By Staff Writer
RioZim, the country’s largest gold producer, says the reduction in gold retention by the Reserve Bank of Zimbabwe (RBZ) have left the miner in a difficult position in terms of basic continuations of its operations.
In 2020, RBZ introduced a mix of policy changes including the fixed exchange rate system at USD1:ZWL25. The parallel exchange rates however, continued to trade at enormous premiums to the interbank rate which meant the company was realising less than full value of its gold produced by wide margins which stifled the company’s profit margins.
The review upwards by the RBZ of the gold retention to 70%, coupled with the replacement of the fixed exchange rate with a forex auction determined rate towards the end of H1 2020, group chairman Saleem Beebeejaun said, were welcome developments which had a positive impact on the firm in the H2 2020.
“Unfortunately, on the 8th of January 2021, immediately after the end of the year under review, the gold retention was varied downwards to 60%,” he said.
Prior to the latest review, miners had been lobbying the apex bank for permission to retain as much as 80% of their foreign currency earnings from the exports.
“This has left the company in an extremely challenging position arising out of the markedly reduced amount of requisite foreign currency required for the basic continuation of operations.”
In FY2020, the company’s gold production fell by 27% to 1.21 tons from 1.66 tons in the comparative period. In the period, the group’s flagship operation Cam & Motor Mine carried out mining activities from the nearby One Step Mine hauling low grade ore to the Cam & Motor plant for processing.
“This resulted in a drastic fall in gold production compared to the prior year when the Mine processed higher grade ore from its Cam pits,” he said.
Gold price maintained a growth trend throughout the year recording a 27% growth from the prior year’s average price of US$1 395/oz, to an average price of US$1 765/oz in 2020 which counteracted the impact of lower production volumes.
Revenue rose fourfold to ZWL$3.1 billion from ZWL$577.1 million in 2019 on the depreciation of the local currency against the US dollar. The miner achieved a net profit for the year of ZWL$452.7 million from a loss position of ZWL$581.3 million – Harare