The Zimbabwe government is to reduce the yearly licence fees for diamond cutting and polishing firms, in a move meant to entrench the refining and beneficiation of the gems in the country prior to export and lower a tariff regime long seen by investors as a threat to the viability of the industry.

Currently, Zimbabwe requires diamond cutting and polishing firms to pay $100 000 in yearly registration fees, in addition to other commodity taxes levied on export-bound mineral products.

Mines and Mining Development Minister Walter Chidakwa told reporters in Harare last week that government was already working towards scrapping the tariffs levied on diamond cutting and polishing firms to support pre-export valued addition.

The Minister said he had met representatives of diamond cutting, polishing and jewellery firms to discuss their concerns. “I called the diamond cutters and polishers and those in the jewellery industry for a meeting and the idea was to get to know what they expect from us. “We also asked them what they will be able to do if we resolve some of their concerns. “We had a lively and fruitful debate and we agreed to address some of the issues that they raised, chief among them being a reduction in the licence tariffs.”

More than 70 Zimbabwean diamond cutting and polishing firms have closed down since 2010, citing viability problems related to the high licence fees, high operating costs and bureaucratic obstacles which prevented them from accessing high-grade diamonds that can be sold at competitive prices in the international market. Chidakwa said that, following the consultations, government had agreed to remove all obstacles inhibiting the growth of the sector.

“We have agreed to address the issues that have been inhibiting beneficiation in the diamond industry and we are going to announce the new measures once the Budget has been passed. “This will pave the way for those in the cutting and polishing sector to start their operations. “This is not only about diamonds – we are also looking at all minerals across the board,” he said.

Investment Destination

Meanwhile, Mines and Mining Development Deputy Minister Fred Moyo said the fact that Zimbabwe’s mining royalty rates were some of the highest in the region did not promote the country as a mining investment destination.

He promised to draft rules to allow for a revision of the mining taxation system, which, he said, “is fragmented, cumbersome and requires immediate revision”.

The Chamber of Mines of Zimbabwe has repeatedly called for a single mining taxation system, as opposed to a multiplicity of taxes, which is the case now.

Meanwhile, Chidakwa said government would impose stiff penalties on diamond firms which failed to beat the January 31 dead- line for the establishment of diamond cleaning facilities. Directive He said government issued the directive because it wanted to ensure that all diamonds which would be traded at Zimbabwe’s second international gem sale in Antwerp from February 12 to 19 were of a high value.

“We have notified the companies of the next Antwerp sale that is likely to take place from February 12 to 19. “Basically, what we are saying is that we want to yield more in terms of revenue. “Once the diamonds are cleaned, the issues of clarity will be enhanced and, as a result, we will hope to yield more in terms of revenue.

“The companies were given a deadline to set up facilities to clean diamonds by January 31. Companies that fail to meet this deadline will face penalties. However, we do not want to go this route. “We have a mutual agreement with the companies and we expect them to comply so that we yield more from our sales,” he said.

Zimbabwe is pushing hard to ensure that all minerals in the country are refined prior to export to maximise returns from the exploitation of the country’s resources. Operators in the platinum, chrome and diamond sectors are under government pressure to start local value addition.