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Gold miner Metallon demands $132 mln from Zimbabwe central bank -documents
Africa-focused gold miner Metallon Corporation is demanding nearly $132 million it says it is owed by Zimbabwe’s central bank, legal documents showed on Thursday, as the country’s mining sector grapples with a severe dollar crunch.
The central bank denied it was in arrears with the company.
The 2017 ouster of Zimbabwe’s longtime ruler Robert Mugabe had raised hopes for an end to decades of hardship but depleted foreign exchange reserves have paralysed many companies’ operations and hindered efforts to repatriate profits.
“These policies are literally destroying the economy and there’s no end in sight,” Mzilikazi Khumalo, London-based Metallon’s non-executive chairman, told Reuters.
Miners sell all their output to the central bank’s subsidiary Fidelity Printers and Refiners, which then exports the gold.
Metallon said the Reserve Bank of Zimbabwe (RBZ) had since 2016 breached its own policy of paying a portion of value of the purchased gold in U.S. dollars.
In a letter from its lawyers to the RBZ and Fidelity Printers and Refiners, the company said those proceeds were instead paid in electronic dollars known locally as RTGS or “Zollars.”
Zollars officially traded at par with the U.S. dollar but their value collapsed on the black market.
Metallon said the discrepancy had led to a shortfall of $132,748,521.
“Our client received short payments which left a balance owing at the end of each transaction,” the letter said. “This shortfall arises directly as a result of our client being paid in RTGS currency as opposed to being paid in USD.”
RBZ Governor John Mangudya rejected the company’s complaint.
“I have not seen the letter from Metallon but the long and short of it is that we don’t owe them any money,” he said.
Khumalo said the currency issue had stifled output from Metallon’s four mines in Zimbabwe and led to job losses. He said the company would take legal action, possibly in a jurisdiction outside Zimbabwe, if it did not receive a satisfactory response within 60 days.
Metallon is not the only miner affected by the dollar shortage.
RioZim, which also said the RBZ had failed to pay it in dollars, last year sued the central bank for $92 million. It was forced to temporarily shutter its mines, but in February it said the arrears had been cleared, allowing it to resume operations. (Reporting by Joe Bavier Additional reporting by MacDonald Dzirutwe in Harare; editing by Emelia Sithole-Matarise)
More: afreuters
Justice Minister, Ziyambi grilled over currencies
Justice minister Ziyambi Ziyambi was yesterday grilled in Parliament over whether the 2019 national budget, which was presented by Finance minister Mthuli Ncube in United States dollars, had now been converted to the newly-introduced Real Time Gross Settlement (RTGS) dollars.
First to fire questions was Rushinga MP Tendai Nyabani (Zanu PF), who demanded clarity on government policy regarding multi-currency usage given that the RTGS$ and the US$ had different trading values.
In response, Ziyambi said: “We had a basket of multi-currencies like the US$, rand, pula and others, and now, we have introduced the RTGS$ through Statutory Instrument SI 133 of 2018 to increase on that multi-currency basket.”
Gokwe Nembudziya MP Justice Mayor Wadyajena (Zanu PF) then asked Ziyambi to further explain if the bond note was now the RTGS dollar?
“Technically, according to SI133 of 2018 the RTGS$ and bond notes are different, but both are trading currencies in our laws and so, practically, they are the same,”Ziyambi responded.
Mutare Central MP Innocent Gonese (MDC Alliance) then asked: “In light of the explanation and the fact that now we have the RTGS$, yet the 2019 budget was presented in US$ and now the RTGS$ is trading on the basis of a floating exchange rate on the interbank rate, what does it mean in terms of figures to our budget, and to persons who deposited actual US$ in their accounts before introduction of the multi-currency (basket)?”
Ziyambi said all balances in the budget were converted to the RTGS$.
“So, what it means is that if the budget was US$10 million, it becomes RTGS$10 million; and there was a separation of accounts to nostro and RTGS$,” the Justice minister said.
“SI 133 of 2018 states that at the opening of trading, the RTGS$ will be equivalent to the US$, and then later, the rate will be determined by the market. So, if you had $10 000 and trading started when the US$ was weaker, then you have more money. SI 133 of 2018 says the RTGS$ will be 1:1, but when trading starts, then market forces will come into play.”
