Rio Zim Records Loss Due to Foreign Currency Shortage

Rio Zim Records Loss Due to Foreign Currency Shortage
Image Credit: The Zimbabwe Independent

Mineral extraction company, Rio Zim Limited recorded a US$2,3 million net loss which is partly attributed to the fixed costs incurred whilst operations were suspended for the gold business last year.

Rio Zim suspended operations at Cam and Motor Mine, Dalny Mine and Renco mines last year following the Reserve Bank of Zimbabwe’s failure to allocate the group with foreign currency required to access raw materials needed to extract gold.

“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,” Board Chairman Lovemore Pfupajena Chihota said.

“Gold prices averaged US$1247/Oz faring slightly better than the levels of US$1242/Oz realised in 2017.”

Rio Zim chairman, said that the year 2018 proved to be extremely challenging economically characterised by acute foreign currency shortages and severe inflationary pressures with the Central Bank foreign currency allocations remaining below the stipulated retention levels.

“This set the stage for a very difficult operating environment and an inability to procure necessary stocks from critical foreign suppliers,” Chihota said.

“The situation, however, worsened as the year progressed and reached unprecedented levels as was depicted by the involuntary shutdown of all mining operations by the Company’s gold business units in the fourth quarter.”

“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,” Chihota explained.

Despite recording loss, Rio Zim’s Murowa Diamonds (Private) Limited recorded a US$6.8million from 740 244 carats an increase from 732 045 extracted in 2017.

The group’s Empress Nickel Refinery (ENR), which is under care and maintanance produced 595 tonnes of matte and 62 tonnes of copper cathode.

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