Zimbabwe slashes miners' royalty to 5% to boost gold output

ALBANY (Scrap Monster): The Zimbabwean government has decided to lower the royalty on gold from 7% to 5% in an attempt to boost gold production from the country. The government decision is expected to breathe new life into the Zimbabwean gold mining industry, which has been struggling for a long time.

According to data, the country’s gold production plummeted to 6 tonnes during the initial seven months of the year. This is 26% lower when compared with the total gold production during the corresponding seven-month period in 2013. The drastic fall in international gold price stares at the profitability of many mining companies including Freda Rebecca, African Consolidated Resources and RioZim Ltd. In addition, the mines are also affected by severe power outages and extremely high borrowing costs.

The statement issued by the country’s Finance Minister Patrick Chinamasa says that the government has decided to review the royalty on gold downward from 7% to 5%. However, the royalty on platinum will continue to remain at 10%. The revised royalty will take effect from 1^st October, 2014, the statement noted.

Incidentally, gold is the second major source of export income in Zimbabwe, after Platinum. Also, minerals and precious metals account for more than 50% of the total export revenues of the country.