RioZim demands $92m from the Reserve Bank of Zimbabwe

Zimbabwean miner RioZim is suing the country’s Reserve Bank for $92 million, in a move intended to force it pay for more of its gold purchases from the company in US dollars.

The company operates three gold mines, a nickel refinery and holds a minority stake in the Rio Tinto-run Murowa Diamonds. RioZim claims the bank is not paying enough for its products in American currency, as promised, which has caused the company major losses.

Based on court documents filed last week and quoted by Newsday, RioZim is arguing it has failed to receive $48 million due in payments from the central bank for its sales in dollars, suffering losses of $44 million due to lost production.

RioZim claims it has failed to receive $48m due in payments from the central bank for its sales in dollars, suffering losses of $44m due to lost production.

Gold miners are required by law to sell their output to Fidelity Printers, an arm of the Reserve Bank, which then exports the ore. Since early October, those companies had only been allowed to retain 30% of the export earnings, down from the previous 50%.

But in a change of policy, central bank Governor John Mangudya and the deputy minister for mines announced Monday that the government now will allow gold, platinum and chrome mining companies to retain up to 55% of their earnings in dollars. The move is aimed at ensuring operators remain viable.

Zimbabwe's government has been using US dollars since 2009 after abandoning its own currency because of hyperinflation. President Emmerson Mnangagwa has vowed to open up the country's economy to the rest of the world in order to attract the much-needed foreign direct investment to revive the ailing economy.

Despite the changes, the country is suffering acute shortages of US dollars, deterring foreign capital from helping the ailing economy recover after 20 years of economic hardship under former leader Robert Mugabe.

Mining is the biggest source of foreign exchange for Zimbabwe, which has the world’s largest platinum reserves after South Africa. It also known for its diamonds, though alluvial deposits are almost depleted, and it's said to have eight out of nine “rare earth” minerals and a processing capacity for gold, diamond and chrome.

(With files from Reuters)