The Chamber of Mines of Zimbabwe (CoMZ) has urged Government to review royalties in the diamond mining sector, proposing a reduction from the current five percent to two percent or the adoption of a price-linked system to ease pressure on struggling producers.
The Chamber says the proposed changes would provide much-needed relief to mining companies grappling with depressed international diamond prices, competition from lab-grown diamonds and geopolitical developments affecting global trade.
Speaking at the Ministry of Mines and Mining Development Strategic Planning Workshop in Kadoma, recently, Chamber of Mines chief executive officer, Isaac Kwesu, said the existing royalty regime was adding to producers’ financial difficulties at a time when the international diamond market remained subdued.
He said Government should consider reducing the fiscal burden to enable companies to sustain operations until market conditions improve.
“They (diamond producers) have said that this (royalties) is a major cost that they are facing. They will be able to survive some way, somehow until the tide turns,” Mr Kwesu said.
“They are requesting support, specifically saying a two percent royalty may be better for them. Otherwise, they would prefer, maybe not to pay a lot at this juncture.”
Zimbabwe currently charges a flat five percent royalty on diamond revenues, compared with a regional average of slightly below five percent.
The Chamber maintains that a review of the royalty structure would make the sector more resilient to fluctuations in international prices, particularly as producers contend with competition from synthetic diamonds.
The proposed changes are also intended to preserve existing mining operations and sustain production capacity while the global diamond market recovers.
The call comes amid broader discussions on improving the competitiveness of Zimbabwe’s mining fiscal framework, with the gold sector providing an example of how adjustments to the tax regime can support increased production.
