Acute foreign currency shortage erodes RioZim earnings

Acute foreign currency shortage erodes RioZim earnings
Published: 02 October 2018 (3301 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

Zimbabwe Women's seven's side coach steps down

by Staff reporter | 22 May 2019 | 60 Views

Guard against uncontrolled fires

by Thomas Murisa. | 22 May 2019 | 57 Views

Lack of Political will has brought unnecessary calamity

by Tinashe Eric Muzamhindo | 22 May 2019 | 80 Views

Mnangagwa faces impeachment

by Mandla Ndlovu | 22 May 2019 | 110 Views

Perence Shiri dissolves CSC board

by Mandla Ndlovu | 22 May 2019 | 73 Views

Zimbabwe Army steps in

by Mandla Ndlovu | 22 May 2019 | 83 Views

Chamisa's spin doctor attacked

by Mandla Ndlovu | 22 May 2019 | 75 Views

Counseling offered for Game of Thrones fans

by Mandla Ndlovu | 22 May 2019 | 69 Views

Nelson Chamisa rallies Zimbabweans

by Mandla Ndlovu | 22 May 2019 | 98 Views

Best/ top data transfer apps from iPhone to Android

by Staff Writer | 22 May 2019 | 66 Views

Chamisa reaches half a million mark

by Staff reporter | 22 May 2019 | 81 Views

Parly to undertake public consultations on review of Water Act

by Community Water Alliance | 22 May 2019 | 84 Views

Mnangagwa addresses a divided ZANU PF caucus

by Mandla Ndlovu | 22 May 2019 | 85 Views

Binga airstrip set for $4m upgrade

by Staff reporter | 22 May 2019 | 75 Views

Mnangagwa joins African Peer Review Mechanism

by Staff reporter | 22 May 2019 | 50 Views

BREAKING: Cyril Ramaphosa elected President of South Africa

by Mandla Ndlovu | 22 May 2019 | 61 Views

Jacob Mudenda blocks fuel situation debate

by Staff reporter | 22 May 2019 | 68 Views

Chamisa's MDC still to appeal High Court ruling

by Staff reporter | 22 May 2019 | 63 Views

Zimbabwean woman honoured with a life-size statue in New York

by Staff reporter | 14 May 2019 | 109 Views

Marriage certificates for couples to enter Sudan hotels

by Mandla Ndlovu | 14 May 2019 | 104 Views

BREAKING: Tsvangirai's daughter in horror crash

by Methusi Ncube | 14 May 2019 | 156 Views

Mnangagwa to tender resignation as Zimbabwe leader to avoid humiliating exit

by Itai Mushekwe/Mary-kate Kahari | 14 May 2019 | 233 Views

Mnangagwa 'defends' workers' rights

by Staff reporter | 14 May 2019 | 89 Views

R2m drug smuggling syndicate busted

by Staff reporter | 14 May 2019 | 90 Views

Nurse recruitment goes digital

by Staff reporter | 14 May 2019 | 126 Views

Gumbura, co-accused not fit for trial, claims Prof Madhuku

by Staff reporter | 14 May 2019 | 85 Views

Gweru left with 3 months' water supply

by Staff reporter | 14 May 2019 | 76 Views

SA police launch manhunt for Zimbabwean armed robber

by Staff reporter | 14 May 2019 | 49 Views

7-day ultimatum for illegal advertisers

by Staff reporter | 14 May 2019 | 84 Views

Mnangagwa urges Chamisa's MDC council to give Harare a facelift

by Staff reporter | 14 May 2019 | 77 Views

ZCDC finance director arrested

by Staff reporter | 14 May 2019 | 84 Views

Defiant in the face of a Tyrant

by Thabo Makuyana | 14 May 2019 | 86 Views

R470 000 fraudster arrested

by Staff reporter | 14 May 2019 | 80 Views

Madinda urges players to soldier on

by Staff reporter | 14 May 2019 | 72 Views

Mnangagwa is a worried man

by Staff reporter | 14 May 2019 | 114 Views

Robber 'rapes' shopkeeper

by Staff reporter | 14 May 2019 | 80 Views

Zinara ropes in CID

by Staff reporter | 14 May 2019 | 61 Views