Zimbabwe Drops Planned Gold Royalty Hike, Raises Threshold for Windfall Tax

Zimbabwe has abandoned its earlier proposal to double gold royalty payments, opting instead for a more moderate fiscal adjustment aimed at balancing government revenue needs with industry competitiveness. According to a revised 2026 budget bill presented on Wednesday, the government will maintain the current 5% royalty rate for gold priced between US$1,200 and US$5,000 per ounce, reversing a widely criticised plan to raise the levy to 10%.

The initial proposal—announced by Finance Minister Mthuli Ncube in his budget speech last month—sought to introduce a 10% royalty rate on gold sold above US$2,501 per ounce. Mining companies and industry organisations reacted strongly, warning that the hike would significantly erode profitability and deter investment in the sector.

During a late-night debate in parliament, Ncube informed lawmakers that the threshold for the 10% rate had now been adjusted substantially. Under the revised bill approved by the lower chamber, the 10% royalty would only apply once the gold price exceeds US$5,000 per ounce, providing relief to producers operating in a volatile commodities market.

Small-scale miners, who form a critical segment of Zimbabwe’s gold output, will continue to benefit from lower royalty rates capped at 2%, a measure designed to support artisanal operations and sustain rural livelihoods.

Several major mining companies had raised alarms over the earlier proposed hike. Caledonia Mining, operator of the 80,000-ounce-per-year Blanket mine, cautioned that the doubling of royalties would negatively affect its profitability. The company further warned that Zimbabwe’s shifting fiscal regime could jeopardise the development of its planned US$500 million Bilboes project, expected to become the country’s largest gold mine once operational.

Industry groups similarly argued that steep royalty hikes would undermine Zimbabwe’s broader ambitions to attract foreign investment and re-establish itself as one of Africa’s premier gold producers.

Their concerns were amplified by the sector’s recent strong performance. Zimbabwe recorded 42 metric tonnes of gold production in the 11 months to November 2025, surpassing its 2024 peak of 37 metric tonnes and marking a new national record.

The government’s decision to scale back the royalty increase appears to be a response to these mounting pressures, reflecting efforts to balance mineral revenue generation with the need to foster a stable and investment-friendly mining environment.

Source: Reuters

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