Friday, June 13, 2008

Gold output down as Zim meltdown worsens

By: Oscar Nkala
Mining company RioZim says gold production at its mines declined from an expected 200 kg to a mere 91 kg in the third quarter of 2007 because of difficulties in obtaining foreign currency, a worsening power crisis and the absence of oxygen used in gold recovery processes.

Group chairperson Eric Kahari said at the company's annual general meeting, last week, that most of the problems the company faced in 2007 had been carried over into 2008.

"Principal among the problems was the unavailability of foreign currency. We were unable to access our own foreign currency or to receive the foreign currency due to us [from the Reserve Bank of Zimbabwe] for gold deliveries and this made for difficult relations with suppliers of inputs and spares.

"The situation became so serious that we were forced to scale back operations at Renco mine . . . As a result, gold production in the third quarter was only 91 kg instead of the level around 200 kg which we would aspire to in normal circumstances," Kahari says.

He added that the worsening power crisis had also hit its refineries at Renco and Empress Mines very hard.

While power supplies showed signs of improving, with direct supplies from Mozambique in the last months of 2007, Kahari said things had worsened again this year, with the Reserve Bank of Zimbabwe (RBZ) failing to submit its approved invoices to the Zimbabwe Electricity Supply Authority (Zesa).

"Early in 2008, it became apparent that the approved invoices which we submitted to the RBZ were not resulting in payments to Zesa. The future of this arrangement is, therefore, in doubt, leaving us again vulnerable to Zesa's and, indeed, the region's power supply problems."

Although the company says it is yet to feel the effects of the loss of skilled workers, Kahari said it was clear that it would be negatively affected in the long term. He said the company was already paying some workers in foreign currency to retain critical skills.

Kahari said the company was exploring the possibility of setting up a thermal power station at its Sengwa coalfield, in Gokwe, in partnership with foreign investors.

He said that exploration was continuing in other parts of the company's lease area at Sengwa with the objective of locating a viable area of the known coal resource to meet local market demands.

The prospects of expanding the Murowa Diamond Mine, which has reportedly recovered from production difficulties experienced in 2007, had brightened following the completion of an investigative study, Kahari said.

Source: Mining Weekly

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