Zimbabwe mulls ending tax on diamonds
The government of Zimbabwe plans to eliminate a 15% value added tax levied on diamond miners as part of measures to stimulate production and attract investment in the sector, Mines Minister Walter Chidakwa announced last week.
Addressing delegates to the 2nd Zimbabwe Diamond Conference on Thursday, Chidakwa said authorities are also planning to remove tax royalties on locally cut and polished diamonds, The Source reported.
President Robert Mugabe said the country’s mining industry needs more than just cutting taxes, as an energy crisis and the lack of new technologies are hindering development in the sector.
Miners operating at the country’s Marange and Chiadzwa fields have been warning for months that it has become economically unviable for them to dig any deeper for alluvial diamonds —those easily extractable through open cast mining.
Expert Paul Zimnisky attributes last year’s Marange diamond production at nearly 17 million carats, or 13% of global supply by volume. But he says this year the total will drop to around 8 to 12 million carats or less.
Hit by smuggling, illegal mining (pictured) and under-invoicing, which has caused a massive leakage in diamond revenues, Zimbabwe has been looking for ways to ensure that the bulk of its diamonds are processed locally. This, as opposed to being exported in raw form, as it happens now.
“In spite of mining being an important contributor to the country’s economy, the mining sector has been limited to extraction and exportation of minerals in their raw or semi-processed form, without due care taken to beneficiation and value addition. The finite resources should be made to remain competitive, in both regional and global markets,” Mugabe was quoted as saying.
He also revealed his government was considering setting aside up to two million carat of diamonds or 10% of its annual production for local industry to encourage local value addition and beneficiation.
Image: Zimbabwe's illegal diamonds miners, screenshot from VOAvideo.