Murowa Diamonds slashes salaries
A SUBSIDIARY of Rio-Zim, Murowa Diamonds, has slashed salaries and allowances for its workforce as part of cost-cutting measures meant to steer the business along a growth path in the wake of falling diamond prices on the international market.
Rio-Zim assumed full control of the mine after Canadian-based, Rio Tinto exited the country.
Rio Tinto relinquished its stake in Murowa and Sengwa Coal Mines following pressure from government, which is eager to have the mining concern take part in a forced merger of diamond mines operating in Zimbabwe.
Government’s punitive tax regime also contributed to Rio Tinto’s decision to give Zimbabwe a wide berth.
Murowa Diamonds’ spokesperson, Lovemore Chimuka confirmed that the company had chopped workers’ salaries as part of painful cost-cutting measures being pursued to ensure the business does not go under.
“Like any other mining business, when commodity prices fall you initiate survival strategies which usually are along(the lines of) cutting costs, streamlining and making sure you still get value from those falling prices. We are, however, confident as a mine that the prices will rebound,” said Chimuka.
“We have streamlined in cases where we had high expenditure and we went further to cut salaries and allowances, a development which had input from our employees,” he added.
Chimuka could not shed light on the extent of the salary and allowances cut.
Murowa has also terminated contractors’ contracts following the purchase of mining equipment worth about US$6 million.
The equipment is part of the US$60 million investment which its new shareholders will commit in the next four years as Rio Zim seeks to expand operations at the Zvishavane-based mine.
Rio-Zim injected US$6 million for the purchase of excavators, dump trucks, dozers and graders, among other equipment, leaving contractors who had a load and haul arrangement with the only operating kimberlitic operation in the country in the cold.
With the fall of diamond prices, the mine recorded a loss of US$573 000 in the half year to June 30, 2015. A survey on the state of the mining sector in the country done by the Chamber of Mines released recently showed that diamond revenue fell by 46 percent following a 30 percent decrease in output.
On the regional front, the softening of the price of the gems has resulted in world diamond producers De Beers and Botswana’s Okavango Diamond Company’s sales falling by over 20 percent last year, a development which pushed the Botswana government to cut the 2015 economic growth target by half.
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