World Biz
Zimbabwe's leading gold producer suspends operations again due to lack of foreign currency
Last Updated: 2019-02-09 10:16 | Xinhua
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Zimbabwe's leading gold producer RioZim has once again suspended operations at its three mines following failure by the Reserve Bank of Zimbabwe (RBZ) to allow producers to maintain 55 percent of their foreign currency earnings in their nostro accounts as per promise.

The Zimbabwe Stock Exchange-listed miner had initially stopped operations at the mines last October but resumed them a month later after getting a commitment from the central bank that it would get enough foreign currency to meet its operational requirements.

Gold producers in Zimbabwe sell their gold only to Fidelity Printers and Refiners, a subsidiary of the RBZ.

In a statement to shareholders on Friday, RioZim said it had withdrawn an earlier cautionary statement issued in October 2018 because RBZ had committed to provide it with adequate foreign currency to meet its operational requirements following its involuntary suspension of operations.

As part of the commitments made to gold producers in November 2018 to support their operations, the Reserve Bank of Zimbabwe undertook to allow all gold producers to maintain 55 percent of their export earnings in their foreign currency nostro accounts and to increase export incentives on all minerals, the company said.

However, notwithstanding these commitments, the central bank had been failing to meet them, resulting in the company experiencing significant and persistent delays in payment of its foreign currency allocation for deliveries made to Fidelity Printers and Refiners (Pvt) Ltd since December 2018.

The three affected mines are Cam & Motor, Renco and Dalny.

The company said gold business contributed around 90 percent of its total revenue and the latest stoppage would therefore have a material impact on its performance.

It said it was in the interim engaging the RBZ, the Chamber of Mines and other authorities on how to expediently resolve the matter.

Zimbabwe is reeling from foreign currency shortages and the central bank is trying to spread the available funds across various sectors of the economy, disadvantaging most of the foreign currency earners in the process.

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