[miningmx.com] – FEARS over the effect of mining taxes, and implementation of a new mineral export levy, led to a 61% decline in first quarter diamond production at Rio Tinto’s Murowa mine in Zimbabwe.
The Anglo-Australian group said in a trading update that productivity at its Murowa diamond mine in Zimbabwe had tumbled by as much as 61% to 40,000 carats quarter-on-quarter. Productivity was also 42% lower compared to the December quarter.
“Carats recovered at Murowa were significantly lower than the comparator periods due to a planned plant shutdown to reconfigure the processing plant and a decision to reduce production rates pending confirmation that a new 15% export tax did not apply to Murowa,’ said Rio Tinto in its quarterly statement.
The rationale for the cut in production is so the mine incurs as little additional taxes as possible although Zimbabwe’s Chamber of Mines said the export levy had probably not yet been applied – a view Rio Tinto now tacitly believes.
Although the Zimbabwe government has come out guns blazing over plans to have miners beneficiate minerals in the country, implementation of the regulations has been sketchy. Finance minister, Patrick Chinamasa, said earlier this year a 15% export levy on platinum that is not fully beneficiated would be implemented, however.
Isaac Kwesu, CEO of Zimbabwe’s Chamber of Mines, said there were indications that the beneficiation levy in diamonds may not have been implemented as yet. “As it is right now … no company has raised the issue with us. Nothing is yet very clear; we haven’t had any (indication) that it has been implemented,’ said Kwesu.
He added that government officials, through the finance and mining ministries, had informed mining companies that they “… are not reverting back’ on the new levy. Kwesu said, however, that “… if there is a company that has been affected, we could have been notified”.
Government officials say the levy will be expanded to include miners of other (non-platinum) minerals, in line with President Robert Mugabe’s ruling Zanu PF party’s local beneficiation drive.
The lack of clarity over implementation of the levy has already had an impact on mining operations and investments in the country. Zimbabwe, which is battling declining productivity in the mining sector, desperately needs foreign direct investment to kick start its struggling economy.
