- Q3 Output Surges to 307 kgs, Marking a 13% Increase
- Cumulative Output for the First 9 Months Reaches 724 kgs
- Despite Progress, RioZim Still Trails Behind Padenga
Harare- RioZim's gold production for the cumulative nine months leading up to the full year of 2023 has surged to 724 kilograms, surpassing the previous year's performance. This nine-month achievement follows a notable 13% increase in the third quarter, yielding 307 kilograms, subsequent to an additional 417 kilograms obtained during the first half of 2023.
It currently operates three mines: Dalny Mine, Renco Mine, and Cam and Motor Mine. Among these mines, Cam and Motor Mine serves as the flagship asset. However, it is worth noting that the operations of these mines have frequently encountered challenges such as maintenance issues, plant breakdowns, and difficulties adapting to heavy rainfall especially since 2020 with more focus tilted on maintenance than replacement and production.
Dalny Mine is currently undergoing maintenance. This suggests that the mine is temporarily not in operation, due to the need for repairs, upgrades. Renco Mine is facing its share of challenges as well. These like said primarily include plant breakdowns, which disrupts production and require consistent repairs or replacements.
The recurring nature of these challenges, spanning multiple years, indicates that RioZim has encountered ongoing difficulties in maintaining consistent operations across its mines. These factors have impacted the company's overall productivity and performance during this period.
Up until 2020, RioZim held the position of the third-largest gold producer in Zimbabwe. The top two positions were occupied by Freda Rebecca and Caledonia, with Freda Rebecca being the leading producer and Caledonia in the second spot.
Freda Rebecca has maintained its position as the foremost gold producer consistently averaging a gold output of 3,000 kilograms. Caledonia, on the other hand, holds the second position, consistently averaging an output of 2,000 kilograms of gold.
Significant changes occurred in the gold mining landscape with the establishment of Padenga Holdings' gold operations arm in 2019. Within a remarkably short period of just two years, this new entrant posed a threat to RioZim in 2021. In 2023, Padenga Holdings managed to surpass Caledonia in terms of both half-year and nine-month performances.
Prior to the reintroduction of the Zimbabwean dollar, RioZim achieved a record annual gold output of 2,071 kilograms. This remarkable figure experienced a substantial decline in 2022, with production plummeting to 929 kilograms, falling below the 1,000-kilogram mark for the first time since 2014.
However, RioZim's decline in output began in 2018, and over the years, production has continued to decrease, albeit at a slower rate. In 2018, production dropped to 1491 kgs, and although it temporarily increased to 1660 kgs in 2020, it has been declining since then.
This downward trend is expected to impact the full-year output for 2023 as well. This projection is based on the observation that the country experienced extensive, if not record-breaking, blackouts from September to November. These blackouts are likely to persist through December due to low water levels at the Kariba Dam and machine breakdowns at Hwange's aging power plants.
To understand the reasons behind the decline in production, it is necessary to examine the factors that contributed to the record high in 2017. The remarkable increase in gold output during that year is attributed to several factors.
Firstly, the Cam and Motor Mine project, which commenced in 2015 and was fully commissioned in 2016, played a significant role while , the acquisition of Dalny Mine from Falcon Gold in 2016 (after the deal was completed in 2015) contributed to the boost in production. In 2017, the Group successfully completed the full commissioning of the Cam and Motor gold processing plant, as well as the installation of the flotation circuit.
These operational enhancements, combined with management changes, led to the notable increase in gold output. It is worth noting that this growth occurred despite challenges such as power outages and a foreign currency deficit, which continued to impact the company throughout the year.
With COVID-19 in 2019, which was particularly felt in 2020, the company’s production declined and also saw the resignation of CEO, Nkomo. Instead of a post-COVID-19 recovery, production further deteriorated due electricity shortages, a shortage of foreign currency, and plant failures.
It is however key to note that Swami and Nkomo's leadership effectively managed the situation. Although some may argue that the conditions were better during their respective tenures, especially Swami's period of operating under a dollarised economy, it's important to note that the issues at hand are not directly related to dollarisation but competitive management.
The former management team demonstrated versatility in terms of generating new ideas. They invested in new plants, machinery, and initiated new projects. These efforts were beneficial in compensating for the electricity deficit that the country was experiencing. By implementing these measures, they were able to mitigate the impact of power shortages on production and maintain a certain level of productivity. These might be ideas that need to be implemented on Danly and the whole company as a while.
With a change in management from Nkomo’s leadership, production at the flagship Cam and Motor Mine has declined significantly. In 2017, the mine produced a peak of 405 kilograms, but by the first half of 2023, production had dropped to 223 kilograms.
There is a need to closely monitor either this is due to depletion of resources (the mineral) or of thoughts. The downward trend is also reflected in the annual performance, with production declining from over 2000 kilograms in 2017 to below 1000 kilograms in 2022.
The once prestigious Dalny Mine is been for a while operating under maintenance, resulting in minimal or no gold production. This trend was witnessed in the third quarter of 2023, mirroring the situation in the first quarter and first half of the year.
Throughout the cumulative nine months, the mine failed to produce any gold. It's important to note that this issue did not arise this year but rather carries over from the previous year. The management is currently facing significant challenges in restoring the mine to full productivity and appears to be overwhelmed by the task at hand. The management attributes this decline to electricity-related issues, further exacerbating the adversity they are confronting.
Due to this poor performance, the company has encountered difficulties in securing investors for its ambitious 178 MW solar project, and the progress of the even more ambitious 2800 Sengwa power project has been slow.
In comparison to the previous leadership under Swami and Nkomo, the current management appears to be lagging behind in terms of their ability to generate ideas and effectively implement them notwithstanding the currency crisis at hand. The current management may be facing overwhelming challenges and struggling to meet the expectations set by their predecessors.
In terms of performance over the past nine months, the company's gold production is at its lowest, particularly when compared to other companies such as Padenga and Caledonia. Padenga achieved a production of 1664 kilograms during the same nine-month period, while Caledonia reached 1564.8 kilograms. Despite Padenga starting their gold operations in 2019, it has managed to surpass RioZim and claim the third position in terms of gold production. This all go back to the ideas of diversifying from crocs to rocks by Padenga’s management.
In 2017, the company's average gold production was 2071 kilograms, and in 2019, it reached the second-highest output of 1660 kilograms. However, in 2021, RioZim's production dropped to 1122 kilograms, marking the beginning of its decline as a renowned third-place gold producer in the country.
The decline became more evident in the first half of 2022 when RioZim produced merely 393 kilograms of gold, while Padenga achieved 933 kilograms, nearly tripling RioZim's performance. As a result, Padenga emerged as the new competitor surpassing RioZim in terms of gold production.
RioZim experienced steady growth in gold production, starting from 613 kilograms in 2013 and reaching a peak of 2071 kilograms in 2017. This represented a significant increase of 238% over a span of five years. However, since 2018, the company's production has been on a downward trend, declining from 2071 kilograms in 2017 to a low of 929 kilograms in 2022. This decline amounts to a staggering 61% decrease over the course of five years.
The current situation calls for immediate attention from the management, as it is likely that the company will produce below 1000 kilograms of gold again this year, considering that the cumulative production for the first nine months was 724 kilograms. With the increased power outages witnessed in Zimbabwe since September, there is a high possibility that the company's production in the last quarter will fall below 400 kilograms.
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