RioZim Limited, one of Zimbabwe’s prominent gold producers, is facing severe financial challenges, but a possible change in ownership and a significant capital injection offer a glimmer of hope for the troubled company. The new investor, whose identity has not yet been disclosed, is reportedly in advanced talks to take over the company’s operations and inject much-needed capital to revive RioZim’s struggling assets.
By Rudairo Mapuranga
For years, RioZim has been grappling with declining production, financial instability, and operational difficulties. Its flagship gold mine, Renco, has suffered from aging infrastructure, low ore grades, frequent mechanical failures, and volatile exchange rates, which have exacerbated the company’s woes. Gold production at Renco plunged by 42% in the first half of 2024, producing just 130 kilograms, marking a continuation of the company’s years-long downward spiral.
Further compounding its problems, RioZim’s BIOX plant at Cam & Motor Mine, which was expected to boost production by up to 50%, failed to deliver the anticipated results. Operations at the Empress Refinery have largely been suspended, adding to the financial strain, while its Murowa Diamonds interest has been hampered by liquidity challenges and an underperforming mining sector.
RioZim’s financial distress is further illustrated by its mounting debts. The company owes US$34 million to the Zimbabwe Asset Management Corporation (ZAMCO), a state-run entity set up to manage distressed companies’ debts. Additionally, RioZim has been the target of calls from the Zimbabwe Diamond and Allied Minerals Workers’ Union (ZDAMWU) for improved conditions after many of its workers went months without pay.
Despite these obstacles, insiders suggest that a deal with a new investor could signal a turning point. If finalized, this acquisition would mark a major shake-up for RioZim, with the new investor expected to take over management of the company’s assets and assume its liabilities. The investor is also likely to be required to make a mandatory offer to minority shareholders, as per regulatory requirements.
The government has also intervened in RioZim’s struggles, with authorities issuing a reconstruction order on some of the company’s assets, including Bindura Nickel Corporation’s Trojan Mine, which has been underperforming due to a sharp decline in global nickel prices.
In an effort to stabilize operations, RioZim is expected to receive a capital boost from the incoming investor, who has committed to addressing the company’s liquidity issues and reviving its stalled projects, such as the Sengwa coal project in Gokwe. However, the success of any turnaround strategy will depend on how effectively the new owners manage RioZim’s restructuring efforts and resolve the underlying issues within Zimbabwe’s mining sector, including foreign exchange shortages, inconsistent policies, and operational inefficiencies.
As shareholders and industry players await the outcome of these negotiations, RioZim’s future hangs in the balance. The conclusion of the deal, which remains subject to due diligence, regulatory approvals, and shareholder agreements, could offer the company a new lease on life, provided the new investors inject the capital and expertise needed to revive its struggling operations.
RioZim has advised shareholders to exercise caution while dealing with the company’s securities, as significant developments are imminent. If successful, this capital injection and ownership change could help RioZim avoid collapse and stabilize its position within Zimbabwe’s complex mining industry. However, failure to finalize the deal could deepen the company’s crisis, potentially leading to further financial distress and operational disruptions.
