unreliable power supply, which affects production and profitability.
Many mining firms have invested in solar and thermal power plants to mitigate energy disruptions, making insurance crucial in protecting these investments.
Frequent power outages can lead to sudden equipment failures, resulting in costly repairs and operational downtime.
“Miners should consider policies such as machinery breakdown insurance to cushion against such risks,” Firstlink said.
However, the reduced forex retention means miners may have to reassess their insurance portfolios to cut costs.
“Miners will likely adjust their coverage, reconsidering comprehensive policies for older vehicles and exploring alternative risk transfer options,” Firstlink said.
With capital shortages affecting the mining sector, insurance solutions are emerging as key tools to help miners secure funding, attract investment, and manage financial risks.
Trade Credit Insurance, for instance, enables miners to acquire equipment and supply on credit, easing cash flow pressures.
Meanwhile, customs bonds can help defer duty payments on imported mining equipment, freeing up funds for operational needs.
“If a new mine wants to build a plant and seek a loan, it may struggle to secure funding unless it has some form of insurance guarantee or debtors’ insurance,” Firstlink said.
Additionally, premium financing through banks allows miners to spread policy payments over time rather than making large upfront payments, offering financial flexibility amid liquidity challenges.
“The insurance industry has solutions such as environmental impairment liability coverage. However, insurers will only cover operations that follow best practices,” Firslink said.
“If a small or medium-scale miner does not meet compliance standards, they will struggle to obtain environmental insurance.”
To bridge this gap, industry stakeholders, including the Zimbabwe Miners Federation, are pushing for better education on compliance and stronger enforcement of environmental laws to ensure that more miners qualify for insurance cover.
