Murowa production down 60 percent on tax fears

Spread This News

RIO Tinto Plc’s Murowa Diamond has reported that output for the first quarter fell by 61 percent to 40,000 carats compared to the previous quarter due to a plant shutdown and worries over a 15 percent export tax.
Government first proposed the tax on unrefined mineral exports, notably platinum, in 2013, in an effort to push mining companies to process the metal domestically.
Late last year, however, it said it would postpone it until January 2017 to give miners time to build the smelting and refining plants.
But the Finance Bill, which was published on January 9, proposed its introduction from January 1, causing concern among miners in the country.
“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 (subsequently received) that a new 15 per cent export tax did not apply to Murowa,” the company reported in a trading update on Tuesday.
Global resources giant Rio Tinto has a 78 percent interest in the company while the remaining 22 percent shareholding is owned by local miner, RioZim Limited.
Ore processed in the period under review amounted to 117,000 tonnes while diamonds recovered totaled 51,000 carats.
The future of the mine is uncertain, after government proposed to bring all diamond mining operations in the country under one firm in which the state will have a 50 percent shareholding.
Zimbabwe, one of the world’s top diamond-producing countries, is believed to hold 25 percent of the world’s reserves of opencast extractable diamonds, with the eastern Marange fields its major diamond source.
Murowa produced 344,000 carats in 2014 but production figures from mining companies operating in Marange area, which produced 14 million carats in 2013, are not yet available.
The government owns half the shares in all the mines in Marange, which produce alluvial diamonds that are of a lower quality than the gems mined at Murowa.
Mines minister Walter Chidhakwa said last month that the government was planning to merge all diamond mining companies, including Murowa, into one big firm in which the state will own half of the shares.
Rio Tinto said it was concerned by the merger plans but is talking to the government on the issue.Advertisement

Other diamond miners in the country include Marange Resources, Diamond Mining Company (DMC), Anjin, Jinan and Mbada Diamonds which operate in the Chiadzwa area and the moribund River Ranch Mine in Beitbridge.