Zimbabwe’s gold miner RioZim has closed its Kadoma mine, Cam & Motor, and two other mines due to a shortage of dollars, the company said in a letter to the central bank on Wednesday.

RioZim is Zimbabwe’s third largest producer of gold, operating Cam and Motor, Dalny and Renco mines. Early this month, the miner threatened legal action to force the Reserve Bank to pay it more U.S. dollars for part of its output.

US dollar shortages in Zimbabwe have worsened since 2016 and earlier this month, the miner threatened legal action to force the central bank to pay it more U.S. dollars for part of its output.

Gold mines are required by law to sell their produce to Fidelity Printers, an arm of the Reserve Bank which then exports the mineral. From the beginning of this month, they are allowed to retain 30% of the export earnings, down from 50 percent before that while the balance is transferred to their local accounts via electronic transfers.

RioZim previously said was “facing severe challenges arising from the Company’s inability to access its foreign currency earnings that are required to fund its operations and sustain its growth.” “As per our previous communications, we regret to confirm that Cam and Motor Mine, Dalny Mine and Renco Mine involuntarily stopped operations after running out of consumables and spare parts recently,” Chihota wrote to RBZ governor, John Mangudya in the letter dated October 26.

“As you are aware, the stocks of critical imported consumables and spares ran out due to an acute forex shortage including cyanide, activated carbon, caustic soda, explosives, forges steel balls, spares for the repair of crucial equipment and numerous other items.”

He added that RioZim only received 14% of its forex allocation since 2016, with almost no allocations at all over the past nine weeks.

“As you will agree, this disruption is very harmful to us all that is our employees, our creditors, the Government of Zimbabwe along with all other stakeholders. However, we very much hope that this stopping of production is temporary and that we will resolve the issues currently facing us as we continue to engage yourselves and hope that at the end of it we shall come out stronger to the benefit of all stakeholders,” he said.

Dalny Mine stopped operating on 19 October while Cam and Motor Mine and Renco Mine closed on the 22 October.

The Cam and Motor Mine is situated 130km south west of Harare, 10km to the east of Kadoma, at Eiffel Flats on the site of the former Cam and Motor Mine. The mine was once the largest producer of gold in Zimbabwe and produced in excess of 150 tonnes of gold in its entire life.

Three main ore bodies were mined by the Cam and Motor Gold Mining Company, the previous owners of the mine. These were the Motor Lode, Cam Lode and Petrol Lode. In 1968, the mine was closed with the gold price at US$35 per ounce and the mine operating at depths of 1,800 metres when operations were no longer viable. At that stage, the mine cut- off grade was 8 grams/tonne and so it was considered likely that there could be significant resources adjacent to the old workings that would now be economic to mine.

RioZim commissioned an exploration program to search for the expected lower grade zones surrounding the mined ore bodies.

ZOOMZimbabwe has not been able to verify whether the mine will be reopened anytime soon.

Renco Mine is 100% owned by RioZim Limited. The mining rights are held through mining claims, a mining lease and a special grant covering a total area of 2 736 hectares. The mine is located in the South-East of Zimbabwe in Nyajena communal lands, approximately 75km southeast of Masvingo.

Gold mining in the Renco area started as early as the 15th century when artisanal miners worked near surface outcrops. Impressed by the quality of the deposit, Mr Hewlett, of Coronation mine, started a minor gold rush in 1938 when he moved out to begin work on the site. By March 1939 Messrs Rennie and Connick formed the Renco syndicate and took control over the area.

Gold fields of South Africa bought the mine from the Renco syndicate and were also granted an exclusive prospecting order over the area. During the tenure of the EPO they drilled several surface diamond drill holes and mined underground to a depth of 25m.

The claims and the mine were transferred to a local exploration company, Anglo American Mineral Searches, who developed the mine to 50m depth and sold it in 1969 after concluding that the deposit was too small and complicated to sustain a large scale mine.

By the end of 1981 over 1,000,000 tonnes in indicated ore resources and 200,000 tonnes in proved ore reserves were declared and the modern Renco mine was commissioned in 1982. The mine has produced continuously since then, with underground and plant infrastructure being upgraded as and when required.

To date 37 tonnes of gold have been produced from 7.2 million tonnes of ore milled at a recovery grade of 5.96g/t gold. Renco Mine is currently producing an average of 60kg gold per month against a potential of above 70kg per month.

In an angry statement recently Rio Zim said monetary authorities had effectively broken their own rules by withholding its foreign earnings without explanation.

“Therefore, in addition to the other measures that the company is considering to address the situation, the company has proceeded to formally serve the Reserve Bank of Zimbabwe with its notice advising it of its intention to file legal proceedings against the Reserve Bank of Zimbabwe for a claim demanding that the Central Bank complies with its directives and policies, and also, for compensation for any losses that the Company has suffered as result of the Central Bank’s non-compliance with its directives from 2016 to date,” read the statement in part.

Listed on the Zimbabwe Stock Exchange (ZSE), Rio Zim said failure to access foreign currency its was negatively affecting the mining group’s viability.

“The company is currently facing severe challenges arising from the company’s inability to access its foreign currency earnings that are required to fund its operations and sustain its growth.

“Whilst the Central Bank’s policy from April 2016 to September 2018 was that gold producers were entitled to access 50% of their receipts in foreign exchange automatically in their nostro account and the balance 50% by application (this policy has changed to 30% with effect from 1 October 2018), the company has not received even the first 50% let alone the balance as per the directives issued by the Central Bank in respect of its foreign exchange allocation.

“Since 2016 to date, the Company has only been allocated an average of circa 15% of the foreign currency that it has generated.”

ZOOMZim