ZIMBABWE Stock Exchange-listed mining group, RioZim says it is in discussions with the Zimbabwe Electricity Supply Authority (Zesa) on the rehabilitation of the unreliable power infrastructure at its units mainly at Renco mine.
The mining firm, which seeks to ramp up production to optimal levels for its two key projects, said although it has put in place generators to lessen production stoppages, it remains reliant on the power utility for consistent power supply to run optimally.
Apart from power challenges, it said access to foreign currency earnings is critical to the needs of the firm.
However, both of these continue to be extremely scarce, promoting the need to engage authorities, it noted.
In its trading update for the third quarter (Q3) 2022, the group said 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.
Production was, therefore, significantly hampered during the quarter due to power supply challenges, hence the need to engage the power utility, it noted.
“Power outages are taking up to 30 percent of the available production time hence adversely affecting production in a very material way,” reads part of the update.
“Engagements with the power utility are ongoing on the rehabilitation of the unreliable power infrastructure mainly at Renco mine.”
The firm had to invest heavily in diesel generators which required foreign currency and power generated by diesel costs is largely higher than normal power.
“The Group is also focused on ramping up production to optimal levels for its two key projects being, the BIOX plant project at Cam & Motor mine and the 500tph processing plant at RZM Murowa (Private) Limited which commenced production during the year and are earmarked to drive the Group to profitability,” it added.
While acknowledging measures being implemented by the authorities to stabilise exchange rates, it noted that the pricing of local inputs remained substantially high due to speculative tendencies.
It said local inputs continued to be pegged at high prices in local currency resulting in it being heavily reliant on the importation of raw materials that require foreign currency.
It added that it continues to engage the authorities in various capacities for an upward review of the foreign currency retention on export proceeds from the current 60 percent noting that this has proven to be inadequate considering the group’s foreign currency requirements
“With the company only retaining 60 percent of its export proceeds in USD, the Company continued to be short of foreign currency to meet all its operational and capital expenditure requirements.”
Meanwhile, Dalny Mine was placed under full care and maintenance due to inadequate foreign currency as it requires a huge capital investment to resuscitate underground operations.
Power supply challenges, inadequate foreign currency and lack of production at Dalny mine resulted in a six percent decline in gold production for the group compared to the same period last year, it said. – The Chronicle
