Rio Tinto Zimbabwe reports slump in diamond and gold output

Rio Tinto Zimbabwe (RioZim) which jointly owns the Murowa Diamond Mine with its parent company, Rio Tinto, has reported a four percent dip in output at the mine. Further, record quarterly gold output in the fourth quarter at another jointly owned operation – the Renco Mine - could not prevent a fall in total annual gold production.

Media reports in Zimbabwe indicate that RioZim, which is listed on the Zimbabwe Stock Exchange, registered diamond production of 240,026 carats in 2006, down from 251,000 it registered in 2005. According to the reports, the company told shareholders that the fall was as a result of a weaker surface ore body and worsening power cuts that are the order of the day in the country. It said the diamond production dip had been expected.

“The decline in diamond output, which was due to the exhaustion of the richer surface ore body, had been predicted and advised in 2005,” private owned Financial Gazette quoted RioZim Chairman Eric Kahari as saying. “The decline in production was however exacerbated by contractor plant breakdowns and ZESA load shedding.”

The development confirms other reports that Zimbabwe’s mineral output had nose-dived over the past years, owing much to load shedding, archaic power supply and breakdown of plant in the mining industry, among other reasons.

According to RioZim, which holds 22 percent of the Murowa Diamond Mine with Rio Tinto owning the remaining 78 percent equity, it still managed to rake in US$485 million profits up from $172 million it registered in 2005. Despite mines in Zimbabwe registering a drop in their mineral output, they managed to make profits due to attractive prices on the international markets.

The company further says gold production at Renco Mine was 740kg, down from 753kg in the previous year. The drop has been attributed to a 53-day breakdown of its primary mill. The mine however managed to produce 244kg of gold in the fourth quarter – which was the highest quarter output for a while, according to the Gazette.

RioZim has embarked on a US$120 million expansion plan at it diamond mine to lift output, after a report by Kahari warned that business at the mine would start winding down in 2009 without the planned expansion, says Gazette.

Apart from load shedding and archaic mining equipment, smuggling and illegal mining have also dogged the mining industry in Zimbabwe, a development that led the government to introduce Operation Chikorokoza Chapera to stop illegal miners and smugglers.

Historically, Zimbabwe was the world’s third largest gold producer after South Africa and Ghana. However due to economic quagmire, which is attributed to President Robert Mugabe’s “bad political and economic policies”, the country is no longer a force in the
industry, and its No. 3 position has been claimed by Tanzania.

source:www.mineweb.net