The Reserve Bank Of Zimbabwe
ATTENTION: THE GOVERNOR, JOHN MANGUDYA ESQ.,Dear Sir
Subject: Request for support to restart operations at RioGold
As per our previous communications, we regret to confirm that Cam and Motor Mine, Dalny Mine and Renco Mine involuntarily stopped operations after running out of consumables and spare parts recently.
As you are aware, the stocks of critical imported consumables and spares ran out due to an acute forex shortage including cyanide, activated carbon, caustic soda, explosives, forged steel balls, spares for the repair of crucial equipment and numerous other items.
As you know, over the last 30 months, RioZim has only received 14% of its money in forex against a Reserve Bank Directive of 50% directly to our nostro account and 50% through application to the RBZ. ln the 9 weeks preceding the closure of production at the mines we have received almost no foreign exchange.
Having run out of the above critical consumables and spares, Dalny Mine stopped operating on 19 October followed by Cam and Motor Mine and Renco mine on the 22 October. As you will agree, this disruption is very harmful to us all that is our employees, our creditors, the Government of Zimbabwe along with all other stakeholders. However, we very much hope that this stopping of production is temporary and that we will resolve the issues currently facing us as we continue to engage yourselves and hope that at the end of it we shall come out stronger to the benefit of all stakeholders.
Governor, we humbly request for your urgent intervention in the following matters which will allow us to restart all our operations and sustain operations thereafter. The assistance we seek is for the following:
1. Once-off exception to allow RioZim to retain 100% forex for the first delivery of Gold after we restart. This will help us to catch up on the deficit created over the last 9 weeks when we received near zero forex allocation and allow us to restock critical supplies to sustain operations.
And
2. RioZim being allowed to retain 60% of its revenue in Forex at every weekly delivery thereafter:
a. 50% for operations; (As you will recall from your attached letter Governor, dated 11 September 2018 you had already agreed to provide as with 50% Forex retention prior to your recent Monetary Policy statement plus facilitate payments for our capex projects) and
b. 10% for critical sustaining capex as we haven’t been able to spend anything on repair and maintenance since over a year due to forex shortages. Our plant and equipment needs urgent attention for them to continue working efficiently.And
3. RioZim being facilitated to access extra forex over the next year for our mission critical growth projects through Letter of Credit facility. To date we have invested more than $30m at Cam and Motor. In order sustain and indeed further increase production, we now need to invest an additional $15m for Biox – without which Cam and Motor has no life going forward and production there will collapse to zero as you are already aware. We need to invest a further $5m to expand production at Renco.
Governor, if RioZim can access all three above, then we want to assure you that the company can get back to producing 165 kgs a month (Cam- 60kgs, Renco- 60kgs, Dalny- 45kgs) from the current production of Zero for a year after we restart. Thereafter, RioZim will be able to grow its production to 300kgs a month (Cam-180kgs, Renco- 75kgs and Dalny- 45 kgs) from year 2 onwards after Biox and Renco expansion are completed.
We remain committed to being a big contributor the economic development of our country by sustaining circa 2,600 current jobs, creating new jobs, supporting our large communities, generating huge forex reserves and contributing in a big way to the fiscus.
We seek your kind and urgent intervention to help RioZim get back to optimal production at the earliest possible. We will endeavour to restart our operations within 2 or 3 days after receiving your support on the above three points and get back to steady state operations.
Thank you!
Yours sincerely,
Lovemore P. Chihota
Board Chairmancc:
• Honourable W. Chitando; Minister of Mines and Mining Development
• Honourable M. Ncube; Minister of Finance and Economic Development
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