Harare- ZSE-listed company, RioZim Limited saw its production significantly hampered during the quarter due mainly to power supply challenges. Power outages took up to 30% of the available production time, adversely affecting production in a very material way.
Power supply challenges worsened during the quarter due to acute load shedding as the country battled with erratic local power generation coupled with inadequate supplementary power imports.
Additional challenges included speculative tendencies, resulting in significantly high pricing of local inputs. Local inputs continued to be pegged at inflated prices in local currency, leaving the company heavily reliant on the importation of raw materials that require foreign currency, severely in short supply.
Further demand for foreign currency was driven by operational and capital expenditure requirements which the company, only retaining 60% of its export proceeds in USD, could not meet.
Power supply challenges, inadequate foreign currency, and lack of production at Dalny mine resulted in a 6% decline in gold production for the Group compared to the same period last year.
Power and access to foreign currency earnings are critical for company but both of these continue to be extremely scarce. Dalny mine was subsequently placed under full care and maintenance due to inadequate foreign currency as it requires a huge capital investment to resuscitate underground operations. The Company has had to invest heavily in diesel generators which have required foreign currency and the power generated by diesel costs is largely higher than normal power.
The company’s gold production from its Cam & Motor Mine, utilising its recently commissioned Biological Oxidation (BIOX) plant, increased at a steady rate and closed the quarter with an 83% growth from the prior year's comparative period. Production growth was achieved despite encountering some normal teething challenges.
However, production at Cam & Motor was adversely affected by power outages.
Furthermore, Dalny Mine was placed under care and maintenance during the period due to a lack of open pit ore sources with consistent grades as the current pits are showing low playability. To sustain care and maintenance costs, the Mine embarked on small-scale mining activities as the available open pit resources are uneconomic to mine using traditional large-scale mining methods.
The Empress Nickel Refinery (ENR) also remained under care and maintenance throughout the quarter.
In the Diamond Business, The Group recorded a 24% growth in production compared to Q3’21 against the backdrop of the 500tph plant project which became operational at the beginning of the quarter.
Power supply challenges remain a key risk to the Group’s operations as the current ongoing power cuts are set to worsen as a result of the approaching rainy season from Q4’22.
Even though the Company has put in place generators to lessen production stoppages, the Group remains reliant on the power utility for a consistent power supply to run optimally. Engagements with the power utility are ongoing on the rehabilitation of the unreliable power infrastructure mainly at Renco mine where production for the quarter declined by 15% compared to Q3’21, due in part to the increased power supply challenges.
The Group is also focused on ramping up production to optimal levels for its two key projects, the BIOX plant project at Cam & Motor mine and the 500tph processing plant at RZM Murowa (Private) Limited are earmarked to drive the Group to profitability.
The Company continues to engage the authorities in various capacities for an upward review of the foreign currency retention on export proceeds from the current 60%, which has proven to be inadequate considering the Group’s foreign currency requirements.