RIOZIM bemoans escalating operating costs despite exchange rate stability

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By Alois Vinga

DIVERSIFIED miner, RioZim has bemoaned continuous price increases on essential raw materials, blaming these for pushing up the cost of production in contradiction to relative stability brought by the Reserve Bank of Zimbabwe (RBZ)’s foreign exchange auction system.

The auction system has managed to stabilise exchange rates at a premium of around $81 per every US$1 since its inception in June this year. The trend has forced prices of some commodities and services to remain stable.

However, in a recent trading update, RioZim reported that some companies continued to violate the official exchange rate through price increases.

“The inflationary operating environment persisted into the third quarter and still continues to drive up the cost of production and erode operating margins.

“Even though the foreign currency auction system has played a significant role in stabilising the interbank exchange rate, prices of materials continued to trade at a premium to this rate,” the miner said.

Several organisations have raised the red flag against unjustified price increases which have been solely blamed on greedy businesses which are used to the culture of profiteering.

The Confederation of Zimbabwe Retailers has since issued a stern warning to businesses urging them to desist from violating the official rate.

However, Employers Confederation of Zimbabwe president Israel Murefu recently urged locals to consider that not all businesses in the country were receiving foreign currency through the auction system.

Meanwhile, during the third quarter of the year, two of the RioZim group’s key gold mines – the Cam & Motor and Dalny Mines – recorded a slowdown in output due to varying reasons.

RioZim reported that the Cam & Motor Mine continued with processing of low grade ores from its One Step Mine throughout the quarter.

As a result, the mine’s output declined by 8 percent from the same period last year when the mine produced from high grade ores at its Cam pits.

Civil works and steel fabrications for the Biological Oxidation (BIOX) plant project progressed timidly during the quarter.

“Delivery of structural and steel components from the project’s contractors in South Africa faced significant delays due to lack of foreign currency funding,” said RioZim.