RioZim blames government for profit loss
One of Zimbabwe’s leading gold and diamond producer, RioZim which recorded a net loss of USD 2.3 million against a net profit of USD 8.1 million achieved in the prior year, blames government’s position on currency for creating a very difficult working environment which led to an inability to procure necessary stocks from critical foreign suppliers.
According to a statement issued by the company’s chairperson Lovemore Chihota, the government’s stubbornness on the position of the USD against the RTGS where it insisted that the currencies were at par while in actual fact the USD was trading at 1:4 against the RTGS balances, led to a situation where the company was selling 45 percent of its gold output at loss because all companies supplying mining machinery and other equipment had adjusted to the parallel market exchange rates.
“…the remaining 45% of the Company’s gold export proceeds were paid in local RTGS currency at a rate of 1:1 with the USD, notwithstanding the fact that the prevailing parallel market was as at October trading at a rate of circa USD 1: RTGS$ 4, and all local suppliers had adjusted their prices to these exorbitant parallel market rates. As a result, for a greater part of the second half of the year 2018, the Group effectively sold 45% of its gold production at only 25% of its true value” he said.
According to the group’s chairperson, the company lost production time after it unwillingly shut down all mining operations in the fourth quarter of the year citing poor government policy which led to insufficient foreign currency allocations by the Reserve Bank of Zimbabwe.
“As a result of these challenges, a whole two months production was lost albeit the fact that the company continued to meet all of its fixed costs and thus driving the business down a path of operating losses,” he said.
“The Group’s revenue decreased by 15% to USD 75.4 million in 2018 from USD 88.9 million realized in 2017. The Group’s underperformance was due to low production volumes in the second half of the year and the inability to complete planned capital projects due to foreign currency funding constraints, which would have sustained and increased production” he said.
However, the company’s chair said some strides were made by the company despite the challenges it faced last year.
“RioZim Limited, however, prides itself in being a truly resilient Zimbabwean company and despite these difficulties, various milestones were achieved during the course of the year, notwithstanding the macroeconomic obstacles which it faced” he said.
According to the group’s statement, RioZim Limited remains resolute on building and maintaining a sustainable mining concern in line with its holistic approach to business. Among the Group’s key goals is to be a responsible corporate citizen. RioZim Foundation continues to expand on its vision to create, develop and promote collaborative sustainable development programmes so that measurable socio-economic benefits are afforded to the communities in which the Group operates and to the country at large.