Online Reporter
Business Reporter
A labour body has rejected a US$160,000 settlement offer from RioZim Limited to withdraw its application seeking to place the listed diversified resources company under corporate rescue.
The Zimbabwe Diamond and Allied Minerals Workers Union, which RioZim owes, deemed the offer insufficient as it lacked guarantees for broader employee and corporate welfare.
RioZim, which is facing a financial crisis, has not been remitting subscriptions due to the mining employees’ representative body, which affirms the union’s claim that the company requires rescue proceedings.
The application for corporate rescue was lodged by some of the company’s workers, represented by Zidamwu.
The union argues that RioZim is facing severe operational and financial challenges and that the corporate rescue is the only mechanism that could save it from collapse.
The development comes after RioZim chief executive Mr Rajgopal Swami, publicly urged Zidamwu to cease creating “hurdles” to the company’s revival, arguing the corporate rescue application was hindering recapitalisation efforts and delaying the process of settling employee arrears.
Mr Swami maintained that a successful turnaround was “definitely possible,” asserting the company was “at the cusp of a breakthrough.”
He also emphasised that the company’s future hinged on unity and a shared commitment to long-term recovery among all stakeholders.
RioZim, through its lawyers Nyahuma’s Law, made the offer “completely without prejudice” and contingent upon Zidamwu making an “unequivocal undertaking” to abandon all legal cases related to the corporate rescue bid.
Furthermore, the offer required the union to consent to RioZim’s application for leave to appeal a High Court judgment that stopped the company from freely dealing with its assets.
The settlement offer also demanded that Zidamwu should desist from “tarnishing its image.”
“The tender is made on condition that prior to the release of the funds, you make an unequivocal undertaking to withdraw and abandon all its (court) cases and relative to the placement of our client under corporate rescue,” RioZim said. “This includes consenting to the application for leave to appeal the High Court judgment in terms of which our client was interdicted from dealing with its…assets.”
Zidamwu, however, stood firm in its rejection, arguing that the financial settlement alone did not address the fundamental issues of company viability and employee security.
The union demanded guarantees, including the full payment of outstanding employee salaries, job security for all workers, the implementation of mechanisms that demonstrate feasible short- to long-term plans for making RioZim a viable entity, and a commitment to sound corporate governance structures.
“Resultantly, our client proposes that a consensual corporate rescue strategy is opposite with clear perimeters on duration, goals and plan after which management can revert to the board.
“This, we trust, gives RioZim the best chance to protect its assets against creditors’ attachment whilst affording scarce resources…be applied toward working capital,” Zidamwu responded through its lawyers, Zinyengere Rupapa
RioZim, a significant player in Zimbabwe’s mining sector with gold, diamond and coal assets, is grappling with severe financial and operational challenges that have significantly hindered its growth since 2022.
Despite operating two gold mines, Cam and Motor (open-pit) and Renco (underground), the company’s performance has been hampered by a challenging macroeconomic environment, including limited local lending capacity and difficulties in accessing external credit due to perceived country risk.
A key issue for RioZim stems from a geological shift at its flagship Cam & Motor Mine.
In 2019, the ore changed from oxide to a refractory sulphide, necessitating a substantial US$35 million capital investment for infrastructure changes that the company could not self-finance.
Extensive efforts to secure long-term funding, both locally and internationally, proved fruitless.
Local lenders offered only short-term loans, while external funders were deterred by a lack of understanding of the country’s circumstances and perceived country risk, even when funding was secured against gold exports through an agreement with Fidelity Gold Refineries.
