RioZim closes 3 mines over forex crisis

RIOZIM has pleaded for government intervention after it suspended operations of its major mines due to foreign currency shortages.

BY FIDELITY MHLANGA

In a communique gleaned by NewsDay addressed to the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya, copied to Finance minister Mthuli Ncube and his Mines counterpart, Winston Chitando, RioZim chairman Lovemore Chihota said over the past 30 months, RioZim has only received 14% of its money in forex against a RBZ directive of 50% directly to its nostro account and 50% through application to the central bank.

“In the nine weeks preceding the closure of production at the mines, we have received almost no foreign exchange.

“As per our previous communications, we regret to confirm that Cam and Motor Mine, Dalny Mine and Renco Mine involuntarily stopped operations after running out of consumables and spare parts recently,” Chihota said in a communique dated October 26.

Chihota said after running out of critical consumables and spares, Dalny Mine stopped operating on October 19 followed by Cam and Motor Mine and Renco Mine on the October 22.

Chihota said the stocks of critical imported consumables and spares ran out due to an acute forex shortage, including cyanide, activated carbon, caustic soda, explosives, forged steel balls, spares for the repair of crucial equipment and numerous other items.

“As you will agree, this disruption is very harmful to us all that is our employees, our creditors, the government of Zimbabwe along with all other stakeholders. However, we hope that this stopping of production is temporary and that we will resolve the issues currently facing us as we continue to engage yourselves and hope that at the end of it we shall come out stronger to the benefit of all stakeholders,” he said.

Efforts to get a comment from Mangudya and Chitando were fruitless yesterday.

Riozim is seeking assistance to have a once-off exception to allow it retain 100% forex for its first delivery of gold after restart to catch up with the deficit created over the last nine weeks where the company did not forex allocation.

The gold mining company also pleaded to be allowed to retain 60% of its revenue in forex for every weekly delivery thereafter 50% for operations and 10% for critical sustaining capex as it maintains that it did not spend anything on repair and maintenance over a year due to forex shortages.

RioZim is seeking to access extra forex over the next year for critical growth projects through letter of credit facility.

“To date, we have invested more than $30m at Cam and Motor. In order to sustain and indeed further increase production, we now need to invest an additional $15m for Biox – without which Cam and Motor has no life going forward and production there will collapse to zero as you are already aware. We need to invest a further $5m to expand production at Renco,” Chihota added.

The company says if it gets support, it can produce 165kg a month (Cam – 60kg, Renco – 60kg and Dalny – 45kg) from the current production of zero for a year after restart.