But Gonese said before the RTGS$ was introduced, some people had deposited real US dollars into their accounts and still want to withdraw them as US dollars.
“When the RTGS$ was introduced, it was 1:1 to the US$ and now market forces will determine what comes into play,” Ziyambi said.
Further asked by Kambuzuma MP Willias Madzimure (MDC Alliance) whether government considered this to be morally right, Ziyambi replied: “Issues of law and morality are different. I explained SI 133 of 2018 and whether you want to look at it from the moral side or not, I am merely stating the law.”
More: newsday
Produce affordable basic goods, Silo told
Government has tasked Silo Foods Industries, which was unbundled from the Grain Marketing Board (GMB), to produce affordable basic commodities to cushion consumers against wanton price increases, Zanu-PF chairman for Mashonaland Central Province Cde Kazembe Kazembe has said.
He said this during an inter-district meeting in Bindura on Sunday where he was apprising party officials on steps being taken by the Government to grow the economy.
Cde Kazembe, who is also the Information Communication Technology and Courier Services Minister, said Silo Foods Industries will supply people’s shops with basic commodities at prices that will be gazetted by Government.
“Silo Foods Industries, which was unbundled from the Grain Marketing Board, will start manufacturing basic goods like rice and mealie-meal for people’s shops to cushion consumers against price increases.
“This is also meant to normalise prices,” he said.
“The board members for Silo Foods Industries will be announced soon.”
Cde Kazembe said Government was also cognisant of the drought that was experienced across the country this year and was going to increase food aid in the province.
He advised people in the province to be wary of some Non-Governmental Organisation (NGOs) who were hiding behind humanitarian aid yet their aim is to destabilise the country.
“I am advising the province to be cautious when dealing with NGOs, some come offering assistance yet they are sent to destabilise the country,” said Cde Kazembe.
“We are aware that $8 million was availed to support the violent protests that rocked the country and there were doctors on standby to treat the protestors.
“A Bill that will regularise operations of NGOs will pass through parliament soon. All NGOs will be scrutinised. Take their money but don’t forget that the party is supreme.”
More: herald
Zimbabwe faces critical fuel shortages after Cyclone Idai
GT, Mines and Specialities Manager Chris Kasima of Total Zimbabwe has said that fuel supply to Zimbabwe has been disrupted due to the damages caused by cyclone Idai.
Kasima said, Zimbabwe will go through a temporary phase of critical shortage of fuel as the jetty in Beira has been damaged and can not receive vessels to discharge.
He also said the pumping house roof was blown away and the electricity board was damaged however the extent of the damage was yet to be established.
The condition of the pipeline is yet to be established and thus, they await to hear from the National Oil Infrastructure Company (NOIC) on the way forward.
There had been fears of a possible crippling fuel shortages in Zimbabwe after cyclone Idai destroyed some most of the Mozambican Port city of Beira.
Beira is a pivotal route for delivery of goods into Zimbabwe. The officials in Zimbabwe who have been inundated with search and rescue operations following the devastation of cyclone Idai have not as yet issued a statement with regards the impending fuel crisis.
More: reportfocusnews
A month of the RTGS $: Zimbabwe finance minister says so far so good with new currency
Just under a month ago, Zimbabwe launched a new pricing system that some – but not the government – are calling a currency.
It is part of a plan by Zimbabwe’s new president, Emmerson Mnangagwa, as he seeks to open up the economy to international investment and remove the barriers to doing business after two decades of stagnation and hyperinflation.
“We should put a situation where anyone looking at country ‘B’ and looking at country ‘A’ and looking at Zimbabwe will say no, no I must go to Zimbabwe, things are better, things have changed, this is what we are going to do,” he told The National during a visit to the UAE.
Asked how the new mechanism – officially called the RTGS dollar – fits into this plan, the president invited Finance Minister Mthuli Ncube, who was sitting nearby, to give a comprehensive answer.
He described the move as the culmination of a months-long process to “resolve our currency’s former issues”.
