Zimbabwe Royalty Hike Clouds Gold Producer Returns

A planned fiscal overhaul in Zimbabwe would raise the royalty on gold miners from 5 % to 10 % whenever the metal sells above US$2,500 per ounce, a move that Caledonia Mining Corporation says will sharply dent profits at its flagship operation, Blanket Mine, and imperil the viability of its new expansion project. The firm, listed on London’s AIM and other exchanges, said that if applied to the full gold price — not merely incremental ounces — the higher levy would erode cash generation and reduce returns below current market expectations. The proposed revision forms part of the government’s 2026 revenue plan, which also alters tax treatment of capital expenditure by replacing the existing 100 % upfront deduction with a depreciation schedule over a project’s life. Caledonia said this change won’t alter total tax payable but will delay fiscal relief and weigh on near-term cash flow.

The initiative aims to allow the government to secure a larger share of windfall gains from rising bullion prices, while harmonising the royalty structure across all producers to close regulatory loopholes. Under the new schedule gold miners would pay between 3 % and 10 % depending on price per ounce, with the top rate kicking in once the threshold is crossed. Since the industry is operating under historically elevated gold prices, many analysts expect the higher slab to be triggered — markedly increasing the cost burden for mining companies.