Government has agreed to reduce mineral royalty tax for underground mines to 6 percent from a proposed 9 percent in a bill to be presented to parliament for approval later this month.
Special assistant to the President for Press and Public Relations Amos Chanda told Bloomberg that the decision was taken because the costs of production in underground mines are far higher than open-pit operations.
Mr Chanda said open-pit mines will pay the 9 percent rate.
The new tax system is due to come into effect on July 1.
Companies including Glencore Plc and Vedanta Plc operate the biggest underground mines in Zambia, Africa’s No. 2 copper producer, and stand to benefit the most from the royalty cut.
Government introduced a royalty-only tax system for mines this year, charging 20 percent for open-pit operators and 9 percent for underground mines.