Wednesday, June 8, 2016

Miners want a say in forex allocation

THE Chamber of Mines of Zimbabwe says it has been excluded from the foreign currency account (FCA) committee that determines allocation to priority areas despite accounting for half of the exports.



As part of measures to stem the cash crisis, Reserve Bank of Zimbabwe (RBZ) last month introduced a priority list, which would be used in accessing the foreign currency, in a bid to allow the importation of essential raw materials and services required to boost local production.

Speaking at the Parliamentary Portfolio Committee on Finance and Economic Development on Monday, Chamber of Mines president Kenneth Muganyi said the sector was an important stakeholder.

"The mining industry itself provides more than 50% of the national exports and in this whole process, is an important stakeholder. We think we were left out during the consultations that were done. We have arranged for meetings that will happen this month, so that some of the key critical issues that affect the industry are taken into due consideration," he said.

"During the engagement we will also try as much as possible to involve the other stakeholders so that it is all encompassing."
The Parliamentary Portfolio Committee is chaired by David Chapfika.

Muganyi said delays in the processing of external payments have crippled the operations of suppliers of the mining industry.

"The mining industry operations require funding, for working capital spares, supplies and consumables, replacement capital replacement equipment and retooling and new equipment expansion projects, which are predominantly funded through usage of foreign exchange to effect payments," he said.

"We know there is a FCA allocation committee, which follows a priority list and we as a mining industry have been excluded from that and it will form part and parcel of the agenda in the meeting that will take place with the RBZ."

Muganyi said there were delays in approval lead times currently ranging from 10 to 20 days, with the mining sector experiencing a potential production loss of up to four months and this remains a huge potential risk to the outlook.

"The Chamber recommends that bank nostro accounts for gold producers be funded as is the case with other mineral categories and that Fidelity Printers and Refineries play an agent role just like what happens with MMCZ."

He said the 50% RBZ retention means that miners would not be able to cover some of the foreign payment requirements.

"In this regard, producers will also face challenges in securing immediate solutions to as much as 20% of their inputs requirements, with adverse impact on mineral output," he said.

Muganyi, however, said the gold sector and the diamond should also be recognised as exporters so that they can also service and pay up their obligations

He said the small scale miners have also been seriously affected as they were failing to access funds to finance their input requirements such as cyanide and other consumables.

In announcing the new measures, RBZ governor John Mangudya said the economy has too many leakages and the usage of the United States dollar has also exacerbated the situation, as Zimbabwe was now a major attraction for the greenback in the region, as regional currencies continue to soften.

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