The Gold Producers Committee of Zimbabwe (COMZ) has warned the government that many mining companies are on the verge of shutting down as they are no longer viable. The gold miners criticised the payment system whereby the Reserve Bank of Zimbabwe (RBZ) only gives them 30 percent of their proceeds in actual United States Dollars while the rest of the proceeds are in the form of real-time gross settlement (RTGS). Mining giant Rio Zim has already announced that it is considering taking the RBZ to court in order to recover the 30 percent forex earnings that it is owed.
Some of the resolutions reached from a meeting of the gold miners’ meeting read,
1. The majority of suppliers and service providers (inclusive of some government entities) are no longer amenable to RTGS as a form of payment.
2. In isolated instances where RTGS are still accepted the local input prices have moved upwards as much as six times.
3. While appreciating the recent review of producers’ allocation of export proceeds (gold to 30% and platinum to 35% in Nostro FCAs), these retentions thresholds are no longer adequate to cover production costs, majority of which have become dollarized.
4. If this situation is not addressed majority of (gold) mining houses’ whose going concern has been undermined, may find it impossible to continue in production.
5. In order to restore viability, we are proposing an upward revision of the FCA allocation to mineral producers in line with the actual US$ costs that are obtaining in the market. Most mining companies total cost to income ratio ranges between 70% and 95%. This situation will be reviewed as and when the situation is brought back to normalcy.
6. Gold producers have a unique challenge as their Nostro FCA accounts are yet to become operational and appeal for your intervention to speed up commercial banks and Fidelity Printers and Refiners to operationalise.