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Zimbabwe’s lithium producers are calling for a reduction in royalties on lithium sulphate and lithium carbonate to 3%, arguing that the current 7% rate could undermine investment in local beneficiation and downstream processing, Mining Zimbabwe can report.
By Ryan Chigoche
The proposal was submitted to the Ministry of Finance, Economic Development and Investment Promotion as part of the Chamber of Mines of Zimbabwe’s Mining Industry Priority Areas for the 2027 National Budget, which outlines the sector’s fiscal and policy priorities ahead of next year’s budget.
The Chamber is proposing that the 7% royalty be retained on unbeneficiated lithium products, such as concentrates, while a lower 3% rate applies to lithium salts that undergo further chemical processing.
Under the current framework, a 7% royalty is levied across lithium products, including concentrates, lithium sulphate and lithium carbonate. The Chamber argues that applying the same rate to all products fails to account for the additional value created through chemical conversion and beneficiation.
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“Applying the full 7% royalty to the final value of lithium sulphate and carbonate would effectively impose the mining royalty not only on the underlying mineral value, but also on the substantial value added through processing,” the Chamber said.
Lithium sulphate and lithium carbonate require additional processing beyond the production of concentrate, with producers incurring further capital and operating costs to create higher-value products.
The Chamber said a differentiated royalty structure would strike a balance between maintaining Government revenue and advancing the country’s value-addition objectives.
It is therefore proposing that the 7% royalty remain in place for unbeneficiated products, such as lithium concentrates, while lithium sulphate and lithium carbonate attract a reduced rate of 3%.
The proposed reduction, the Chamber said, would recognise the value created through beneficiation and encourage producers to pursue further downstream processing in Zimbabwe while ensuring that the Government continues to receive revenue from the underlying lithium resource.
The proposal comes against a background of longstanding concerns among lithium producers over Zimbabwe’s tax regime, with companies previously raising concerns about the cumulative burden of taxes and statutory charges on their operations.
However, in its latest submission, the Chamber is making a specific case for differentiating royalties according to the level of processing. It argues that maintaining the 7% rate on concentrates while reducing the charge to 3% on lithium sulphate and lithium carbonate would create an incentive for producers to invest in chemical conversion rather than continue exporting less-processed material.
The proposal also seeks to preserve Government revenue from lithium production while ensuring that companies undertaking additional processing are not subjected to the same royalty rate on value created through beneficiation.
The debate comes as Zimbabwe seeks to capture more value from its lithium resources by encouraging producers to move beyond concentrate production into chemical processing.
The country’s lithium sector has attracted significant investment in recent years, with producers expanding mining operations and developing processing facilities as the Government pushes for greater local beneficiation.