Mines Minister Wylbur Simuusa
Mines Minister Wylbur Simuusa (L)

Mines Minister Wylbur Simuusa has told Reuters today that Zambia could cut back mineral tax royalties if commodity prices collapse next year. Mr Simuusa told Reuters on the sidelines of a London conference.

“For now (the royalties) will stay, but if it becomes a crisis, if prices crash, we might have to review the regime… not in 2012 but for 2013, in the next budget,”

Zambia plans to double royalties on copper miners to six percent in order to bring in badly needed revenue, increase social spending and farming subsidies – a move miners have warned may cause them to scale back operations.

The World Bank has said that the policy is unlikely to cripple the industry at current prices but could cause problems if copper prices fall.

Copper miner First Quantum, one of the largest investors in the Zambia’s mining sector, warned the viability of newer projects in the country, especially a newer generation with lower copper grades, could be at risk. It says its Kansanshi copper-gold mine is already among the most highly taxed in the world.

Adam Little, head of tax for First Quantum, indicated the miner hoped reforms to improve Zambia’s tax collection would result in lower royalties, which are based on revenue, not profit, and can be very punitive as prices fluctuate.

“We need to be thoughtful about the impact of revenue-based taxes. The recent 100 percent increase in mineral royalty taxes is damaging, especially for low-margin mines,” Little said.

“If other taxes can become more collectable, then Zambia’s reliance on the more damaging taxes can be reduced.”

Simuusa agreed their could be a re-calibration once Zambia has overhauled its tax and tax collection system.

Foreign mining companies operating in Zambia include Canada’s First Quantum Minerals, London-listed Vedanta Resources Plc, Glencore International Plc, Barrick Gold, Brazil’s Vale and Metorex of South Africa.

[Reuters]

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30 COMMENTS

  1. i see nothing wrong in what the honourable minister is saying. thats plan b for the goverment. I wish the goverment well and am asking them to be a listening ruling party to what sympathisers and critics are saying.

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  2. Not World Bank…the developed countries’ lobby again….This what happens when you sale your souls to devil; why should we cut back when foreign Mining Conglomerates have been eating well in the boom years!!

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  3. if plunderers such as FQM are not satisfied, they can give up their Trident project

    sure wachina will take over it !

    those looters can pack and go… no problem

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    • Mikete, ” if plunderers such as FQM are not satisfied, they can give up their Trident project sure wachina will take over it ! those looters can pack and go… no problem ”

      If they reinstated the windfall tax, they wouldn’t be talking about what would happen if prices collapse. It would automatically be taken care of.

      If the PF can’t tax the mines either, they must be nationalized, so the nation can benefit.

      Also, the Zambian government should sue the IMF, for loss of tax revenues. Their ‘advice’ has cost the tax payer not only well over $10 billion, but also the opportunity cost of not having invested that money in agriculture, infrastructure and manufacturing.

      Together, they are setting the development of the country back again and again.

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  4. What you have are Muppets running your country Zambia, I prefer to dissociate myself with a country that has done nothing for me. I only did primary and secondary school there My MBA CIMA and ACCA and soon PHD are all from Great Britain, and hence my excellence.

    The brusqueness of the minister in answering the queries for me , shows he is inept and not deserving of his position at this level. he looks out of touch, and unless certain Zambians such as myself who refuse to repudiate, or settle for anything that the masses want you want for your country you will remain poor and unwanted

    I would love to send my CV for perusal by the president

    Thanks

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    • Mushota UK does not mean credible papers tell us the schools u have been to.
      I am a proud university of Zambia graduate with a distinction and soon I will be at oxford/Cambridge not those backdoor schools u have been to.

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  5. I am tired and sick of this country. Where is the f..ckin jobs and money we got promised. Zambians are f**ckin dull.  F**ckin too many bloggers posting shit.

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  6. Copper prices are not likely to go down in the foreseeable future. Keep those taxes are they are…

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  7. @8 Mikete

    Why isn’t the World Bank & IMF advising the EU on their euro problem, if they are the best brains in the business oh no no that’s a no go area for them…they don’t want to annoy their paymasters do they! 

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  8. These foreign Mining Conglomerates have the cheek to talk about tax when they are getting the best deals from their subsidiary Zambian companies in their portfolio. They won’t tell us that, browse through their colourful glossy websites (i.e. Glencore International plc website) and see how they are performing on the Stock markets in London and New York.
    Only in Africa do you see a CEO complaining about tax, in the West this is unheard as they all cowardly hide behind their representing association or institute.
     It’s time this government took a robust stance similar to President Mwanawasa’s (MHSRIP) either “take it or pi$$ off” as they will always be takers…these natural resources are not yours but for our great grand children and not yours!!

