Zimbabwe lithium miners want royalties to be linked to prices
Zimbabwe lithium miners want royalty payments to the government linked to metal prices as the current market downturn threatens the viability of investment projects.
That will ensure “the government captures a higher share of revenue when lithium prices are high, while providing relief when prices drop,” the miners said in proposals forwarded by the Chamber of Mines to Zimbabwe’s Ministry of Finance.
The battery metal has slumped from a peak in late 2022 amid oversupply and weak demand from the electric vehicle sector. That’s coincided with the imposition of higher royalties in Zimbabwe, while projects operated by companies including China’s Chengxin Lithium Group Co. and Sinomine Resource Group Co. are relatively new.
“They are still facing huge start-up costs and are yet to recoup their investments,” the chamber said. “The high royalty has a huge impact on their top line, thereby compromising on the viability of lithium projects.”
Zimbabwe’s mining sector has lost $500 million of potential revenue due to output losses from power outages, the chamber said.
During the first half of the year, the country’s mineral earnings fell 1.1% to $2.6 billion, it added. Gold output declined 3%, while production of platinum group metals dropped 1%. Lithium output slumped 9%.
Other recommendations by Chamber of Mines:
* For the platinum sector, it proposed a price-linked royalty of 3.5% up to $1,100 an ounce, rising to 5% for $1,100-$1,400, 7% for $1,400-$2,000 and 8.5% for price above $2,000 an ounce.
* Mining companies want the minimum retention of foreign currency earnings to be increased to 85% from current 75%.
* Miners are seeking a power tariff of around US9c/KWh compared with current USc14.21/KWh, and peak tariff of around USc19/KWh, which they say is unaffordable.
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