Acute foreign currency shortage erodes RioZim earnings

Acute foreign currency shortage erodes RioZim earnings
Published: 02 October 2018 (668 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

Joram Gumbo must leave office and face justice

by MDC Communications | 20 October 2018 | 23 Views

Zimbabwe teachers demand salaries in US$

by newzimbabwe | 20 October 2018 | 116 Views

'Chamisa's Alliance plotted a coup against Mnangagwa'

by Staff reporter | 20 October 2018 | 153 Views

Demand for Indian sex sweets rises

by Staff reporter | 20 October 2018 | 147 Views

'Chamisa won't be contested at congress' - no vacancy in MDC presidium

by Staff reporter | 20 October 2018 | 122 Views

Mthuli Ncube calls for political reforms

by Staff reporter | 20 October 2018 | 130 Views

Mnangagwa's minister exposed charging in USD refuses Bond notes

by Staff reporter | 20 October 2018 | 89 Views

Zimsec engages Deloitte And Touch over exam leaks

by Staff reporter | 20 October 2018 | 75 Views

The White Man who sent fear down Mugabe's spine

by Globe and Mail | 20 October 2018 | 72 Views

Human rights violations down in Zimbabwe

by Stephen Jakes | 20 October 2018 | 52 Views

Mliswa pleads with Finance minister to see importance of MPs vehicles

by Stephen Jakes | 20 October 2018 | 35 Views

Electric Tesla car causes stir on Zimbabwe social media

by Staff Reporter | 20 October 2018 | 64 Views

Zimbabwe army officers warned

by Staff reporter | 20 October 2018 | 85 Views

Biti savages Mthuli Ncube

by Staff reporter | 20 October 2018 | 60 Views

Zanu-PF backers justify army use of deadly force

by Staff reporter | 20 October 2018 | 58 Views

Zimbabwe tax system hit by low compliance levels

by Staff reporter | 20 October 2018 | 47 Views

Price controls, tinkering with the deck while the titanic is sinking

by Jacob Mafume, MDC National Spokesperson | 19 October 2018 | 216 Views

Man nearly killed over cooking oil

by Simbarashe Sithole | 19 October 2018 | 194 Views

Mnangagwa closing in on unscrupulous businesspeople

by Staff reporter | 19 October 2018 | 206 Views

Prophet sells congregant's vehicle

by Staff reporter | 19 October 2018 | 174 Views

Zanu-PF's Dexter Nduna confirmed Chegutu West MP

by Staff reporter | 19 October 2018 | 121 Views

Mnangagwa caps 1719 graduands

by Staff reporter | 19 October 2018 | 101 Views

ZCTU calls for resignation of Minister Gumbo

by Stephen Jakes | 19 October 2018 | 256 Views

Mnangagwa has to deliver and, urgently too

by Staff reporter | 19 October 2018 | 266 Views

Zanu-PF dictatorship, ideological dominance

by Vivid Gwede | 19 October 2018 | 186 Views

ZCTU, why spare Bulawayo council over rates hike

by Conway Tutani | 19 October 2018 | 168 Views

Motlanthe Commission risks playing into Zanu-PF agenda

by Staff reporter | 19 October 2018 | 213 Views

Councils challenged to generate own income

by Staff reporter | 19 October 2018 | 141 Views

Zimbabwe gender parity misses 50% mark, says Mohadi

by Staff reporter | 19 October 2018 | 104 Views

Zanu-PF official, sangoma jailed over pangolin scales

by Staff reporter | 19 October 2018 | 165 Views

Mliswa mocks Gender Commission

by Staff reporter | 19 October 2018 | 152 Views

Police harass senior Masvingo journalist

by Stephen Jakes | 19 October 2018 | 134 Views

Zimbabwe gold exports decline by 21%

by Staff reporter | 19 October 2018 | 157 Views

Zimbabwe drops in World Economic Forum rankings

by Staff reporter | 19 October 2018 | 172 Views

Village Inn exonerates Supa Mandiwanzira

by Staff reporter | 19 October 2018 | 126 Views