Rio Tinto’s Murowa Mine, located near Zvishavane in south-central Zimbabwe, is a relatively young mine which started production in 2004 and has since produced and sold one million carats of diamonds in the international market (with 10% reserved for Zimbabwe’s domestic diamond manufacturing industry). Its current capability, says Rio Tinto is “of around 400,000 carats per annum of large, predominantly white, gem-quality diamonds”. However, after little over a decade of operations, the management of the mine is considering closure of the mine.  The owner of the mine, Murowa Diamonds Private Limited, has been waging what seems to be a losing battle with the Zimbabwe government to ease its tax burdens.

“The government has slated a regime of taxes that include ground rental fees, which are weighing down the business,” said Zebra Kasete, Managing Director of the mine in a  letter dated January 26 addressed to its staff, as quoted by a Bloomberg report. “The management team is continuously engaging government and hope for some positive outcome from this process; else the viability of Murowa Diamonds as a going concern will be impacted.”

It is understood that the Government of the Republic of Zimbabwe has for the past year or so been imposing taxes across the board on various industries and enterprises in order to raise revenue to be utilised, amongst other things, to pay large outstandings of the government workers’ salaries. The Murowa mine, reports say, is faced with a multitude of taxes: on gem sales, corporate tax, levy to fund the fight against HIV, and most burdomesome of all are the land rentals, and newer ones keep getting added.

Media reports suggest that the Minister of Mines and Mining Development of Zimbabwe, Walter Chidhakwa has come out in sympathy for the Murowa management and promised to take up the matter with the Finance Minister.