Zimbabwe gold miner stops production over forex shortage, payment delays
Zimbabwe gold miner RioZim Limited on Tuesday halted production after
failing to meet operational expenses because of foreign currency shortages and
delays in payments for bullion deliveries.
The southern African country's top gold producer said "severe challenges" arose from a fixed exchange rate system and a limit on foreign currency introduced by Zimbabwe's central bank.
Gold exporters are entitled to access 70 percent of their bullion proceeds in foreign exchange and 30 percent in Zimbabwe dollars at the prevailing interbank rate of 25:1, while markets and suppliers are pricing goods at 80:1.
"The impact of this situation on the company's operations has been that the company is no longer able to meet it operational expenditure requirements considering that the company is required to pay for electricity and fuel in USD along with almost all its consumables and spares being denominated in USD," RioZim said in a statement on Tuesday, adding that employees also received part of their salaries in US dollars.
"This means that the company does not have sufficient foreign currency to sustain its operations, let alone fund growth."
RioZim estimated it was getting less than 80 percent for its gold production compared with the international market price.
The company also said it was owed around $2.5 million and 65.5 million Zimbabwean dollars ($2.6 million) for gold delivered to printers and refiners.
"These delays, coupled with the current policies... and the extremely expensive local market for its consumables and spares, has made it impossible... to continue bullion production," the statement said.
All of RioZim's gold mines have been placed on "care and maintenance" until a "viable solution" is found.
Zimbabwe has been grappling with economic decline and rampant hyperinflation for over a decade, forcing foreign companies to shutter their operations or move to neighbouring countries.
President Emmerson Mnangagwa has so far failed on promises to revive growth and attract foreign investment after decades of mismanagement by his predecessor Robert Mugabe, whom he succeeded in 2017.
Basic goods such as fuel and food staples remain unaffordable to most and are hard to come by, with long queues forming at petrol stations on a daily basis.
Annual inflation rose to 785.55% in May from 765.57% in April, according to figures released by the National Statistics Agency on Tuesday.
