Zim miners reject 1:1 exchange rate

HARARE- In a move that is likely to further impact negatively on the economy, miners who are the major generators of forex are demanding a fair value liquidation of their export proceeds paid in RTGS.

Fair value liquidation refers to the conversion of forex receipts at prevailing unofficial but evident exchange rates.

The market has priced the impact of exchange rate as seen through price increases notably for goods of import nature.

General prices across a wider selection of goods notably of imports nature now show at least a 300% upsurge and this is largely in line with parallel exchange rates between the US dollar and the RTGS.

Locally manufactured goods’ prices have also risen but at a much slower rate, as a knock on effect of USD surges and the complete economic circuit.

In a state of the mining industry 2018 report, miners opined that FCA allocations for the industry should be reviewed in line with the actual $US costs that are obtaining on the market for inputs.

Of the $3.01 billion generated through exports between January and September, mining contributed over 70% with the difference largely being attributed to agriculture whose anchor product Tobacco achieved a record out-turn.  Key mining exports remain gold and platinum.

Gold saw a record performance at 30.2 tonnes in the 10 months period to October which is ahead of revised full year target. Its price has however been trending lower on global markets since January.

Zimbabwe has earned over $1 billion in gold receipts between January and September 2018 and this has largely been from small scale miners. The country is reported to have potential of producing up to 50 tones of gold per annum.

Government however allows for retention of forex receipts of up to 70% by miners in gold, chrome and platinum.  Despite this allowance a number of the mining producers have not been able to access the 70% and in a recent case Rio Zim which is the largest listed gold said it is downing tools due its failure to access its forex from RBZ.

Rio Zim said it has only accessed 15% of its forex receipts since 2016 which is grossly below the allowed 70% hence its failure to service debts and retool.  The miner has since resumed operations at its 3 mines following an escalated engagement with RBZ.

Given the shifting contribution in favour of small scale miners, it is alleged that primary miners are understating production numbers driven by the motive to preserve value.

– Equity Axis News

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Equity Axis is an online financial media service platform focused on African markets offering real-time stock quotes, news, analysis and data.

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