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PF Government wont back down on new Mine tax, it’s what Zambians wanted-Yaluma

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Mines, Energy and Water Development Minister Christopher Yaluma (right) and his Deputy George Zulu (centre) inspect the Lusaka fuel storage depot with Lusaka Province Minister Obvious Mwaliteta before commissioning of the plant
Mines, Energy and Water Development Minister Christopher Yaluma
(right) and his Deputy George Zulu (centre) inspect the Lusaka fuel
storage depot with Lusaka Province Minister Obvious Mwaliteta before
commissioning of the plant

MINISTER of Mines, Energy and Water Development Christopher Yaluma has dismissed claims that the increase in mineral royalty tax for underground and open pit mines will affect the profitability of mining companies and result in capital flight.

Parliament passed the 2015 national budget which effected an increase in mineral royalty taxes from six percent to eight percent for underground mines and 20 percent for open pit mines.

Mr Yaluma accused the mining sector of allegedly wanting to “kill” the economy at the expense of making huge profits.

The minister said in an interview on Thursday that Government should not be taken for granted.

“We as Government must be careful that we are not held at ransom by anyone, especially that what we are doing is in the interest of the Zambian people,” Mr Yaluma said.

Mr Yaluma said before the Patriotic Front (PF) assumed office three years ago, there was an outcry that Government was not collecting sufficient revenue from the mines.

He said the revised mineral royalty tax is just responding to that concern.

“We have introduced eight percent mineral royalty tax for underground and 20 percent for open pit mining,” Mr Yaluma said.

He said any Government’s survival is based on the revenue it collects in terms of taxes.

He warned that the economy will be affected if Government backtracks on the new mining tax regime.

“What we have done as Government is reasonable. Barrick Gold Corporation is saying that the mineral royalty tax will kill their business at Lumwana Copper Mine but they want to kill our economy,” he charged.

Barrack Gold Corporation has announced that it will initiate procedures to suspend operations at its Lumwana Copper Mine resulting in a possible loss of 4,000 direct jobs.

Mr Yaluma wondered why Lumwana Copper Mine claims that Government will kill its business when it has not presented a scientific argument on how it will fair under the new the tax regime.

He also said Government has an open-door policy and will listen to mining companies that will bring forward figures to justify their claims to find a lasting solution.

“We are interested in seeing that the mines are making profits and Government growing its economy. All I am saying is that we are open for discussion, we cannot stop this tax regime,” Mr Yaluma said.

He said he summoned Lumwana Copper Mine for a meeting because the issue at hand is a matter of survival.

“No one will drop this tax because of political reasons and we cannot go and bend for the sake of bending because there is need to protect Zambians,” Mr Yaluma said

He said when PF came into power, mineral royalty tax was increased from three to six percent and the mines still made a lot of profits.

He said it will be negligent of the government to remove new mineral royalty tax.

27 COMMENTS

  1. On this one, I will support government’s stance on this issue. Zambians need to benefit from their God given natural resources.

    • If government wants to make more from the mines why dont they run the mines themselves, what should be understood is that investors are here to make money thats why they invest, if they cant then they pull out, they dont invest out of charity NO.

    • IMMEDIATE RELEASE
      27TH DECEMBER 2014
      LUNGU’S CAMPAIGN PROGRAM RESCHEDULED TO MONDAY
      We wish to announce that the campaign program has been rescheduled to Monday 29TH December 2014.
      PF President Edgar Lungu was due to continue his presidential campaign on Saturday 27TH December 2014.
      The entire program has been rescheduled to Monday and will go on as planned.
      The delay has been caused by unavailability of the Planes and Helicopters hired in this campaign trail.
      The logistical delay has been caused by the current holidays.

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    • On this one, kudos to the gov’t. On this issue, opposition parties should also not just do cheap politics on this one and make costly promises. These mines new about the budget months ago, now that they know elections are on, they say they will pack up. They want to hold us hostage and threaten us in our own country. Barick has even been mining gold that they don’t declare. Let them go, others will come

  2. Mining companies should not take Zambians for granted government has done the right thing for introducing mineral royalty tax for us to benefit from our natural resources.
    How can we be the second producer of copper in Africa and still be the poorest nation that is barbaric.

    Government officials should not back down and be blackmailed by these investors who want to rip huge profits at our expense.

    They are also given tax holidays for years when it comes to start paying tax they want to arm twist us Zambians let us be serious and put our foot down to find a win win situation.
    We need investors and they need us but if they want to be greedy and enjoy tax holidays sorry we would rather they go and bring in other investors.

  3. Another clueless and USELESS Minister!

    Zambia copper production 2012 -629,020 tons, 2013 -830,000 tons

    Democratic Republic of the Congo production 2012 -608,400 tons 2013 -900,000 tons

    DRC has overtaken Zambia in copper.

    Wake up you Poor Fools, there are the facts.

    Investment has gone to DRC, now there are less jobs in Zambia due to your incompetence, arrogance and stup!dity.

