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Zimbabwe cuts royalty on gold to boost production
A Zimbabwean miner works underground at Mwana Africa's Freda Rebecca Gold Mine near Bindura, about 90km north of the capital Harare, September 14, 2012. PHOTO BY REUTERS/Philimon Bulawayo
16/09/2014
HARARE (Reuters) - Zimbabwe will cut the royalty imposed on gold producers to 5 percent from 7 percent to boost production because companies are struggling with low prices, the government said.
"International prices of precious metals, in particular, gold, remain subdued, thereby threatening the viability of most of the mining houses," Finance Minister Patrick Chinamasa said in a statement seen by Reuters on Monday .
"I, therefore, propose to review downwards, royalty on gold
produced by primary producers from 7 percent to 5 percent. These measures take effect from 1 October 2014."
Zimbabwe's gold production fell 26 percent to six tonnes during the January-July period this year, according to official data, and the spot price for the precious metal has been pinned down around 8-month lows below $1,250 an ounce.
The country's gold mines are also struggling with power shortages and high borrowing costs. Minerals and precious metals account for 52 percent of Zimbabwe's export income and gold is the number two earner after platinum.
The royalty on platinum remains at 10 percent.
Gold mining firms in Zimbabwe include Freda Rebecca, which is owned by London-listed junior producer Mwana Africa plc as well as African Consolidated Resources and RioZim Ltd.
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