New tax regime could force Riot Tinto to close Murowa diamond mine

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RIO Tinto’s sole diamond mine in Zimbabwe is coming to an end.
According to a letter written for staff, the London-based company stated it would be closing its Murowa Diamond Mine in the country due to a new tax regime by the government.
“The government has slated a regime of taxes that include ground rental fees, which are weighing down the business,” Zebra Kasete, the managing director of the mine, said in the letter on Monday.
In recent years the government has raised or imposed a multitude of new taxes. In addition to paying a 15 percent royalty on diamond sales as well as other taxes, including corporate tax, Rio pays more than $109 million per year in land rental.
“I am meeting the finance minister to discuss that 15 percent royalty issue,” Mines Minister Walter Chidakwa said. “I support them on their concerns.”
Located in Mazvihwa, south-central Zimbabwe, the Murowa Diamond mine is 78-percent owned by Rio Tinto. The mine, which is valued at $279 million by Deutsche Bank, produced 101,000 carats of diamonds in the fourth quarter of 2014.
“The management team is continuously engaging government and hope for some positive outcome from this process; else the viability of Murowa Diamonds as a going concern will be impacted,” Kasete stated.Advertisement