LUSAKA – Zambia, Africa’s second largest copper producer, will introduce a variable tax on mineral royalties that will be adjusted according to metal prices, a government spokesman said on Tuesday.
Zambian royalty taxes will range between three per cent and nine per cent for open-pit and underground mines and will be calculated using the global price of metals, Amos Chanda said, adding that it may come in as soon as the first quarter of 2016.
Zambia had already cut mineral royalties in June for underground mines to six per cent from nine per cent and those of open cast mines to nine per cent from 20 per cent following an outcry by mining firms.
The Zambia Chamber of Mines, which had suggested the idea of a sliding tax, welcomed the government’s decision.
“We are anxiously looking to the government implementing it, especially in this low price environment,” Chamber of Mines President Nathan Chishimba told Reuters.
An electricity shortage and weaker copper prices due to slower growth by top consumer China have put pressure on Zambia’s mining industry, threatening output, jobs and economic growth in the southern African nation, and put its currency on the back foot against the dollar.
Chanda said the government wanted stability in the mining sector and expected the new mineral royalty to run for a period of at least three to five years.
“Parliament will have to approve this royalty and it is possible that we can have it introduced in the next quarter,” he said.
Mining companies operating in Zambia include Canada’s First Quantum Minerals, Swiss commodities giant Glencore, London-listed Vedanta Resources and Barrick Gold Corp. (Reuters)
