‘We Are Paying 40% of Our Sales to Government’, Lithium Producers Open Up on Crushing Tax Burden
As Arcadia’s US$400 million plant is completed, Bikita builds a caesium facility, and Kamativi recovers tin, miners say the fiscal regime needs to evolve with the industry.
The lithium sector is the jewel of Zimbabwe’s beneficiation agenda. Six large-scale producers have invested billions. Processing plants are rising. Export quotas have been granted. The government’s 2027 deadline for local processing is approaching.
By Rudairo Mapuranga
But beneath the headlines, a quieter story is unfolding. Lithium producers say they are being crushed by a tax burden that consumes nearly 40 percent of their sales, leaving little room for the very investments the government demands.
“We are paying 40 percent of our sales to the government,” one producer told Mining Zimbabwe. “We try our best to contribute, but we feel we are treated badly.”
This is not an attack on policy. It is a plea for partnership. And if both sides listen, the outcome could be billions more for the Treasury and a sustainable, thriving lithium industry.
The Arithmetic of Survival
Let us break down the numbers.
When a lithium producer sells a tonne of concentrate, the government takes:
- 10% unbeneficiated export tax on gross fair market value
- 7% royalty on lithium sales
- 3% community development levy on lithium sales
- 1% MMCZ marketing fee
- 15.5% VAT on applicable transactions
- Foreign currency retention requirements that effectively tax export earnings
Add corporate income tax, payroll taxes, and various other levies, and the total approaches 40 percent of sales revenue.
This is before operational costs. Before equipment. Before labour. Before power. Before maintenance.
“They will make sure operational costs are covered,” the producer said. “But after that, there is not much left.”
The Permit Crisis: Starting Over
Compounding the financial pressure is administrative uncertainty.
Several producers reported that their MMCZ export papers had been cancelled without clear guidance on how to proceed.
“We are not sure now whether we will start the whole process again or resume with the previous papers,” one miner said. “When we did everything right, our papers were cancelled anyway.”
The uncertainty creates delays. Delays create costs. Costs add to the 40 percent burden.
The Rare Earth Question: Government Loses Too
Producers are keenly aware that the government’s aggressive tax regime may be self-defeating.
If by-minerals such as tantalum, niobium, and caesium are not declared because it is not economically viable to separate them under the current fiscal framework, the government loses revenue on those minerals as well.
“If it’s viable, the rare earth within the products, the government also loses,” the producer said. “They missed the good window of good prices.”
Research presented by NUST lecturer Eng Mudono at a recent ZELO breakfast meeting estimated that Zimbabwe lost approximately US$400 million in unreported tantalum and US$30 million in unreported caesium from lithium concentrate exports.
That is government revenue that never reached the Treasury. That is value that left the country without a cent paid.
The Arcadia Example: Africa’s First Lithium Sulphate Plant
Among the three major processing facilities reshaping Zimbabwe’s lithium sector, Arcadia Lithium Mine stands out as the most advanced.
Operated by Prospect Lithium Zimbabwe, a subsidiary of China’s Zhejiang Huayou Cobalt, Arcadia has built a US$400 million lithium sulphate processing plant, the first of its kind in Africa and only the third globally.
The facility, located in Goromonzi, Mashonaland East Province, has reached its equipment commissioning phase and is expected to begin production in the first quarter of 2026. The plant has a design capacity of approximately 60,000 tonnes of lithium sulphate per annum.
According to PLZ General Manager Henry Zhu, the plant’s three production lines will process 500,000 tonnes of concentrate annually, converting it to around 80,000 tonnes of lithium sulphate.
“The lithium sulphate plant is a game-changer for our economy,” Zhu stated. “Not only has this plant created jobs and stimulated local economic activity, but it also showcases Zimbabwe’s potential as a major player in the global lithium market.”
The economic implications are already being felt. Beyond the capital investment, the plant’s construction has created numerous employment opportunities for residents of Goromonzi District, with further hiring expected upon operational launch.
Prospect expects to more than double its revenue once the plant comes into production, demonstrating the compelling economics of local processing.
The Bikita and Kamativi Examples: Market Decisions, Not Defiance
The government should take note of what is already happening across the sector.
Bikita Minerals, under its Chinese parent company Sinomine Resource Group, has built the world’s first caesium flotation plant, a US$35 million investment that extracts caesium from petalite tailings. Sinomine has also announced plans for a US$400 million smelting facility to produce battery-grade lithium hydroxide or carbonate.
Kamativi Mining Company is currently constructing a tin, tantalum, and niobium recovery system, expected to commence operations in September 2026.
