RIOZIM says its operations are under threat from a critical shortage of foreign currency to sustain and grow its business and has blamed these challenges on failure by the Reserve Bank of Zimbabwe (RBZ) to pay the gold producer price in foreign currency, crippling its operations.
BY FREEMAN MAKOPA
Prior to October 1, 2018, the RBZ was obliged to pay gold producers 50% in foreign currency for deliveries made to its subsidiary, Fidelity Printers and Refiners (Fidelity Printers).
The policy had been in force since April 2016. In terms of this policy, which was reviewed this month, the balance was supposed to be paid by application.
Under the new policy, the RBZ has increased the ratio of foreign currency paid into nostro foreign currency accounts to 70%.
RioZim, in a statement yesterday, said the RBZ has since 2016 only released “an average of circa 15% of foreign currency that it has generated”.
“The company is required to deliver all gold produced to Fidelity Printers, who in turn credit the company through the local RTGS (real time gross settlement) system notwithstanding the fact that they have a contractual obligation to pay in foreign currency,” RioZim said in the statement.
“The impact of this on the company’s operations has been that the company is unable to pay its external suppliers and consequently, the company’s costs have escalated as the price of locally available consumables and spares have increased exponentially when compared to the prices quoted by external suppliers for the same products.”
RioZim is one of the four miners quoted on the Zimbabwe Stock Exchange. It has interests in gold (Renco Mine, and Cam and Motor Mine); coal (Sengwa), nickel (Empress) and diamonds (Murowa Diamonds).
The diversified miner further says it has had to suspend capital expenditure projects for its gold business at Cam and Motor Mine and Renco Mine, undermining viability and stifling the sustainability and growth of production.
At cam and Motor Mine, RioZim planned to establish a biological oxidation plant for treating refractory ore following the depletion of near-surface oxidised ore at the end of 2017.
“The lack of foreign currency has also started to have a significant negative impact on the company’s ability to meet its projected targets,” RioZim further said in the statement.
As a result, “revenues have shrunk, leading to a severely depressed production”.