Pressure is again building on central bank over its currency regime, as RioZim warns it can no longer sustain expenses due to payment delays and the fixed exchange rate, while the Chamber of Mines pleads for the lifting of a 30-day limit on holding forex.

RioZim, the country’s largest gold miner, said in a statement Tuesday that it is owed US$2.46 million and Z$65 million due to payment delays by Fidelity Printers and Refiners, RBZ’s gold buyer.

RBZ recently increased the proportion of forex earnings that a mine can keep from 55% to 70%. The remaining 30% of export sales is sold at the official rate.

However, that exchange rate has been fixed at 25:1 since late March, while rates on the parallel market have fallen, eroding value. Miners such as RioZim have long campaigned to keep 100% of their earnings.

“The impact of this situation on the operations of the company has been that the company is no longer able to meet its operational expenditure requirements considering that the company is expected to pay for electricity and fuel in USD along with almost all its consumables and spares also paid in USD,” RioZim says.

By the company’s calculations, the exchange rate rules and erosion of the Zimdollar component mean that it is only getting 80% of the value of its gold.

The company has, over the past two years, twice suspended operations to protest at payment delays and the retention regulations. The company runs the Dalny, Renco and Cam & Motor gold mines, plus Murowa diamonds.

RioZim’s sentiment has contrasted sharply with those of smaller rival Caledonia, which has doubled earnings at its Blanket Mine in the first quarter and forecast higher output this year.

Power cuts slashed gold output at RioZim by 7% in 2019 and by 41% in the first quarter of March.

RBZ on the spot

As the exchange rate crisis worsens, RBZ’s management of the currency is coming under increased scrutiny.

The Chamber of Mines has written to RBZ to reconsider its recent decision to reinstate a 30-day limit on holding foreign currency in miners’ accounts. The regulations compel exporters to bring in unused forex within 30 days.

RBZ temporarily suspended the on March 30 as part of efforts to free up the market in response to COVID-19. But the central bank plans to reinstate it from July 1.

The move will affect miners’ ability to fund operations, the Chamber of Mines says in a June 9 letter.

The Chamber of Mines says the industry remains vulnerable to the impact of the coronavirus pandemic, which has hit commodities prices globally and cut off critical supply lines.

“Mining companies are appealing to you to reconsider removal of the 30-day compulsory liquidation of un-utilized

export earnings to provide mining companies with capacity to meet their operational requirements as well as funding their projects whose cycles exceed 30 days,” the Chamber said.

Zimbabwe generated US$2.91 billion in mineral exports in 2019, 55.2% of total exports, but output is expected to fall this year due to a combination of COVID-19, foreign exchange shortages and power outages.

The Chamber of Mines has warned of a 60% dip in mineral output due to the coronavirus, estimating earnings losses of US$400 million.