“This is the kind of journey we need to go through to restore the full value of our currency and show investors that we are a normal economy,” he said.
“What it has done is a few things,” Mr Ncube said. “It has restored full monetary policy as a tool to support and work along with fiscal policy – we can now set interest rates, we can now target reserve money, we can now use it as a tool for managing inflation rate exceptions.”
For years, the Zimbabwe dollar was pegged to the US dollar at an exchange rate of 1 to 1. But when inflation peaked in 2009 at 231 million per cent, with prices doubling daily, the government threw out its cash with its famous 100 trillion dollar note in favour of the greenback.
But more US dollars were leaving Zimbabwe than entering and long queues at banks were not uncommon. Attempts to return to some form of local currency were largely unsuccessful and met with distrust.
In the absence of a national currency and with US dollars in short supply, many in Zimbabwe began using numerous foreign currencies, debit cards and – increasingly – money stored on mobile apps.
But this led to prices appearing in numerous currencies, often at different rates depending on the payment method.
The RTGS, an acronym for Real Time Gross Settlement, is an attempt to set a unified price for all methods of payment. But crucially, it is not a physical currency and exists solely on screens.
The RTGS dollar will have a floating exchange rate rather than being pegged.
Mr Ncube said the benefit is that “above all we now have market-determined value for assets in Zimbabwe, we will also improve access to foreign currency because now you can get it at a market price.”
And three weeks in, the finance minister said it has been “so far so good.”
Mr Ncubeexplained that now launched, the administration was staying out of the way to “make sure that we don’t, as a government, distort the market”.
He said they have plans to set up a monetary policy committee to set interest rates and strengthen the reserve bank’s role as the lender of last resort for the country’s banks.
In the long run, he explained, the government may even be able to issue a physical money equivalent to the currently electronic RTGS dollar.
“This is the kind of journey we need to go through to restore the full value of our currency and show investors that we are a normal economy and their value is protected,” Mr Ncube said.
Via The National
Bond notes have not failed, people do not know the genesis of the bond note: Dr Mangudya
The Reserve Bank of Zimbabwe Governor Dr John Mangudya took the opportunity at yesterday’s public accounts committee hearing, to clearly explain the genesis of the Bond Notes hailing it as a success.
According to the Governor the bond note was a success as an export incentive and called on those calling it a failure to do more research on the Bond Notes.
Mangudya was responding to Dzivarasekwa MP Edwin Mushoriwa who asked him why he had not resigned after the bond notes had allegedly failed, as he had “promised” to do.
However, Mangudya stood firm on his claims, highlighting that bond notes did not fail as an export incentive, but were a major success as evidenced by the rise in foreign currency receipts due to their introduction.
“For starters people always want to put words in my mouth. What I said and repeat today under oath is, ‘if the bond note, as an export incentive scheme fails to promote exports in this country, I will resign,” the Governor said.
Mr Tendai Biti interjected and read a statement attributed to Dr Mangudya, published on September 16, 2016, which reads: “On this matter (bond notes), the buck stops here. We do not want this idea of giving people problems, which I make myself. Give us a chance to do what is right for this economy, to put it back on track.”
“If these policy measures fail, if the bond notes do not work out, I’m willing to resign because I am genuine about getting the economy back on track.”
Dr Mangudya retorted, by saying ‘if the bond note fails to do its work, which was to promote exports’ (I will resign)”.
Dr Mangudya said “People do not know the genesis of bond notes. The bond note is monetising the export incentive scheme. The reason why we were giving them 5 to 10 percent was to promote exports.”
In the 2018 Mid-Term Monetary Policy Statement, Dr Mangudya said a combined $743,2 million incentive was paid out to exporters who earned US$12,6 billion in forex.
Dr Mangudya also said the 1:1 value of the US dollar and bond notes had not failed, “…there is $437 million worth of bond notes and total banking sector deposits of $10 billion, implying that “what has failed is not bond notes, what happened is that the economy expanded much more than the forex generated”.
“It’s a failure of the economy to generate much foreign currency to maintain its (1:1) parity (due to Government expenditure),” he added.
More: reportfocusnews