HomeBusiness DigestRioZim warns of adverse effect of shutdown

RioZim warns of adverse effect of shutdown

Conrad Dube

RIO Tinto Zimbabwe has warned that the 48-day shutdown at the Empress Refinery in March and April and at Renco in February due to shortage of explosives and a strike by workers will affect financ

ial results in the second quarter.

Empress refinery was shut down for 24 days due to a furnace breakdown at BCL Ltd.

The company said the 12-day strike by employees at Renco and a further 12-day shutdown due to the failure of the gold support fund to release foreign currency timeously compounded RioZim’s operational problems during the quarter.

Chairman Eric Kahari said: “The just-ended quarter was therefore not a good one operationally and getting supplies through the border takes time and adds to working capital requirements. But since quarter-end the refinery has restarted and Renco after a disappointing April is currently recovering strongly from the poor first quarter.”

He said the changes to the exchange rate in February had a positive effect on revenues but the frequency of payment of the US dollar portion by the Reserve Bank of Zimbabwe (RBZ) had been slow and erratic.

He said operations were under threat from suppliers unwilling to provide necessary supplies on the chance that gold miners may at some stage be able to pay for them.

Kahari said: “Increasingly suppliers demand upfront payment in foreign currency, even when foreign currency is available the bureaucratic process involved in obtaining RBZ approval to pay invoices sometimes becomes a challenge. We still occasionally suffer cuts even when payment has been made for fuel and electricity, which must be paid for in foreign currency.”

Patchway Mine, which RioZim classified as a small operation, needed a further investment but the group has “taken the decision to dispose of the claims and assets of the mine as it would remain a small investment even with that further investment.”

The operation could provide an ideal opportunity for investment by a smaller industry player, the company said.

But chief executive officer John Nixon said the process to dispose of Patchway Mine was just beginning.

The joint venture with Rio Tinto Mining and Exploration, while focusing on diamonds as a target, generated a great deal of data about other minerals and the company has indicated that seeking a local partner to invest in new programmes would be a possibility. The mining group’s total gold production lost significantly to 6 480 ounces compared to 10 647 ounces in the comparative quarter last year.

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