Metallon Corporation demands $132 million from Zimbabwe’s central bank

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Legal documents obtained by Reuters showed Metallon Corporation, an Africa-focused gold miner, revealed it is owed nearly $132 million by Zimbabwe’s central bank.

The country is currently struggling through a severe dollar crunch and the central bank denied it was in arrears with the company.

The impeachment of Robert Mugabe in 2017 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.

London-based Metallon’s non-executive chairman, Mzilikazi Khumalo said “these policies are literally destroying the economy and there’s no end in sight”. 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.

The company revealed in a letter from its lawyers to the RBZ and Fidelity Printers and Refiners, that those proceeds were instead paid in electronic dollars known locally as RTGS or “Zollars”, which 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. The letter said “our client received short payments which left a balance owing at the end of each transaction. This shortfall arises directly as a result of our client being paid in RTGS currency as opposed to being paid in USD”.

The Governor of RBZ, John Mangudya rejected the company’s complaint. He said “I have not seen the letter from Metallon but the long and short of it is that we don’t owe them any money”.

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.

 

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