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Zimbabwe will double the royalty rate it charges mining companies on the platinum group metals (PGMs) they produce to 5% from January 2023 in a bid to increase government revenues, said Finance Minister Mthuli Ncube.

Zimbabwe is the third-largest producer of platinum, after SA and Russia, with major miners Anglo American Platinum, Impala Platinum, Tharisa and Sibanye-Stillwater operating there.

Presenting a midterm budget in parliament, Ncube said government income from the mining industry was low due to what he called “a generous royalty regime on some major minerals”. Ncube also proposed a 5% royalty rate for lithium, a mineral that is drawing investor interest in Zimbabwe, which holds some of the largest hard-rock lithium deposits in the world, as demand for battery minerals grows.

Mineral exports from Zimbabwe, mainly gold and PGMs, reached $5bn in 2021, accounting for 80% of the country’s total export value. Ncube expects total export earnings to increase 16% to $7.3bn this year, buoyed by commodities. He lowered 2022’s economic growth forecast to 4.6% from 5.5% but saw growth picking up to 5% next year. Ncube linked the lower 2022 forecast to the global economic environment and domestic factors like reduced agricultural output.

BusinessDay reports that South Africa, the world’s leading PGM producer, uses a formula to calculate the royalties it charges mining companies, based on earnings. The royalty rate is capped at 5% for refined minerals and at 7% for unrefined minerals. PMGs are: platinum, palladium, rhodium, iridium, ruthenium and osmium.

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