Rio Tinto Group has announced that it may close its Murowa Diamond mine in Mazvihwa, south-central Zimbabwe, citing the regime of taxes announced by the government.
The company wrote a letter to its staff in Zimbabwe giving tax issues as the main reason for the possible closure of the mine, Bloomberg reported.
Majority-owned and operated by Rio Tinto, the Murowa Diamond mine was valued at $279m by Deutsche Bank in 2013.
In the fourth quarter of 2014, the mine had produced 101,000ct of gems.
Murowa Diamond mine managing director Zebra Kasete said in the letter: "The government has slated a regime of taxes that include ground rental fees, which are weighing down the business.
"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."
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In 2004, the Zimbabwe Government aimed to increase revenue to pay government workers and has raised or imposed taxes on all commodities from mines to water.
The mine is a combined open pit and underground construction, and current estimates put construction costs at $61m and mine reserves are 19 million tonnes of ore, with an ore grade of 0.9ct (180mg) per tonne.
RioZim, a former subsidiary of Rio Tinto that was spun off, owns the remaining interest in Murowa Diamond mine.
Image: Rough diamonds from the Murowa Diamond mine. Photo: courtesy of Rio Tinto Group.