HARARE – Zimbabwe’s Chamber of Mines has proposed linking royalty payments to metal prices in order to protect operations during a market downturn.
The proposals, reported by Bloomberg News, were made to the Ministry of Finance and include the lithium and platinum group metals sectors.
Regarding the under-pressure lithium industry, the chamber said its proposals would ensure “the government captures a higher share of revenue when lithium prices are high, while providing relief when prices drop”.
The battery metal has slumped from a peak in late 2022 amid oversupply and weak demand from the electric vehicle sector, said Bloomberg News.
That’s coincided with the imposition of higher royalties in Zimbabwe, while projects operated by companies including China’s Chengxin Lithium Group and Sinomine Resource Group are relatively new, the newswire added.
“They are still facing huge start-up costs and are yet to recoup their investments,” the chamber said. “The high royalty has a huge impact on their top line, thereby compromising on the viability of lithium projects.”
For PGMs, the chamber is proposing a price-linked royalty of 3.5% up to $1,100 an ounce, rising to 5% for $1,100-$1,400, 7% for $1,400-$2,000 and 8.5% for price above $2,000 an ounce, said Bloomberg News.
Zimbabwe’s mining sector has lost $500m of potential revenue due to output losses from power outages, the chamber said.
During the first half of the year, the country’s mineral earnings fell 1.1% to $2.6bn, it added. Gold output declined 3%, while production of PGMs dropped 1%. Lithium output slumped 9%, said Bloomberg News.
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