Forex scarcity rattles granite stone producers

Kudzai Kuwaza

GRANITE stone producers are struggling to remain viable due to an acute foreign currency shortage which has resulted in at least 50% of them retrenching their workers, businessdigest has learnt.

Many mining companies have been struggling to remain operational due to the low foreign currency retention threshold by the central bank.

Dimension Stone Producers Association spokesperson Edward Muvhuro said the 50% allocation they are getting from the Reserve Bank of Zimbabwe is inadequate and has crippled their operations, forcing some of their members to downsize to stay afloat. “We have made presentations to the Reserve Bank of Zimbabwe to increase our allocations from 50% to 80%, including letters from workers asking to be paid in forex and although they have promised to respond they have not done so. We have not made any headway,” Muvhuro said.

“We are choked at the moment to the extent that at least half of our members have begun retrenching workers. I am sorry to say but getting 50% of our own money in forex is an insult.”

He said operations at Nature Stone, where he is the human resources executive, have been seriously constrained by the inadequate allocation of foreign currency considering that 90% of their operations are supported by imported consumables. He warned that if there was no increase to the forex retention thresholds, Nature Stone would also be forced to retrench. The company is currently paying its workers a portion of their salary in foreign currency in order to cushion them from the continuing increase in prices of basic commodities brought about by the currency volatility in the market.

Late last year, RioZim closed three of its gold mines resuming operations after the central bank increased the forex retention from 30% to 55% for gold producers. This followed a letter by the Chamber of Mines on issues resolved by the Gold Producers Committee to Reserve Bank of Zimbabwe governor John Mangudya. The committee pointed out that the foreign currency retention threshold of 30% to gold producers is inadequate to meet costs of production.

“While appreciating the recent review of producers’ allocation of export proceeds, these retention thresholds are no longer adequate to cover production costs, the majority of which have become dollarised,” the chamber told Mangudya.

“If this situation is not addressed, the majority of gold mining houses, whose going concerns have been undermined, may find it impossible to continue in production.”

Last month, beverage giant Delta Corporation announced it would sell its products in forex. It however reversed the decision after government promised to allocate forex to sustain the company’s operations.