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Alba Iulia
Tuesday, December 1, 2020

Mining taxes delayed to September – Mutati

Economy Mining taxes delayed to September - Mutati

Zambia has launched negotiations with foreign copper mining firms on raising taxes, but expects to agree new deals in September instead of this month, Commerce and Trade minister Felix Mutati said on Tuesday.

Mutati said negotiations, including raising the mineral royalty rate to 3.0 percent from 0.6 percent, would take longer than initially expected.

“We are renegotiating with individual mining firms and hopefully everything should be completed by September,” Mutati told Reuters.

The government said in May it planned to conclude the negotiations in June, but Mutati said the government was cautious since mishandling the exercise might dampen investor confidence.

Also on the agenda will be raising corporate tax to 30 percent from 25 percent, revisiting exemptions on customs duty for imported mining equipment and increasing power tariffs.

Starting in 1998, Zambia awarded foreign mining firms tax exemptions and other incentives to woo them into the copper mining sector, which faced closures after decades of undercapitalisation amid low global metals prices.

“We want a win-win situation in renegotiating the development agreements between the investors and the government,” Mutati said.

Higher global copper prices have forced Zambia to renegotiate the tax incentives which in some cases were awarded over 20 years at the time the southern African country was trying to revive its mining industry.

“The (mining) deals we got in the 1990s were rescue deals,” he added.

The opposition Patriotic Front (PF) accused the government of failing to raise taxes in the mining sector in the run-up to the 2006 presidential and legislative elections, despite higher global metals prices.

The ruling party lost all but two of the 23 parliament seats in the mineral-rich Copper Belt region after PF leader Michael Sata promised to raise taxes and to plough the revenue into social sectors.

Among the foreign mining firms operating in Zambia are Canada’s First Quantum Minerals, Glencore International AG of Switzerland, Australia’s Equinox Minerals Ltd, and London-listed Vedanta Resources Plc.


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