Zambia says mines have failed to show impact of higher taxes


Zambia – Africa’s second-largest copper producer, increased its sliding scale for royalties of 4 to 6% by 1.5 % points from Jan. 1 and introduced a new 10 percent tax when the price of copper exceeds $7,500 per tonne.

Zambia also plans to replace value-added tax with a sales tax by April to help reduce mounting public debt. The Chamber of Mines said last month that as a result of the changes, more than 58% of Zambia’s copper producers would be loss-making at current prices.

Paul Chanda, permanent secretary for mines, said his ministry had asked individual mining companies to provide financial models by Friday last week on how the new taxes would impact them, however, none had  done so.

“We wanted them to show how the new taxes will affect production and profitability but so far we haven’t received anything,” Chanda told Reuters.

“Two mining companies have written to us asking us to give them more time but we haven’t heard anything from the others.”

Mining companies are likely to lay off more than 21,000 workers because of reduced capital expenditure over the next three years resulting from the higher taxes, the Chamber of Mines said last month.

Mining currently makes up more than 70% of Zambia’s foreign-exchange earnings. Companies operating in the southern African nation include First Quantum, Glencore,Barrick Gold Corp and Vedanta Resources.

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