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  9. Yeah, there it comes. Haste projections. You go ahead and let all those earning K2m tax free, and substitute that for loyalty tax and borrowing, what nonsense? Which world do you leave in? There is an economic crisis loaming in europe (Greece and now spain, italy are pulling everyone in the euro down) and USA (budget deficit).Who is going to give you a loan? Development model for all African nations shud be more tax in all sectors so that the resources are used to develop the social sector by providing schools, health facilities, roads, clean and safe drinking water cos only Gvt can do that. Create a base first. Issues of more money for workers has already been tried, it only improves the lives of a few. Even whites, at one time they sacrificed.How can this be drummed in your thick heads?

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  10. This is the reason we needed windfall tax so that everything is automatic and simple for everyone. The prices have been high you say dont tax them much, the prices are now on way down you say drop taxes for them. Are always to be shot changed?
    When are we getting to have leaders with spines.

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  11. Have an idea, lets make these people sign somewhere that if there is one more u-turn, unfulfilled campaign promise or another sensational rumour peddled to the public by the chief kachepa MCS, we should be allowed to stone them to death. It will be much cheaper for us that waiting 5 years, impeachment or a by-election. Stones are free still yes?. twalema mwe

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  12. at least you came up with the best tax on mines. do not be intimidated. just make sure you collect each and every ngwee. iam consoled at the fact that detractors on this blog have no bearing whatsoever on the day to day running of the country.they are nothing but chair critics.

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  13. These chaps we put in government do the seriously have brains?? Let the tax stand, we know you are trying to keep the investors and protect peoples jobs but these mines are running on old budgets which were made when copper price was $3200/ton. When the price went as high as $9000/ton they were making abnormal profits. If you reduce royalty tax perharps you can do the same with PAYE when prices of commodities go up you reduce PAYE tax

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  14. First Quantum should be the last to speak. The money they plundered from Zambia has been solely responsible for their organic growth. Let them pack up and go, companies like Freeport, Vedanta, Barrick and Eurasia are prepared to come and BE PARTNERS WITH ZAMBIA.

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  15. OPEN LETTER TO THE PRESIDENT OF ZAMBIA
    Mr.President Zambia has depended on Copper for the last 47yrs,Zambia has been a source of raw materials I believe Sir with your Leadership and the Parliament you can change that.Copper can produce more jobs beyond mining it is time Zambia used it’s copper properly;

    1.All the Electric System on all the Vehicles are Copper wires
    2.All household appliances are Copper wires
    3.TV’s,Computers,Radios,Gadgets use Copper wire
    4.Electricity wiring for the Houses is Copper wire
    The list is endless setup plants to produce these products in Zambia or bring in Partners who will own these Companies 50% and the local owns the other 50%

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    • ” The list is endless setup plants to produce these products in Zambia or bring in Partners who will own these Companies 50% and the local owns the other 50% ”

      This isn’t even necessary. The government needs to tax the mines, so they can build factories themselves, by contracting out the job to domestic or foreign companies.

      Let THEM get the jobs and let US keep the profits.

      If the job trickle down effect is so great, why should only Zambians enjoy it? And if it doesn’t matter who owns the factory, it won’t matter that Zambians own own. Just to torpedo the usual ‘free market’ fundamentalist talking points.

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  16. The romans built the aqueducts in 312 BC ( umu paipi wa menshi ) and the colosseum (stadium) in 80 AD. These things are still standing today and are now tourist attractions. How come we can not build the ndola stadium or levi park?

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  17. This particular Govt is the most circucious lot we ever have lived under. They speak first and think later. This is yet another foolish u-turn even before the tax is implemented! They can virtually say and do anything and then the very next moment undo it without even an iota of shame! And yet some fool hardy supporters can only keep ululating them on. How shameless.

    They only are a reflection of them that voted them into power over this most unfortunate nation!

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  18. ” The World Bank has said that the policy is unlikely to cripple the industry at current prices but could cause problems if copper prices fall. ”

    And…

    ” Mines Minister Wylbur Simuusa has told Reuters today that Zambia could cut back mineral tax royalties if commodity prices collapse next year. ”

    So who runs the Zambian economy? The PF or the World Bank.

    Never mind, everyone knows that in this globalized economy, there is no such thing as independent governments, and the trillionair owned World Bank runs EVERY country in the world.

    So why have elections at all?

    THIS IS NOT DEMOCRACY.

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  19. The World Bank and IMF have just gotten rid of the ELECTED heads of state of Italy and Greece. In Greece, the PM, who was already a neoliberal pro-IMF type, was gotten rid of because he had the guts to actually call for a referendum, and let the people decide on the austerity package they are using to rob them blind.

    Is there any doubt left whether ‘The West’ stands for democracy?

    This is not democracy, it is fascism. Benito Musselini said: “When the state takes over business, we call it communism. When business takes over the state, we call it fascism.”

    The trillionairs’ IMF/WB and their corporations have taken over the Zambian state.

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