The government has ruled out exempting foreign mining companies from paying higher taxes in return for doing more to train local workers.
Zambia gave foreign firms that bought copper mines starting from 2000 tax breaks as part of development agreements so they could keep up output at a time of low prices.
With prices now sharply higher on the back of strong global demand, especially from China, the government recently told 10 foreign copper and cobalt miners that it wanted to renegotiate these pacts.
Finance Minister Ng`andu Magande said he would explain to the mining companies that the development agreements were about more than tax breaks; they also obliged the mining firms to train local contractors if they lacked the necessary skills.
“Now, when we go into these negotiations, we want to know whether the mines have been able to do that. If they haven`t, what is the problem and how can we work together to create this capacity?” Magande told reporters on the sidelines of the annual meeting of the African Development Bank.
Asked whether there could be a trade-off, Magande said: “No. What we feel is that if we let each one of them say, `I have a social responsibility, I will do this` it will be very difficult to supervise.”
Foreign mining firms operating in Zambia include London-listed Vedanta Resources plc, Canada`s First Quantum Minerals and Swiss firm Glencore International AG.
If social development were left to the mining firms, inequality and social problems would result, Magande said.
“So what we have said is that, if they do agree, we think taxation is logical.”
Some of the firms argue that the development agreements incorporating the tax breaks are legally binding.
Magande said the government, in embarking on the negotiations, had discovered some “technicalities” were involved and said some multilateral financial institutions and bilateral donors had offered to help Zambia prepare for the talks.
The government had held preliminary meetings with the mines and hoped to have something in writing by the end of the month, the minister said.