RioZim to sue central bank over dollar payments

Author: Mining Weekly
Date: 2018-10-10

HARARE – Zimbabwe's gold miner RioZim on Tuesday said it would take legal action to force the central bank to pay it in US dollars for part of its output, signalling impatience by mining companies over acute dollar shortages afflicting the economy.

The shortages have worsened since 2016 and are the biggest concern for foreign investors seeking a foothold in Zimbabwe, which is trying to recover after 20 years of economic hardship under former leader Robert Mugabe.

RioZim, which operates three gold mines, a nickel refinery and holds minority shares in the Rio Tinto-run Murowa Diamonds, said the Reserve Bank of Zimbabwe (RBZ) had for some time failed to pay US dollars to the miner, breaching its own policy.

The RBZ governor could not be reached for comment because he was travelling to Indonesia for World Bank and IMF meetings.

Mines sell their gold to the RBZ-owned Fidelity Printers and Refiners, which then export it. According to RBZ policy, gold mines, from Oct. 1, can retain 30% of their dollar sales, down from 50% before that date.

The central bank's policy is to credit miners' accounts with actual US dollars, with the remaining 70% of sales paid for through electronic dollars known locally as "Zollars."

Zollars officially trade at par with the US dollar but have been collapsing in value on the black market.

RioZim said the RBZ had since 2016 only paid an average of 15% of sales in US dollars, meaning the company was unable to import equipment and materials for capital projects, putting its operations in jeopardy.

"The Company has proceeded to formally serve the Reserve Bank of Zimbabwe with its notice advising it of its intention to file legal proceedings ... for a claim demanding that the central bank complies with its directives and policies," RioZim said in a cautionary statement.

The southern African nation has been using the US dollar since 2009 after discarding its own hyperinflation-hit currency.