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Gold producers demand more forex allocation

By Kudzai Kuwaza

THE outlook for gold mines is looking gloomy after RioZim Ltd shut down its mines over forex retention concerns amid concerns other bullion producers could also cease production.

RioZim sent an SOS to the central bank this week after it failed to procure key consumables for mining operations.

Zimbabwe is currently reeling from foreign currency shortages and resultant volatility triggered by the pronouncement by the Reserve Bank of Zimbabwe separating Real-Time Gross Settlement (RTGS) balances and foreign currency accounts. Gold miners have appealed to the central bank to increase their retention threshold.

A document by the Chamber of Mines’ Gold Producers’ Committee to RBZ governor John Mangudya, says the foreign currency retention threshold of 30% for bullion producers was inadequate to meet costs of production.

“While appreciating the recent review of producers’ allocation pf export proceeds, these retention thresholds are no longer adequate to cover production costs, majority which have become dollarised,” the chamber said. “If this situation is not addressed, majority of gold mining houses, whose going concerns have been undermined, may find it impossible to continue in production.”

They also said that the majority of suppliers and service providers, including government entities, are no longer amenable to RTGS as a form of payment.

“In isolated instances where RTGS are still accepted the local input prices have moved upwards as much as six times,” the chamber said.

The Chamber of Mines said in order to restore viability, they are proposing an upward review of the foreign currency allocation to mineral producers in line with the actual United States dollar cost that is obtaining in the market.

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