RioZim, a diversified resource company listed on the Zimbabwe Stock Exchange (ZSE), urgently requires an estimated US$200 million in fresh capital to resuscitate its struggling mining operations, according to recent High Court filings.
The funds are earmarked to address mounting debts, enable repair and maintenance of aging mining equipment, and provide critical working capital to sustain day-to-day operations. The application for corporate rescue, filed by employees represented by the Zimbabwe Diamond & Allied Minerals Workers Union, signals a desperate need to prevent the company's collapse.
RioZim's mining portfolio includes gold and chrome claims in Darwendale and Ngezi, a stake in Murowa Diamonds, and coal claims in Gokwe, where the company plans to establish a power station and a base metals refinery.
Court documents stress that while a restructuring of shareholding is likely, selling RioZim in its current distressed state would be unwise. Instead, the focus must be on initiatives that create sustainable value for all stakeholders, while respecting social justice considerations.
"Even if the shareholding structure is reconfigured, it would not be prudent to dispose of the first respondent in its current form and substance," the court papers state, warning that failure to implement corporate rescue will lead to liquidation. The revival of RioZim is described as crucial to nation-building and mitigating the effects of the company's operational paralysis.
The employees argue that RioZim holds significant social and economic importance in Zimbabwe's mining landscape. However, unlocking this potential requires a systemic overhaul of how the company operates, including addressing internal inefficiencies and governance reforms.
"Governance reforms will create opportunities for the group to evolve, allowing change and stability to co-exist," the workers' application adds, emphasising that reconfiguring the company for improved cost-effectiveness and operational efficiency is achievable with existing structures and enhancements.
Financially, RioZim faces dire challenges. As of 30 June 2024, the company's current liabilities exceed current assets by approximately ZiG1.04 billion, while total liabilities surpass total assets by ZiG149.2 million. It struggles to meet obligations including US$5.5 million and ZiG9 million in regulatory and contractual payments, prompting the Zimbabwe Revenue Authority (ZIMRA) to investigate potential financial improprieties and demand the company's asset register.
Operations have been severely affected; for example, electricity was disconnected at the Renco Mine due to an unpaid US$4.7 million power bill. RioZim also owes US$5.6 million in outstanding salaries, with numerous labour disputes ongoing.
Despite rising global gold prices, RioZim's gold production has declined, exacerbating the company's precarious position. The company is additionally embroiled in significant legal battles, including criminal charges from tax authorities, a US$30 million commercial dispute, and a US$55 million debt owed to an associate company.
Audited financial statements by Forvis Mazars Zimbabwe reveal material uncertainties about the company's ability to continue as a going concern-a concern echoed by previous auditors Ernst & Young Chartered Accountants, who as far back as December 2021 highlighted compliance issues with International Financial Reporting Standards (IFRS).
An independent technical report from May 2024 paints a bleak picture of RioZim's mineral assets, noting that a large portion of its gold and chrome mines-such as Cam and Motor, Dalny Mine, One-Step, and Maranatha-are currently under "care and maintenance." Only the Renco Gold Mine and Murowa Diamond operations remain active.
The proposed turnaround strategy outlined in court papers calls for stakeholder dialogue to develop a shared vision, operational consolidation and tighter controls, a robust communication framework, and a redefinition of the company's mandate and long-term vision. This is expected to culminate in a streamlined organisational structure compliant with mining regulations and a strategic blueprint designed for inclusive stakeholder engagement.
With time running out, RioZim's fate now hinges on the court's willingness to grant corporate rescue status and the successful mobilisation of the required capital to stabilize and transform the troubled mining giant.
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