• Zimbabwe remains Africa’s highest-taxed diamond producer with a 10% royalty while global rough diamond prices have collapsed by 74% since 2020
• RioZim’s decision to sell its 22.2% stake in Murowa Diamonds reflects the commercial unsustainability of private diamond mining under current fiscal and regulatory framework
• Botswana and Angola have already begun restructuring their diamond strategies through increased state marketing participation and value addition

Harare- De Beers cut its diamond prices in July 2026 as weak Chinese luxury demand, expanding laboratory grown diamond production and increased rough supply from producers such as Angola deepened the industry's prolonged downturn. The reduction brought De Beers' official prices, which had remained 5% to 50% above secondary market levels depending on stone category, much closer to prevailing market prices after 137 years of maintaining a pricing structure built around natural diamond scarcity.

For Zimbabwe, the change comes as diamond revenues are falling while the fiscal framework remains anchored to a 10% royalty on gross diamond revenue. RioZim is seeking to sell its 22.2% stake in Murowa Diamonds and other mining assets to address US$76.5 million of debt, while Botswana is changing how it captures diamond value and investing in renewable energy as weaker prices place pressure on its finances.

The global rough diamond price has fallen by about 74% from its 2020 peak, while laboratory grown diamonds have moved from a niche alternative into a major part of the jewellery market. Zimbabwe's policy framework is consequently collecting revenue from an industry whose underlying value base has changed substantially since the royalty was reduced from 15% to 10% in 2019.

De Beers' price reduction provides the clearest evidence of the market's change. Laboratory grown diamonds now account for 52% of US engagement ring centre stones, compared with 3% in 2018, while improvements in production technology have continued to widen the price gap between natural and laboratory grown stones.

Natural one carat diamonds fell to about US$4,200 in 2025 from approximately US$6,000 in 2021, while laboratory grown one carat stones were selling for roughly US$750 to US$1,000 in 2026. A two carat natural stone priced around US$15,000 therefore competes with a laboratory grown equivalent at roughly US$2,000, giving consumers a substantially cheaper alternative to natural stones.

The financial consequences have reached the industry's largest companies. Anglo American, which owns 85% of De Beers, recorded a US$2.3 billion pre tax impairment on the diamond business in 2025, taking cumulative write downs on De Beers to US$6.8 billion over three years, while De Beers' EBITDA loss widened to US$511 million from US$25 million a year earlier.

Zimbabwe's own production data provide a sharper measure of the pressure. Kimberley Process data show rough diamond production rising from 4.46 million carats in 2022 to 5.29 million carats in 2024, while the reported value of production fell from US$423.6 million to US$163.8 million over the same period.

Zimbabwe therefore increased physical output by about 18.6% while the reported value generated by that output fell by more than 61%. The divergence exposes a weakness in measuring sector performance through production volumes alone because more carats have been accompanied by substantially less value available to producers, government and the wider economy.

Zimbabwe is the world's seventh largest diamond producer, with production centred on the Marange diamond fields operated by the Zimbabwe Consolidated Diamond Company, Murowa operated by RZM Murowa and exploration by ALROSA Zimbabwe in the Chimanimani region.

Diamond exports reached US$130.12 million in the first ten months of 2025, 36% below the comparable 2024 period and the lowest level in almost five years. Comparable exports stood at US$161.29 million during the first ten months of 2021, placing the latest decline within a longer deterioration in the country's diamond revenue base.

Zimbabwe reduced its diamond royalty from 15% to 10% in 2019 as a competitiveness measure, when rough diamond prices were around US$2,500 to US$3,000 per carat. The current market is operating around a much lower price base, meaning the same 10% rate now applies to substantially less revenue per carat.

The difference is straightforward. A 10% royalty on a US$3,000 carat produces US$300 for the state, while the same rate on a US$900 carat produces US$90. The producer has lost US$2,100 in gross value per carat while still carrying the costs required to extract, process and market the stone.

The royalty also operates alongside a 30% foreign currency surrender requirement and power constraints. The source analysis estimates that power shortages erode at least 20% of output potential, while ageing infrastructure contributed to ZCDC losing 1.4 million carats in 2023.

The fiscal burden therefore sits alongside a production problem. Lower prices reduce revenue, the royalty continues to claim a fixed percentage of that revenue, foreign currency restrictions affect access to imported inputs and infrastructure weaknesses reduce the number of carats available for sale.

An official familiar with RioZim's position, who spoke to Equity Axis on condition of anonymity, described the royalty as “crazy” given what he said was Zimbabwe's position as having the highest diamond royalty in Africa. The official said the burden contributes to the lack of commercial feasibility at Murowa and forms part of the reason RioZim wants to sell its interest in the operation.

