Zimbabwean miner RioZim said on Tuesday is taking legal action to force the country’s central bank (RBZ) to pay it in US dollars for some of its gold output.
The move comes after the company reported earlier this month that profit after tax had dropped 86 percent to $406,000 in the six months to June 30, from $2.9 million last year, despite higher gold production. RioZim attributed the weak results to RBZ’s failure to pay it in foreign currency earned from gold exports.
RioZim, which operates three gold mines, a nickel refinery and holds a minority stake in the Rio Tinto-run Murowa Diamonds, said RBZ had for some time failed to pay US dollars to the miner, breaching its own policy.
The “lack of foreign currency has started to have a significant impact on RioZim’s ability to meet its projected targets” for production and growth, it said.
Last year, for instance, RioZim only received 15 percent of foreign currency earned from the exports while the RBZ had said it would give gold chrome and platinum producers 70 percent of what they and keep the remaining 30 percent to support critical businesses, the company said in a statement.
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.