RIOZIM is taking legal action against the Reserve Bank of Zimbabwe (RBZ) for failure to have access to foreign currency earnings realised from the sale of bullion it produces.
Precious metals miners in Zimbabwe are struggling under increased demands for them to prop up Zimbabwe’s treasury which is struggling to raise revenues to settle key obligations such as power, fuel and other national imports.
Zimbabwean gold, chrome and platinum miners only get a small portion of their earnings in hard currency while the bigger portion is paid out in the country’s local currency which is fast losing value. This was heavily impacting on viability and costs of the miners.
“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 RBZ 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 a result of the central bank’s non-compliance with its directives (on forex release) since 2016 to date,” RioZim said in a cautionary issued on Tuesday.
RioZim said that although central bank regulations between April 2016 and September this year state it the company is entitled to 50% of its earnings from gold sales in foreign currency, it was getting only 15%. The balance is paid in local currency which is credited electronically. Gold miners now only have access to 30% of their earnings in forex with effect from last week.
RioZim costs and those of gold industry peers have spiked, heavily impacting on capital provisioning for operations. The “lack of foreign currency has started to have a significant impact on RioZim’s ability to meet its projected targets” for production and growth, it said.
RioZim has also not been able to build a biological oxidation plant at its Cam and Motor gold mine which “… will affect [its] viability”. RioZim operates gold mines, the Murowa Diamond mine, and has some coal assets.