Rough diamonds

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.

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"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."

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.