First Quantum Minerals and the Zambian government: looking to the future of copper mining.
First Quantum Minerals and the Zambian government: looking to the future of copper mining.

Zambia agreed to give First Quantum Minerals more time to complete its analysis of what the company might owe the Zambia Revenue Authority after it was slapped with a $7.9 billion tax bill.

The Vancouver-based company is challenging the ZRA, which claims First Quantum incorrectly declared imports for one of its two mines in Zambia.

“They are doing their own analysis and they have asked for a bit more time,” Finance Minister Margaret Mwanakatwe, 56, said in an interview with Bloomberg in her office in Lusaka, the capital, on Thursday.

“We have given them a month so that they can complete the analysis.”

Mrs. Mwanakatwe said the government is seeking to expand revenue collection as it moves to keep its budget deficit to gross domestic product ratio under 10 percent, while ensuring it maintains its obligations to businesses.

Copper accounts for more than 70 percent of exports in a nation that’s battling to contain ballooning external debt after spending on projects to boost infrastructure.

Higher copper prices have helped support the economy after a slump from 2014 curbed income, added to debt and prompted the government to ask for assistance from the International Monetary Fund.

On VAT refunds, while the Zambia Chamber of Mines says the government owes mining companies more than $350 million in value-added tax refunds, the revenue authority has warned it won’t pay out where liabilities are outstanding.

First Quantum estimated it is owed $368 million in unpaid VAT refunds.

First Quantum, which operates the Kansanshi and Kalumbila mines in the country, accounted for more than half of Zambia’s copper production last year and is the biggest individual taxpayer.

The company’s shares were 0.8 percent lower at 10:45 a.m. in Toronto on Thursday.

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10 COMMENTS

  1. There are only two thing certain on earth, Tax and Death.
    Its clear, FQM owes us money otherwise Philip Pascal would have lived up to his promise of getting bact to ZRA in shortest time. The fact that he asks for more time implies that there is something fishy – it may not be the 7.9 billion but still collosal amount will be paid.
    Having said that, why should we still on copper export, 70% of our export is copper, when we have had independence for over five decades? When the ore bodies are depleted what are we going to be exporting?
    The government must make all school leaver go for ZNS to support farming at least for a year so that agriculture sector is fully developed.

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    • Mining companies inflate their imported spares to claim huge VAT rebates & reduce their profit margins.

      They then externalize the profits by selling the copper to their own offshore-based shelf companies at very low prices so that they pay little export duty & reduce the profit margins.

      That’s why on paper, Switzerland, UAE, Mauritius are Zambia’s biggest trading partners, not China where the copper is destined.

      Watch “Stealing Africa” on youtube to see how they do it. With a corrupt lazy, thieving PF00Lish Regime, they’re getting away with it.

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  2. Is this not the same approach of letting a company do its analysis of tax obligation, that ZRA and government rejected when The Post, a Zambian company asked for the same 3 years ago?
    If you can’t definitively answer the above question, just move on to something else.

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    • You know the post was not coperative and it dragged on that case of unpaid tax for year and not months. FQM is only talking about a month more.
      Secondly, Fred had hidden political ambitions, as you can see now – his reporting became extremely biased and was a recipe for civil war. He could have left post alone and join politics and leave the post to do jounalism and his political party do politics. He mixed the two, and in African politics, we dont joke – its brutal.
      I have no sympathy for that stubborn homo who soiled FTJ’s legacy.

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  3. This is laughable to say the list. They want more time to do an analysis of what? Are we implying that our people don’t know how to calculate what’s owed? If you look at the kind of machinery that FQM has brought in the country to come and finish our copper, that amount is a drop in the ocean. No wonder this country needs a pragmatic leader the likes of Mangufuli’s of this world. These inf-esters keep reaping us and we are even saying, we have given you time for what? Let them pay and our debt will reduce to half from that amount. Nonsense.

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  4. FQM should pay up what they owe. The US$7.9 billion sounds ludicrous though and ZRA should do sensible tax assessments. We all know that once Glencore and FQM exit Zambia all these mines will be bought by the Chinese. At that point we will know what it means to be poor as our country pretty much is run on copper.

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    • If US$7.9 billion is ludicrous because it’s a colossal figure, FQM would have laughed it off in the first instance. They know they are guilty. The question is how guilty? This is what they are trying to verify. Knowing how much they are benefiting from Zambia’s mineral wealth, they will not try to argue unreasonably. I only hope ZRA have done their homework well and their claim is water tight.

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  5. Malozas comments above need correction please……. Mauritius has not and will never be our biggest trading partner…
    please get your facts right!

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  6. This is the money that shall be used to settle Zambia’s Debt

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  7. Not so sure about these numbers. Unless we are saying that ZRA are tge best accountants and financial analysts in the world. If they are not, then it’s possible that they misunderstood what they were analysing so a discussion around the table should yield the correct numbers. The one month period given should be seen in that light. Hopefully it will yield the correct analysis, whether the tax reduces or increases or remains the same will be seen then. We all want money but sometimes we are overzealous about it.

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