Metallon Corporation, the country’s biggest gold producer, is to sue the Reserve Bank of Zimbabwe for what it says is US$132 million worth of lost profits due to central bank’s alleged failure to pay for gold.
In a strongly worded statement on Thursday, Metallon chairman Mzi Khumalo accused RBZ of “corruption and a sense of impunity” and said he would sue the Governor of the RBZ, John Mangudya, and central bank’s gold buyer Fidelity Printers and Refiners, to demand full payment of amounts he says are owed.
“We have started legal proceedings against the Reserve Bank of Zimbabwe, particularly against the Governor, Dr John Mangudya, demanding specific performance. We are doing this because we feel the treatment we have received from the concerned authorities has been driven by corruption and a sense of impunity, for which we believe there is no end in sight,” said Khumalo.
Reacting, Mangudya rejected Khumalo’s claims.
“I have not seen the letter from Metallon, but the long and short of it is that we don’t owe them any money,” Mangudya said.
Metallon runs four mines; Shamva, Mazowe, How and Redwing. Its mines, the company said, have had to placed under care and maintenance “because of the unsustainable costs of running them without proper compensation for its proceeds” from government.
“Between 2016 and 2019, Metallon lost US$82m and Metallon is claiming for US$132m for the lack of profit and procurement, including interest,” the company says.
Metallon, in its notice to the Governor of the RBZ and the FPR, claims that while it issued invoices in US dollars, the foreign currency retention scheme saw Metallon being paid in RTGS. The disparity in the purchasing power resulted in the corporation being unable to procure machinery, equipment and operational goods at competitive prices, Metallon adds.
This seriously affected the production capacity of its various mines, leading to huge losses and unemployment measures being taken in an already strained economy. More than 2000 employees have lost their jobs, Khumalo says.
“The people who suffer most are Metallon employees who no longer have jobs. First, they were victims of hyper-inflation under the previous regime. And now they have lost their livelihoods. We had no other recourse but to take decisive action,” added Khumalo.
Metallon is also suing the Zimbabwe Ministry of Mines and Mining Development for the unlawful withholding of a mining lease that was approved by the Zimbabwean Mining Affairs Board in January 2019.
The lawsuit would be an escalation of tensions between Khumalo and the Zimbabwe government. Metallon is currently in court fighting off claims of externalising US$31 million from the country, a charge Khumalo denies.
In 2018, gold producer RioZim sued RBZ for US$92 million in unpaid export earnings.