Business Reporter
Lithium producers, including global giant Zhejiang Huayou Cobalt, have stepped up lobbying efforts for comprehensive reforms to Zimbabwe’s lithium fiscal regime, pushing the Treasury to eliminate “double taxation” and introduce a tiered royalty system that rewards in-country processing.
Huayou, which operates in the country through Prospect Lithium Zimbabwe and Arcadia Technology Zimbabwe, wants the Ministry of Finance to make export taxes tax-deductible expenses against corporate tax.
Under current assessments, the Zimbabwe Revenue Authority excludes the 10 percent export tax and 3 percent export levy from deductible corporate expenses.
Mining houses argue the administrative treatment creates a cumulative tax burden that drives effective tax rates above 16 percent, resulting in double taxation that hurts exporter cash flows.
“We respectfully (request) that the Ministry of Finance consider making export taxes and income taxes deductible,” Huayou says.
In tandem with tax-deductibility reforms, Huayou is proposing to replace Zimbabwe’s flat-rate 7 percent royalty structure with a graduated, tier-based system aligned with the upcoming 2027 lithium concentrate export ban.
The Government has set a December 31, 2026, deadline for companies to end lithium concentrate exports as it pushes for further local beneficiation. Under Huayou’s proposed framework, unrefined raw ore would maintain high penalty royalty rates to discourage the export of un-beneficiated minerals.
Partial processing into lithium sulphate would feature a reduced royalty rate to incentivise local refining, while higher-value refined chemical salts would enjoy the lowest preferential rate to drive full-scale production of electric vehicle (EV)-ready battery materials, according to the group’s proposal.
“This structure directly incentivises downstream investment, ensuring Zimbabwe captures greater economic value from its mineral wealth,” the company says.
The group’s submissions build on its active investments in local beneficiation. Huayou became the first company in Africa to export processed lithium sulphate from its processing facility, and work is currently underway on a crude lithium carbonate plant to begin early next year to expand domestic refining capacity.
Huayou says it has injected US$100 million into the Treasury in taxes since starting its operations in Zimbabwe.
The lobbying highlights the delicate balancing act facing the Treasury as it attempts to maximise revenue and force local value addition, while keeping major investors profitable amid volatile global markets.
Bikita Minerals says the country’s lithium sector is struggling under weighty statutory obligations amid volatile markets, calling on the Treasury to review current tax structures and extend the upcoming export ban deadline to protect operations and funding for local beneficiation.
Bikita Minerals is already constructing a US$400 million lithium sulphate plant with an annual capacity of 100 000 tonnes. This would bring its total investment in Zimbabwe to nearly US$900 million by next year.
Speaking on the operational constraints facing the industry, Bikita Minerals deputy general manager (technical) Mr Thomas Mufumi said the heavy fiscal regime was placing a severe strain on emerging producers operating in a volatile global market.
“We kindly request the revenue stakeholders to engage on this because the lithium industry is still in its infancy and needs support,” he said. He said tax relief would unlock the critical funding required to accelerate investment in local beneficiation facilities.
While noting significant progress on the construction of its lithium sulphate plant, Mr Mufumi said meeting the Government’s December 31 deadline was no longer feasible due to logistical challenges that have delayed equipment shipments.
“We are being honest to say, the 2027 January deadline, we are not going to be able to meet it in all honesty,” said Mr Mufumi.
“We currently request for an extension into 2027 as we project that our project will be completed by mid-year of 2027. We really need the funding to support this project, and the only funding that we can get is the revenue that we are getting from the current production.”
In its Mid-Term Policy recommendations, the Chamber of Mines appealed for a deferment of the export ban, noting that several lithium producers are at an advanced stage of complying with the agreed beneficiation roadmap to export lithium sulphate.
The chamber highlighted that Huayou has already met the requirements ahead of schedule and is exporting lithium sulphate.
Other producers remain at various stages of compliance due to capital constraints and cash flow challenges stemming from subdued global lithium prices.
The Chamber urged the Government to defer the beneficiation tax for miners meeting verifiable construction milestones, enabling them to protect critical cash flows required to finalise their lithium sulphate plants.
“For those with assets that may not justify construction of lithium sulphate plants, we appeal to Government to allow them to enter into toll-treatment arrangements with producers that have excess smelting capacity,” said the chamber.
Lithium has overtaken platinum as the largest foreign currency earner among non-precious minerals.
During the eight-month period to August, Zimbabwe’s lithium exports generated US$2,11 billion.
Spodumene concentrate accounted for the bulk of earnings at US$1,8 billion, driven by a 283 percent surge in global prices, while petalite contributed US$155 million.
Furthermore, the country recorded US$190 million in lithium sulphate sales, reflecting initial gains from domestic processing.
