Zimbabwean miner RioZim is demanding $92 million from central bank in lawsuit, what you need to know…

PUBLISHED: Thu, 22 Nov 2018 13:15:24 GMT

HARARE (Reuters) – Zimbabwean miner RioZim is demanding $92 million from the central bank in a lawsuit brought to force the Reserve Bank to pay for more of its gold purchases from the company in U.S. dollars, court documents showed.

Miners are struggling as Zimbabwe grapples with an acute shortage of dollars.

Producers sell all their gold to the central bank’s subsidiary Fidelity Printers and Refiners, which then exports it. RioZim, however, says that since 2016 the central bank only paid for 15 percent of gold it purchased from the company in dollars, breaching its policy to pay for 30 percent in the U.S. currency.

The central bank has not commented on the lawsuit.

RioZim first announced on Oct. 9 that it would take legal action against the central bank, signalling impatience by miners over the dollar shortages.

In its summons filed with the High Court dated Nov. 14, RioZim says it failed to receive $48 million due in payments from the central bank for its sales in dollars and suffered losses of $44 million due to lost production.

“The plaintiff suffered a direct loss of money and the devaluation of the purchasing power of its earnings …,” RioZim said in the documents seen by Reuters on Thursday.

The company says failure to receive dollar payments left it unable to import equipment and materials for capital projects, putting its operations in jeopardy.

The gold miner shut its three mines last month due to the dollar crunch until it can find a solution.

RioZim CEO Bekhinkosi Nkosi did not answer calls to his mobile phone for comment, while company attorneys Devittie Rudolph and Timba refused to comment.

The southern African nation adopted the U.S. dollar in 2009 to tame hyperinflation, but it is facing acute dollar shortages and that has sent prices of basic goods spiralling and inflation rising to double digits.

On Monday, in a change of policy, central bank Governor John Mangudya and the deputy minister for mines announced that the government would allow gold, platinum and chrome mining companies to retain up to 55 percent of their earnings in dollars, up from 30 percent. The move is aimed at ensuring operators remain viable.

Mangudya could not be reached for comment on the lawsuit.

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