Diamond producers in Zimbabwe have requested the government to reduce royalty rates for the precious stones to enhance viability in the sector.
Royalties for diamond producers are currently rated as 10% of gross revenue, a figure deemed too high by players in the industry.
In its State of the Mining Industry report for 2021, the Chamber of Mines of Zimbabwe said the Government must slash the royalty in line with best practices. It said:
Diamond producer respondents indicated that the royalty for diamonds at 10% is still one of the highest in the world and is undermining the viability of diamond producers.
They are expecting the government to review the royalty downwards in line with best practices.
The Chamber said Botswana, one of the largest diamond producers in Africa, also receives 10% royalty on its diamonds.
In his 2020 budget statement Finance minister Mthuli Ncube announced that the Treasury had cut royalties for diamond mining from 15% to 10% of gross revenue, to reduce the cost of extracting deep-seated kimberlite gems.
Ncube said diamond miners were now exploiting deep-lying conglomerate deposits, with a higher cost of extraction, hence the need to revise downwards the diamond royalty.