RioZim Halts Output as Central Bank Fails to Make Payments

HARARE (Capital Markets in Africa) = RioZim Ltd. halted production at its three gold mines after Zimbabwe’s central bank failed to provide foreign currency the company needs to keep operating.

The shutdown is the second by RioZim since October. It’s the latest indication of how businesses are struggling to keep going as a dearth of foreign exchange causes shortages of food and fuel in the southern African nation.

RioZim said it suspended output after the central bank reneged on a commitment made in November to allow all gold producers to keep 55 percent of their export earnings in so-called nostro accounts and to increase export incentives.

“This has severely affected the viability of the company’s operations,” Harare-based RioZim said in a statement published in the NewsDay newspaper on Friday. “The current stoppage in production has a material impact on the company’s performance.”

Reserve Bank of Zimbabwe Governor John Mangudya wasn’t available when Bloomberg called his office seeking comment.

Mining is the biggest source of foreign exchange for Zimbabwe, which has the world’s largest platinum reserves after South Africa and also has deposits of chrome and iron ore. RioZim produced 2.1 tons of gold in 2017, accounting for almost 10 percent of total output in Zimbabwe.

Source: Bloomberg Business News