The comparative claim requires care because African diamond producers operate under different combinations of royalty rates, state ownership, corporate taxes, foreign currency requirements and other charges. The operator's assessment remains important because it places the royalty directly inside the commercial feasibility calculation of an existing Zimbabwean diamond asset.

RioZim puts the investment problem into focus

RioZim announced plans to sell its 22.2% stake in Murowa Diamonds, four diamond claims valued at US$4.6 million and other mining assets as part of a strategy to address US$76.5 million of debt. The company is targeting a US$60.8 million liability owed to major shareholder RZM Murowa and has received interest from more than 15 potential investors for a combination of equity and debt financing.

RioZim has operated Murowa since acquiring the asset from Rio Tinto in 2015. Its decision to release the stake while the global diamond market is undergoing a substantial repricing places the asset within the wider commercial conditions facing private diamond operators in Zimbabwe.

Rio Tinto had raised concerns about Zimbabwe's tax environment before its departure, with an employee letter stating that taxes were “weighing down” the business. That assessment was made before the subsequent deterioration in rough diamond prices, leaving current operators facing a lower revenue environment alongside the existing fiscal and operating costs.

RioZim's position does not establish that taxation alone caused the company's decision to sell. Debt, commodity prices, production economics and group capital requirements all form part of the transaction, while the anonymous official's comments provide additional evidence that the royalty is being considered within the asset's commercial feasibility assessment.

Botswana is changing the value equation

Botswana offers the most relevant African comparison because diamonds account for about 25% of GDP and 75% of foreign exchange earnings. Debswana reduced production by 40% in 2025 amid a 50% fall in revenue, while the resulting pressure contributed to economic contraction and a deterioration in fiscal and reserve conditions.

Botswana has responded by changing its participation in the diamond value chain. A new agreement with De Beers extends Debswana's mining licences to 2054 and progressively increases Botswana's share of rough diamond sales from 25% to 50% over the next decade, while a sovereign wealth fund established in 2025 is intended to direct diamond related revenues into areas such as agro processing, renewable energy and tourism.

The country is also investing in energy security. Debswana plans a major solar project near Jwaneng, while Botswana has committed US$100 million to the 100 MW Tati Solar Project as weaker diamond revenues increase the importance of controlling operating costs and reducing exposure to imported energy.

The more consequential adjustment is downstream participation. The Okavango Diamond Company is increasing its share of rough diamond sales from 25% towards 50% over the decade, while the HB Antwerp partnership gives Botswana greater exposure to trading and value addition.

Zimbabwe remains concentrated around extraction, leaving a substantial portion of the downstream value chain outside the country. The policy challenge is to create commercially viable conditions for retaining more value from the stone after it leaves the mine.

Angola, Russia and India provide different models

Angola provides a model in which the state participates through several stages of the diamond business. Endiama provides state equity participation, private operators contribute capital and technical expertise, while Sodiam participates in marketing, giving the state exposure through royalty, equity returns and the downstream trading structure.

Russia provides another model through ALROSA's involvement with ZCDC. ALROSA Zimbabwe remains in the prospecting phase under a 70/30 joint venture covering 40 Special Grants, with Chimanimani as its initial focus, after committing US$12 million initially and announcing plans in 2025 to double the investment.

The eventual move from exploration to production will depend on commercially viable discoveries and fiscal terms covering royalties, foreign currency retention and beneficiation. Zimbabwe therefore still has an opportunity to establish a more competitive framework before new deposits reach production.

India demonstrates the downstream opportunity through Surat, which became the world's largest diamond cutting and polishing centre through specialised labour, industry infrastructure and government support, with zero import duty on rough diamonds helping maintain processing competitiveness.

Zimbabwe's Marange and Murowa diamonds largely leave the country as rough stones, leaving cutting and polishing margins to centres such as Antwerp, Mumbai and Tel Aviv. A commercially viable domestic processing industry would retain labour income, technical skills and part of the downstream margin inside Zimbabwe.

Zvikomborero Sibanda, a renowned economist who previously worked with the Zimbabwe Coalition on Debt and Development, argues that value addition has to be pursued alongside the financial realities of the existing diamond trade. His position was that policy changes need to account for the foreign currency and production currently generated by rough diamond exports, particularly where domestic processing capacity has not yet reached the scale required to replace those export flows.

“The royalty needs to be tied to the price of diamonds because the economics have changed significantly,” Sibanda said.

“A 6% to 7% royalty would give producers some breathing space while prices are depressed, and when prices recover the government can take a higher percentage. The objective should be to keep the mines viable while making sure the state benefits when the market improves.”