    • Capitalists will always take advantage of relaxed regulations. The well being of our people depends on how much government collects in taxes. These same investors you are talking about don’t make that much from where they come from. Open your eyes the government is just doing the right thing and if anything they should have increased much more.
      They know that if you pay a few influential people then you will be smiling all the way. These are people who make money without regard to the suffering masses. Please wake up…

    • You are the one who is dull indeed. So you want more copper to be produced while Zambia get nothing from the God given resource. Very dull creature. Shame on you.

    • Some comments shows ignorance. DRC has a lot of mineral reserves and the sharp increase is because of stability from civil war in that country. Who do you want to be feeling you chap? Come you do mining yourself.

    • Its not like that wekapo iwe ,u know nothing about mining ,congo is the richest country on earth for your own info,they have huge mines than zambia,so dont be suprised if congo surpase zambia interms of copper production.

  4. on issues of our resources there is no politics only economics and we as Zambians should not be held hostage for our resources. we need to get much more in terms of jobs, taxes and fiscal support, retained profits to reduce cost of capital and doing business; we expect sound corporate social responsibility [CSR] from investors, to see to it that they plough back some profits into the environments and communities in which they operate. They should also bare social costs of the effects of operations and enhance sustainability. If this is not the case please let our copper remain in the ground.

    • If this is the case then government should nationalise the mines so that all the profits are retained in the country and that more than 4000 jobs are not lost. one thing that should be understood is that an investor will always aim at maximizing profits after all its their money

  5. If they try to go, let them not start stripping the assets in place. Most mining equipment comes in free of tax. Let them go manja manja!

  6. As the saying goes, the devil is in the detail. This is political posturing by PF Govt.
    For as start, his man Yaluma can’t live up to his name and bite effectively. The question is Why? Why is Yaluma asking the investor to prove that the company will go into loss mode if the Mine Tax is introduced? What sort of lame request is that? The investor will of course message figures and prove that the company is at the verge of collapsing. For anyone to expect anything else would be incredibly stup1d.
    The onus to prove scientifically, whether or not, what Govt is asking for is attainable rests squarely with Yaluma, and not the investor. Thats Yaluma’s due diligence.
    So Yaluma has got it the wrong way round. Or has he? Is he playing games with the voters who cannot read between the…

  7. Yes that’s the way to go. These guys want to be making supper profits while Zambia is getting nothing from the mine. Hold on to your stance sir.

    Peace and Prosperity to Mother Zambia.

  8. Great move by government. PF, UPND, FDD, Heritage, MMD etc. The people of Zambia, this is great for us all. Even if mines pout, all shall pass and more investors shall arrive. What people should be upset about is lack of Zambian investors with a vision.

  9. Guys this is simple arithmetic. Somebody (Chiluba and Mwanawasa) arranged/gave away mining royalties at 0.6%.

    Not 6%.

    ZERO POINT SIX percent!!!!!

    Now if you have set up a large mining investment based on a situation that includes a mineral royalty to government, to accept a hike such as up to 20% royalty is perhaps a little bit difficult. Even 6% is a 100% increase from 0.6%. And copper prices are falling, and we have seen this all before in the 1970s.

    Just saying

  10. This tax will result in capital flight. There is no business that gets taxed on its revenues in Zambia. They are all taxed based on taxable profits. So why are the mines being treated differently?

    And to those who like complaining that the mines are reaping huge profits, well that was the whole point of setting them up. Companies are not charities. They are here to make money, and if they can’t make money, they will leave, like Lumwana has indicated.

    And if these companies are supposedly making huge profits, how come ZRA is not collecting taxes due on the profits?

    • @Clutchplate; Please differential mineral royalty taxes from corporate taxes. The former is usage based and agreed upon on basis of gross or net revenue, not profit. Now corporate tax which is based on profits has for a long time been abused by mining houses; under-declared profits have meant less fiscal space for GRZ. Worse still mining houses have enjoyed tax shields by which their cost of capital has been subsidized/reduced. By having debt or gearing in there capital structure interest payment towards their debt is deducted from gross profit for tax purposes. The effect is reduced profits and lowered cost of capital. So mines are having a field day while Zambians wallow in poverty. its prudent to adjust upwards mineral royalties to increase GRZ fiscal space.

  11. Saki refuses to rejoin UPND

    By Lambwe Kachali

    Thursday June 19, 2008 [04:00]

    UNITED Liberal Party (ULP) president Sakwiba Sikota yesterday said UPND president Hakainde Hichilema is not honest in his offer of reconciliation because he has failed to deal with tribalism in the party. Responding to Hichilema who on Tuesday invited him to rejoin UPND in the spirit of national unity and development, Sikota said Hichilema’s offer to the leadership and membership of ULP to rejoin UPND was not genuine and was laced with thorny issues.

    Sikota accused Hichilema of playing to the gallery by using the press without apologising to the people that suffered at the 2006 UPND convention and those who were still affected by the alleged tribalism in the party. He said if Hichilema really wanted…

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