The proposed mining tax increases in Zambia would destabilise Africa’s second biggest copper industry, companies said on Thursday, a further warning to investors already concerned about the country’s mounting debt.
Several mines would become unprofitable if the tax plans were implemented with overall copper production likely to fall, Zambia Chamber of Mines President Nathan Chishimba said.
A number of companies have already halted expansion plans since Zambia announced new mining duties and an increase in royalties to help bring down mounting debt on Friday, Chishimba said.
Zambia’s copper industry unfairly benefits foreign companies like First Quantum, Glencore and Vedanta Resources, while millions of its citizens suffer without basic services.
Chishimba said attracting investment was the only way to boost growth and increase government revenue. Mining contributes more than 70 percent of Zambia’s foreign exchange revenue.
Concerns about Zambia’s rising debt, alongside accusations of additional hidden borrowing and government corruption, have spooked investors and Western donors in recent months. Talks about an aid package, have been put on hold by the IMF due to Zambia’s debts that are currently unstable.