The Sunday Mail
Martin Kadzere Senior Business Reporter
Platinum and chrome producers fear they might be headed for tough times after the Reserve Bank of Zimbabwe directed miners to surrender 80 percent of their foreign currency earnings to the central bank as the country struggles to contain a crippling hard currency shortage.
Industry players warned that the policy measure was likely to hurt production at a time when several local companies, including gold miners and importers, were also struggling to access foreign currency to meet operational requirements.
Banks are delaying processing foreign payments because accounts held by local banks abroad have been depleted of foreign currency, resulting in huge backlogs. To ensure effective administration of foreign exchange, as well as spread liquidity to guarantee equity in the foreign exchange market, the central bank early this month ordered 80 percent of foreign exchange receipts from platinum and chrome be remitted to the RBZ’s nostro account on receipt, from the previous 50 percent threshold.
“We already have gold miners struggling because foreign payments are not moving and this move will worsen the situation,” said a senior executive with a leading platinum firm.
The mining sector generates about 60 percent of Zimbabwe’s foreign currency revenue. “The delayed payments (for consumables) means production will be severely affected and this will in turn affect foreign currency generation. It will be regressive.”
However, RBZ Governor Dr John Mangudya downplayed miners’ concerns in an interview on Wednesday, saying the central bank would “chip in if any market failure arises”. “The policy is aimed at ensuring efficient use of foreign currency. As the central bank, we have been very consistent in supporting our exporters and this is why we have even come up facilities such as stabilisation fund for nostros. We have always appreciated exporters’ concerns and we will work with them to ensure no one is disadvantaged.”
The Chamber of Mines said the miners had engaged the central bank to understand the operational modalities of the policy directive. “We would want to get full details of the policy before we can make a fair and objective assessment of the impact of the policy,” Chamber of Mines chief executive Mr Isaac Kwesu said in an interview on Wednesday.
Platinum and chrome miners have been helping importation of power through pre-payments, but concerns are growing the reduction of the threshold they retain would hamper electricity purchases which could trigger load shedding, industry players warned.
“Remember, these companies are making prepayments for power imports and we see danger looming around this arrangement now that our retention levels have been cut,” an official with a ferrochrome company said. “I think it is in the best interest of the country if the policy is implemented in a manner that will not cripple the operations of miners.”
Zimbabwe holds the world’s second largest platinum reserves after South Africa while two of the world’s largest mining companies – Anglo American Platinum and Impala Platinum Holdings – have operations in the country. Zimbabwe is also host to the largest chrome reserves after South Africa, with the bulk of the deposits found on the Great Dyke.
