Govt Adjusts Royalties to Ensure Mining Profitability


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DT Correspondent

In response to the softening prices of mineral commodities, Mines and Mining Development Minister Soda Zhemu said government is considering adjusting royalties to support mining profitability.

The Chamber of Mines of Zimbabwe (CoMZ) has advocated for reduced taxes to help mining companies operate at a profit amid the challenging market conditions.

Minister Soda emphasised government would take necessary measures to safeguard the growth and development of the mining industry.

“In as much as reduction of taxes is a way to go, we continue to observe the performance of the commodity prices on international markets and if that’s supposed to be the way to go, as a government we can always see how to move forward because, at the end of the day, the producers must be able to break even and see business in what they are doing.

“The government is always available where the need arises to also intervene but that has to be informed,” said Minister Soda.

While addressing the issue of reducing taxes, he highlighted the government’s commitment to assessing international commodity prices and making informed decisions accordingly.

The government aims to ensure that mining producers can break even and conduct business successfully.

The mining industry has been grappling with rising operational costs, driven by commodity softening and persistent electricity shortages.

Over the past year, key minerals such as rhodium, lithium, palladium, diamond, and nickel have experienced significant price declines of up to 74 percent.

These declining prices have coincided with increased costs, particularly due to electricity tariffs, which have risen by over 40 percent in the last 11 months.

Additionally, royalty rates for platinum and lithium have been increased by 180 percent and 150 percent respectively, further impacting the viability of mining projects.

Mining companies have implemented cost-cutting measures, including reducing capital expenditure and optimizing their operations.

The scale of the viability gap has necessitated government intervention through reductions in electricity tariffs and royalties.

Such measures are crucial to restore the viability of mining projects and support the long-term sustainability of the industry.

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