The proposal addresses the central contradiction in Zimbabwe's current fiscal framework. A fixed 10% royalty takes the same proportion of gross revenue when a carat sells for US$3,000 and when it sells for US$900, even though the producer has lost US$2,100 of gross value while continuing to carry many of the same mining, power, maintenance and working capital costs.

A tied system would establish predetermined price bands and corresponding royalty rates, allowing the adjustment to occur automatically rather than through repeated negotiations between government and producers. It would also give mining companies greater visibility when evaluating investment, particularly for assets such as Murowa where capital allocation is already being tested by lower diamond prices and operating costs.

Sibanda's proposal does not resolve the other constraints facing the industry. The 30% foreign currency surrender requirement, power shortages, ageing infrastructure and limited domestic beneficiation would continue to affect investment even with a lower royalty.

The next reform therefore concerns foreign currency retention. Diamond producers need sufficient hard currency to fund imported equipment, energy requirements and debt service, particularly when export values are falling, while greater retention would provide additional working capital for maintaining productive assets and financing investment.

The next requirement is an investment incentive for local cutting and polishing. A royalty credit or comparable fiscal benefit tied to verified domestic value addition could encourage investment in a facility located where reliable power is available, either through dedicated generation at Marange or within a suitable special economic zone.

The potential value addition is substantial. The source analysis estimates a beneficiation premium of between 30% and 100%, depending on stone size and quality, while Murowa's production includes gem quality stones and large specials that carry greater potential for downstream value creation.

The next requirement is a time bound operational restructuring of ZCDC. The company needs to address ageing processing infrastructure, electricity constraints and security weaknesses, with the 1.4 million carats lost to ageing infrastructure in 2023 providing a measurable indication of the cost of underinvestment. At US$900 per carat, those lost carats represent a theoretical US$1.26 billion in gross export value, although actual recoverable revenue would depend on stone quality, recovery rates and realised prices.

Improving production efficiency can expand the revenue base itself, while fiscal reform changes how that revenue is distributed between the state and producers. Both dimensions have to move together if Zimbabwe wants to maintain production and attract fresh investment.

The final requirement is a natural diamond differentiation strategy based on provenance. Laboratory grown diamonds have removed much of the traditional price advantage of natural stones, leaving geological origin, rarity, traceability and verified production as important foundations for maintaining a premium.

Zimbabwe can build that proposition around the geological history of Marange and Murowa, Kimberley Process certification, traceability and documented community participation. A credible system would require investment in verification, marketing and digital traceability beyond existing certification, allowing Zimbabwean stones to compete through identifiable origin and scarcity rather than price alone.

Production and value data provide the clearest measure of the policy challenge. Between 2022 and 2024, rough diamond output increased from 4.46 million carats to 5.29 million carats, yet reported production value fell from US$423.6 million to US$163.8 million.

The country therefore added nearly one fifth to physical output while losing more than three fifths of the reported value generated by that output. Production volume has consequently become an inadequate measure of sector performance because value per carat, cost of production and the proportion of downstream value retained in Zimbabwe have become equally important.

The same issue appears within ZCDC. Recovering production lost through ageing infrastructure can expand the revenue base without requiring a new discovery, while reliable electricity and modern processing equipment can reduce the cost of producing each carat.

The policy window remains open

Zimbabwe has more room to reform than Botswana because diamonds account for a smaller share of the overall economy and export earnings. That gives policymakers greater capacity to adjust the fiscal framework, invest in productive infrastructure and develop downstream industries before the diamond downturn becomes a broader macroeconomic constraint.

The opportunity requires action while the country still has established mines, known resources, international industry partnerships and prospective deposits. ZCDC remains active in Marange, Murowa remains an established kimberlite operation and ALROSA's exploration programme provides another potential source of future production.

Zimbabwe cannot determine the global diamond price or control the growth of laboratory production. Its policy can determine how much value remains in the country after each carat is mined, how much foreign currency producers can deploy into productive capacity and how much of the downstream margin is captured locally.

The measurable test is therefore broader than the number of carats produced. Zimbabwe needs production to remain commercially viable, value generated per carat to recover, local processing capacity to expand, foreign currency policy to support productive investment and the fiscal system to remain sustainable across the diamond price cycle.

The evidence for reform is already accumulating across the industry. De Beers has cut prices, Anglo American has written down billions of dollars from its diamond business, Zimbabwe's diamond exports have fallen and RioZim is seeking to exit Murowa while an official familiar with the company's position says the royalty burden has contributed to the asset's lack of feasibility.

Zimbabwe's diamond policy now needs to respond to the market that exists rather than the market that supported the framework of the past. The central measure will be whether the country can retain more value from every carat while leaving enough commercial return inside the mine to sustain production, finance investment and build the processing capacity required to capture more downstream value.

Equity Axis News