These were not reactions to government pressure. They were market decisions. Bikita saw an opportunity to extract additional value from its tailings. Kamativi recognised that its pegmatites contain multiple economic minerals worth recovering.
“Bikita did it for market-based decisions,” the producer explained. “When lithium is good, we focus. It was a market decision.”
The lesson is that miners are not enemies of the state. They are businesses responding to price signals, operational constraints, and investment horizons. When the economics work, they invest.
The Laboratory Solution: A Network Already Being Built
One of the most practical steps the government could take is already underway.
On 14 April 2026, Cabinet approved the National Minerals Research and Analytical Scientific Laboratory Infrastructure Pillar, establishing a decentralised network of specialised analytical hubs at nine universities and scientific institutions across the country.
The University of Zimbabwe will serve as the apex hub for lithium, rare earth elements, and uranium. The National University of Science and Technology and Great Zimbabwe University will anchor platinum group metals and battery minerals. Midlands State University will provide analytical oversight for iron ore, chrome, and vanadium corridors.
“Government will end the costly and risky reliance on foreign laboratories for mineral certification through a decentralised network of specialised analytical hubs co-located at national universities and scientific institutions,” Information Minister Hon Zhemu Soda announced.
But a network of laboratories is only useful if it is used. The government must ensure these facilities are equipped, staffed, and funded to test every export consignment for all economic minerals present. The results should serve as the basis for taxation—not self-declaration, not trust, but empirical data.
If the government tests and finds tantalum, tax tantalum. If it finds caesium, tax caesium. If it finds rare earths, tax rare earths. The laboratory network gives the government the evidence it needs to capture value from every mineral in every concentrate.
The Infant Industry Argument
The lithium sector in Zimbabwe is, by any honest measure, brand new.
Before 2021, commercial lithium production was negligible. The current wave of investment has occurred almost entirely in the last four years. The sector is not a mature, cash-rich industry ready for heavy taxation. It is a newborn, still finding its feet, still building the plants that will one day deliver the beneficiation the government seeks.
“The sector is young,” the producer said. “The investment that the government now requires from us is heavy. This was supposed to be the first step, before the taxes, before the heavy demands.”
Between 2020 and 2025, Zimbabwe’s raw lithium exports surged from about US$7 million to nearly US$600 million. That is one of the fastest growth trajectories in the country’s mining history. But the export ban has now halted that momentum mid-flight.
Industry sources say Zimbabwe could be losing as much as US$60 million monthly in royalties and taxes following the indefinite ban. The five largest producers, employing about 9,000 workers, have scaled down operations and are largely mining to stockpile ore—a stopgap strategy that buys time but offers little certainty.
“At the moment, we are only stockpiling since the ban came into play. Costs of production are rising by the day,” a source said. “It is uncertain if firms will preserve jobs.”
Geology Abandoned for Processing
One of the most persistent gaps in Zimbabwe’s mining sector is the absence of comprehensive geological research. NDS2 identified exploration and geological data as priorities, but the funding has not followed.
“So much money is going to processing, and geology is abandoned,” the producer said. “The government should see this. The resource, is it good for that? Is there enough to do exploration?”
Without knowing what is in the ground, the country cannot attract the right investors. Without the right investors, the beneficiation agenda cannot succeed. Without success, the tax revenues will never materialise.
“The government should create an environment to encourage miners to produce rather than force them,” the producer said.
The One-Plant Problem
The government’s expectation that every producer build its own lithium sulphate plant is economically unrealistic.
“Having one plant for all miners is difficult. For all miners, it is not economical,” the producer said.
The solution, already working in the PGMs sector, is toll processing. Smaller miners send their concentrate to larger producers with excess capacity. Zimplats processes concentrate for Mimosa. The same model could work for lithium.
But the fiscal regime must recognise this reality. Forcing every producer to build its own plant, when the economics do not support it, is not a beneficiation strategy. It is a recipe for stranded assets.
The 11 Conditions: A Framework, Not a Final Word
The government has made progress. The 11 conditions issued by Mines Minister Hon Dr Eng Polite Kambamura on 7 April 2026 include mandatory declaration of all minerals before export and the establishment of assay laboratories at each producing mine within three months.
These conditions target the very practices that created the pricing gap. Financial transparency ends transfer pricing. Assay laboratories end under-declaration. Beneficiation requirements end the export of raw material altogether.
But a condition is not implementation. A laboratory is not a policy. The missing link is a fiscal regime that recognises the reality of an infant industry.
What Needs to Happen: A Partnership Approach
The producers are not asking for a free ride. They are asking for a fiscal regime that recognises the reality of an infant industry and creates a genuine partnership between government and miners.
“We are willing to follow government rules, but sometimes some processes should fund themselves,” the producer said.
