By ETimes

RioZim, the country’s largest gold producer, says it is currently producing at a loss due to the foreign exchange volatility and power cuts.

This comes after the miner third quarter gold production declined by 7% compared to the same period last year.

According to the company, the market was characterised by price increases on raw materials and widening gap between the auction rate and black market rates. It said the continued depreciation of the local currency continues to pose a threat to business performance.

The miner gave up circa 55% of its gross revenue to either the Reserve Bank of Zimbabwe or other agencies of the Government of Zimbabwe in the form of surrender of foreign exchange, royalties, taxes, duties and utilities.

“The ZWL thus received, at the official exchange rate, had a purchasing power of almost half of what the Company receives,” said the miner in a statement.

“That means that the Company carries an additional cost of approximately 25% of revenue which comes from the current environment. In effect the company loses about 25% of its revenue altogether.”

Operational costs are likely to continue going up as firms are subjected to regular power cuts because of the inability of power utility ZESA Holdings to meet demand.

“The group’s mines were not spared from the load shedding and suffered considerable downtime, which negatively affected production and increased costs significantly,” it said.

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As for company associates in gold business, Cam & Motor Mine production declined by 31% from the same period last year. 

BIOX Plant Project Structural steel fabrications and equipment installations progressed during the quarter with most of the activities necessary to bring the plant to commissioning at an advanced stage. 

“Notwithstanding the disruptions encountered on installations, mainly from power cuts and slow movement of cargo due to the cross border challenges, the group is looking forward to commissioning the project at the end of Q4 2021.”

At Dalny Mine third quarter production rose 31%. “The growth in volumes was due to increased throughput as a result of plant process interventions that were implemented from the beginning of the current year,” it said. Also it opened new open pit mining areas during the year which contributed to a positive upturn in ore availability and throughput.

Renco Mines recorded a marginal 1% increase in production compared to the third quarter last year.

This was attributed to stable ore grades as the accelerated exploration activities which the Mine undertook from the prior year continued to give the Mine more control on its feed grades.

The Empress Nickel Refinery (ENR) remained under care and maintenance throughout the quarter.

RioZim associate RZM Murowa recorded a 43% decrease in production compared to Q3 2020 owing to processing low grade ores from the K1 pit after the high grade K2 pit reached pit life. “The Associate’s Crown Jewel Project which will increase the processing capacity of the plant is progressing albeit at a slower pace than desired due to lack of adequate foreign currency.” – Harare

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