Page Nav





Breaking News


RioZim Sues RBZ Over Forex Allocations

RioZim is to sue the Reserve Bank of Zimbabwe over its failure to allocate foreign exchange to its mines, the gold producer has said, in a h...

RioZim is to sue the Reserve Bank of Zimbabwe over its failure to allocate foreign exchange to its mines, the gold producer has said, in a hard-hitting cautionary likely to further dent investor sentiment.

RioZim is listed on the Zimbabwe Stock Exchange and operates three gold mines, a nickel refinery, and interests in coal and diamond operations. Its gold assets are Renco Mine, located in Masvingo, Dalny Mine in Chakari, Cam & Motor Mine and Empress Nickel Refinery in Kadoma. RioZim holds a 50% interest in Sengwa Colliery which has coal assets in Gokwe. The company has 22.2 percent interest in Murowa Diamonds which operates in Zvishavane.

In a cautionary today (Tuesday), the mine says these operations, and its expansion plans, are now at serious risk as central bank has been only allocating 15% of the group’s forex requirements.
The agreed allocation has previously been 50 percent, but this has seen fallen to 30 percent after central bank’s last policy measure.
RioZim Sues RBZ Over Forex Allocations

“Since 2016 to date, the Company has only been allocated an average of circa 15% of the foreign currency that it has generated. The Company is required to deliver all gold produced to Fidelity Printers and Refiners who in turn, credit the Company through the local RTGS system notwithstanding the fact that they have a contractual obligation to pay in foreign currency. 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 has increased exponentially when compared to the prices quoted by external suppliers for the same products. In some cases, the prices quoted by local suppliers is more than 300% the prices quoted by their international counterparts.”

RioZim says it has in effect been receiving a fraction of the true value of the international market price of the gold that it has been delivering to Fidelity.

“The situation is thus unsustainable and prohibits the Company’s ability to operate viably and maintain its production.”

RioZim says its plan to build a new Biological Oxidation Plant at Cam & Motor Mine which is required to treat refractory ore as the near- surface oxidized ore was was now at risk.

“There are other similar capex projects which are absolutely critical for the Company to sustain and grow its current production which have not been triggered as a result of foreign currency not being available.”

RioZim says its revenues have shrunk, depressing production, while costs shoot up. After making no headway with negotiations, RioZim is taking the step of suing RBZ.

“The Company has engaged the Central Bank on numerous occasions over the issue and minimal progress has been made in improving the situation. Therefore in addition to the other measures that the Company is considering to address the situation, the Company has proceeded to formally serve the Reserve Bank of Zimbabwe with its notice advising it of its intention to file legal proceedings against the Reserve Bank of Zimbabwe for a claim demanding that the Central Bank complies with its directives and policies, and also, for compensation for any losses that the Company has suffered as result of the Central Bank’s non-compliance with its directives from 2016 to date.”

RioZim’s cautionary will resonate with many other mining firms, which are also failing to secure forex for critical supplies. The foreign payments backlog is at least US$600 million.

The statement is also an escalation in tensions between the company and Government, after RioZim took the Ministry of Defence to court for the designation of its mining claims as a cantonment area, while offering the same claims to mining companies linked to the military.

RioZim: By the numbers

In 2017, RioZim produced 2.1 tonnes of gold, up 31% from 1.6 tonnes in 2016. In the 2018 first half year, the company produced 1 050kg from 873kg in the prior half year.

In its latest cautionary, RioZim does not state how much it could claim in damages. However, profit fell a massive 86% to $406 000 in the six months to June 30, from $2.9 million last year. The drop was because RioZim only received 14% of its export proceeds from RBZ. The company estimated losses due to payment delays to be US$40 million in increased expenses and delayed capacity.

Cam & Motor Mine is the flagship operation of the RioZim group. The $10 million plant at Cam & Motor plant was commissioned in January 2017 and contributes 46% to the group’s gold output. Cam and Motor produced 974kg in 2017. Output was 458kg in the first half of 2018.

Foreign currency shortages have delayed full operation of that new plant, due to delays in securing components for the milling and leaching sections.

At the time of commissioning, RioZim said the Cam & Motor plant had capacity to process 2 400 tonnes of ore per day and a recovery potential of 93%. The company expects to increase gold production at the mine to 130 kg per month, to give the group a combined output of 200kg per month.

The company announced in April 2018 that it had budgeted up to US$25 million for exploration. Of this, US$3 million was committed to Murowa for new equipment. RioZim is also exploring a diamond find in Chivi.

Disclaimer: The information contained in this website is for general information purposes only.

The information is provided by Gossip Maestro using online sources and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose.

Any reliance you place on such information is therefore strictly at your own risk.

Classic Header