Zimbabwe gold producers are seeking another review of the country’s royalty structure, warning that gold prices exceeding US$5,000 an ounce would double the levy from 5% to 10%, potentially eroding mine profitability and threatening the viability of marginal operations, Mining Zimbabwe can report.
By Ryan Chigoche
The Chamber of Mines of Zimbabwe raised the concern at the Ministry of Mines and Mining Development’s 2027 Strategic Planning Workshop in Kadoma on Wednesday, where government and industry stakeholders discussed production growth, investment and policy priorities for the mining sector.
Addressing the workshop, the CoMZ chief executive officer, Dr Isaac Kwesu, said the royalty structure could expose producers to a sharp increase in tax payments once international gold prices cross the US$5,000-an-ounce threshold, even if the movement above that level is marginal.
“One major risk factor which the gold producers raised relates to the royalty structure, the framework of royalty, which says for prices above US$5,000 per ounce, the royalty will double. We go up 100%, from 5% to 10%,” Kwesu said.
Under the current arrangement, crossing the threshold triggers the higher rate on the value of gold sales, rather than applying it only to the additional value above US$5,000. This is what concerns producers, as a relatively small increase in the international price could result in a substantial rise in their royalty obligations.
Kwesu illustrated the difference by saying that a producer paying US$5 for every US$100 in gold revenue would see the payment double to US$10 once the higher rate takes effect.
He warned that the increase could take a significant share of mining revenues, particularly affecting operations with limited room to absorb additional costs.
“This means royalty will chew a lot in terms of their revenue, to an extent that some marginal mines may struggle,” he said.
The Chamber is now seeking to have the calculation changed, with Kwesu confirming that the industry has already taken its concerns to Treasury.
“We have lobbied the Ministry of Finance to make sure that this royalty structure be rearranged for it to look normal in any setup,” he said.
The industry’s proposal is not to remove the 10% rate, but to change how it is applied. Producers want the existing 5% rate to remain on the baseline value, with the higher charge applying only to the portion of the gold price above US$5,000 an ounce.
“Our request is, as producers are crying out, they are saying, let the 10% apply on incremental price, then leave the baseline as it was. So, in any case, if the price reaches 5,000, they are saying, no problem,” Kwesu said.
The renewed push for a review also comes after the mining industry secured a significant concession during the 2026 National Budget consultations. Finance Minister Mthuli Ncube had initially proposed raising the 10% royalty threshold to prices above US$2,500 an ounce, but following objections from miners, the Government moved the trigger to US$5,000.
The revised arrangement was subsequently enacted, with Caledonia Mining welcoming the changes as supportive of its Zimbabwean operations and planned projects.
The revised threshold has, however, brought the debate back into focus as gold prices continue to rise. The US$5,000 mark that producers previously lobbied to secure is now within reach, raising the prospect of some mines moving into the higher royalty band.
J.P. Morgan Global Research projects gold prices to average US$6,263 an ounce in 2027, well above Zimbabwe’s threshold. If prices reach those levels, the 10% royalty would become a more immediate concern for producers.
The dispute is now less about the threshold itself than how the higher rate is applied. Under the current arrangement, crossing US$5,000 would trigger a rise from 5% to 10% on the value of gold sales, rather than only on the portion earned above that level. This could significantly increase the amount payable, including for mines operating on relatively thin margins.
The Chamber’s proposal would leave the 5% rate in place on the value up to US$5,000, with the 10% applying only to the additional revenue above that point. Such an approach would still allow Government to collect more as prices rise, while avoiding a sudden increase in the royalty burden across the entire value of production.
The industry’s renewed push for changes comes after it successfully lobbied for the threshold to be raised from the initially proposed US$2,500. While producers stand to benefit from stronger gold prices, Government also has a legitimate interest in capturing a greater share of the revenue they generate.
The challenge is to strike a balance that increases the country’s return from its gold resources without weakening the economics of the mines expected to drive future production growth.
