Rising costs choke miners Rio Zim sends forex SOS to RBZ governor
THE Chamber of Mines Zimbabwe has proposed an upward review of the foreign currency account (FCA) allocation to the mining sector to cover rising production costs.
Through its gold producers committee, the Chamber of Mines has said in a report to be presented to the Reserve Bank of Zimbabwe, seen by Business Chronicle, that its members may be forced to suspend operations due to foreign currency shortages that have left them with inadequate finance to cover production costs.
“While appreciating the recent review of producers’ allocation of export proceeds (30 percent for gold and platinum 35 percent in Nostro FCAs), these retention thresholds are no longer adequate to cover production costs, a majority of which have become dollarised,” said the chamber.
“If this situation is not addressed, a majority of (gold) mining houses’ whose going concern have been undermined, may find it impossible to continue in production.
“In order to restore viability we are proposing an upward revision of the FCA allocation to mineral producers in line with the actual US$ costs that are obtaining in the market.”
The chamber said most mining companies’
RIOZIM has requested the Reserve Bank of Zimbabwe (RBZ) to allocate it foreign currency to restart and sustain operations at its mines that closed last month after running out of critical imported consumables and spares.
The mining group suspended operations at Dalny Mine on October 19 followed by Cam and Motor and then Renco Mines on October 22, having run out of imported consumables and spares. In a letter dated October 26, 2018, addressed to RBZ Governor Dr John Mangudya seen by this paper, RioZim said it had temporarily ceased operations at the three mines after critical imported consumables ran out of stock recently due to foreign currency shortages.
“Governor, we humbly request for your urgent intervention in the following matters,
total cost to income ratio ranges between 70 percent and 95 percent.
“This situation will be reviewed as and when the situation is brought back to normalcy. which will allow us to restart all our operations and sustain operations thereafter. The assistance we seek is for the following: Onceoff exception to allow RioZim to retain 100 percent forex for the first delivery of gold after the restart.
“This will help us to catch up on the deficit created over the last nine weeks when we received near zero forex allocation and allow us to restock critical supplies to sustain
Gold producers have a unique challenge as their Nostro FCA accounts are yet to become operational, and appeal for your intervention to speed up commercial banks and Fidelity Printers and Refiners to operationalise.”
Zimbabwe’s gold sector has maintained a bullish trend this operations,” said the mining group.
The critical imported consumables and spares that ran out included cyanide, activated carbon, caustic soda, explosives, forged steel balls, spares for the repair of crucial equipment and numerous other items.
RioZim said over the last 30 months, it had only received 14 percent of its money in forex against the Central Bank’s directive of 50 percent directly to its nostro account and 50 percent through application to the monetary authority.
“In the nine weeks preceding the closure of production at the mines we have received almost no foreign exchange,” it said.
The group further pointed out that the disruption of operations at its mines was harmful not only to itself but Zimbabwe at large. RioZim hopes that the matter would be resolved as soon as possible as it continues to engage the monetary authority.
year with the miners pledging to produce up to 100 tonnes of the yellow metal per annum if given adequate support by Government.
The miners have demanded improved efficiency when receiving payment for their deliveries among a chain of incentives.—@ okazunga.