Zim diamond sales to soar, platinum royalty to be doubled

Zimbabwe boosted its revenue estimate for 2012 as diamond sales are set to soar and government doubles royalties on platinum to take advantage of higher prices.

Revenue will probably reach $4-billion next year, up from an earlier projection of $3.4- billion, Finance Minister Tendai Biti said in his Budget speech in the capital, Harare.

The royalty on platinum sales will increase to 10%, while gold producers will be charged 7%, up from 4.5%, he said.

Zimbabwe, which emerged from a decade-long recession in 2009, is seeking to earn more from mining to help bolster the economy’s recovery. The Southern African nation has the world’s second-largest reserves of platinum, which is mined by companies including Anglo American Platinum and Impala Platinum Holdings. Zimbabwe also began selling diamonds this year after a partial ban on the gems was lifted.

“The resource rent collections are not commensurate with the value of minerals extracted, especially in view of the surge in the international prices of precious metals,” Biti said. “Government expects compensation for permanent loss of resources, since minerals are a depleting resource.”

Royalties earned the Zimbabwe government $44.1-million in the first ten months of the year, compared with mineral export earnings of $1.7-billion, Biti said. Platinum makes up 45% of mineral export earnings, gold 24% and diamonds 14%, he said. Mining shipments are estimated to expand 39% this year and 13% in 2012, he said.

A ban on diamond sales from Zimbabwe was partially lifted after the Kimberley Process, set up to monitor the sale of so-called conflict diamonds, allowed exports from two operations in the Marange region.

Zimbabwe has struggled to attract investment since emerging from recession two years ago because of instability in the power- sharing government. President Robert Mugabe’s Zanu-PF rules the country jointly with the Movement for Democratic Change, led by Prime Minister Morgan Tsvangirai.

The economy will probably grow 9.4% in 2012 from an estimated 9.3% this year as the finance and mining industries expand, Biti said.

He did not give estimates for government spending for 2012. Recurrent expenditure, which includes salaries, amounted to $1.68- billion in the first nine months of the year, while capital expenditure was $192-million. Total revenue was $2.1-billion, he said.

-Mining Weekly