Acute foreign currency shortage erodes RioZim earnings

Acute foreign currency shortage erodes RioZim earnings
Published: 02 October 2018 (2561 Views)
RESOURCES group RioZim Limited's profit after tax dropped by 86% to $406 000 in the six months to June 30, from $2,9 million last year, despite higher gold production after the central bank failed to pay foreign currency earned from gold exports.

The miner's gold output was 20% higher at 1 050kg from 873kg over the same period last year but only received 15% of foreign currency earned from the exports.

The central bank has previously stated that it would keep between 25% and 30% of all foreign currency earned by miners to support critical businesses.

Zimbabwe is gripped by a shortage of US dollars, a currency it adopted in 2009 after shedding its own Zimdollar when inflation reached 500 billion percent according to World Bank figures.

The rise in gold output was on the back of higher production at Cam and Motor Mine which was up 27% to 458kg; Renco Mine up 14% to 360kg and Dainy Mine up 18,36% to 232kg.

"The group's results for the period ended June 30, 2018 were saddled by challenges mainly emanating from an acute shortage of foreign currency to meet external payments, high inflationary pressures and cash shortages," RioZim chairman Lovemore Chihota in a statement accompanying the group's results.

"The inability to access foreign currency crippled the group's intentions to maintain and continue with its expansion projects as well as exposing it to inflationary pressures encountered in procuring consumables on the local market at exorbitant prices. In particular, the group during the period under review only received some 15% of its gold production earnings in foreign currency with the balance being paid through the local real time gross settlement (RTGS) system."

Chihota said the purchasing parity of RTGS transfers had been falling and is at present between 30% and 50% of the United States dollar.

"Consequently, this has meant that not only has the group not been able to carry out its essential maintenance projects, but it has been exposed to procuring goods locally at a cost of up to 300% of the actual fair value," Chihota said.

RioZim associate, Murowa Diamonds Limited realised an operating profit of $913 000, from $583 000 over the comparative prior period.

Group revenue at $44,4 million was 17% higher owing to a 5% rise in the gold price.

Basic earnings per share dropped to 0,34 cents from 2,40 cents previously.

"Foreign exchange remains challenges remain a key risk area and the group is actively exploring avenues to address this risk. It is important to emphasise that the situation cannot be sustained where the company is in effect selling gold at 50% of its fair market value," Chihota said.

- NewsDay

 0

You May Like These Videos

Comments

There are no comments.

Latest stories

Mnangagwa dismisses Chamisa's irritating noise

by newzimbabwe | 14 December 2018 | 66 Views

Chiwenga endorses Mnangagwa for 2023

by Staff reporter | 14 December 2018 | 59 Views

Where is Mohadi?

by ZimLive | 14 December 2018 | 75 Views

Government to solve shortage of medicine

by Mandla Ndlovu | 14 December 2018 | 89 Views

Mnangagwa's 'arrest and release on bail' program exposed

by Mandla Ndlovu | 14 December 2018 | 89 Views

Mutodi speaks on $500 000 'bribe' report

by Mandla Ndlovu | 14 December 2018 | 101 Views

Lumumba undresses Fadzayi Mahere

by Mandla Ndlovu | 14 December 2018 | 124 Views

School uniforms demo set for 18 December

by Mandla Ndlovu | 14 December 2018 | 86 Views

VP Chiwenga pours cold water on Presidential ambitions

by Mandla Ndlovu | 14 December 2018 | 130 Views

Mutsvangwa snubs ZANU PF Conference?

by Mandla Ndlovu | 14 December 2018 | 151 Views

Chamisa will eventually accept position

by Simba Rushwaya | 14 December 2018 | 167 Views

Tendai Biti relives court horror

by Mandla Ndlovu | 14 December 2018 | 130 Views

Mnangagwa speaks on Chivayo saga

by Mandla Ndlovu | 14 December 2018 | 140 Views

Motlanthe Commission report to be made public next week

by Mandla Ndlovu | 14 December 2018 | 114 Views

US. launches 'Prosper Africa' initiative to counter China's influence

by Staff reporter | 14 December 2018 | 123 Views

Dzamara and Linda Masarira clash

by Mandla Ndlovu | 14 December 2018 | 125 Views

WATCH: Live ZANU PF Conference

by Mandla Ndlovu | 14 December 2018 | 122 Views

Mphoko's son to spend Christmas in jail

by newzimbabwe | 14 December 2018 | 123 Views

Wise is he who looks ahead

by Mapozho Saruchera | 14 December 2018 | 103 Views

Behind the walls of MDC-ZANU PF negotiations

by Mmatigari | 14 December 2018 | 161 Views

MDC tripping itself

by Bevan Musoko | 14 December 2018 | 110 Views

PHOTOS: Choppies workers demonstrate

by Mandla Ndlovu | 14 December 2018 | 104 Views

ZANU PF conference, a necessary event

by Peacemaker Zano | 14 December 2018 | 89 Views

Lest we forget, soccer legends told

by Stanley Chirimbani and Richard Zimunya | 14 December 2018 | 92 Views

Temba Mliswa attends ZANU PF Conference

by Mandla Ndlovu | 14 December 2018 | 101 Views

Buyanga wants Zimbabwe in United Nations Security Council

by Staff reporter | 14 December 2018 | 116 Views

Zanu-PF urged to focus on fixing economic challenges

by Staff reporter | 14 December 2018 | 112 Views

Patient steals from nurse

by Staff reporter | 14 December 2018 | 144 Views

Banking sector posts 77% profit jump

by Staff reporter | 14 December 2018 | 112 Views

Wicknell Chivayo 'overpaid' in $5million Gwanda project

by Staff reporter | 14 December 2018 | 107 Views

'Zifa machinations' - Gift Banda arrested for 'corruption'

by Staff reporter | 14 December 2018 | 108 Views

Mphoko's son trial postponed

by Staff reporter | 14 December 2018 | 119 Views

Police probe Nkulumane carjack and robbery

by Staff reporter | 14 December 2018 | 103 Views

Suicide man announces imminent death

by Staff reporter | 14 December 2018 | 118 Views

Woman's maintenance claim thrown out

by Staff reporter | 14 December 2018 | 98 Views