Several proposed changes to the Zambian mining tax regime have been made and included in the country’s 2019 budget delivered on 28 September 2018 to the National Assembly and are expected to take effect from 1 January 2019.
TSX-listed Zambian copper miner First Quantum Minerals, one of several copper miners in the country to be impacted, have noted the following proposed changes to the Zambian mining tax regime that are pertinent to the mining industry:
Mineral royalty changes
- Increase in mineral royalty rates by 1.5% at all levels of the existing scale
- Introduction of a fourth tier rate at 10% which applies when copper price above US$7 500/t
- Make mineral royalty tax non-deductible for income tax purposes
Other key changes
- Introduce an import duty of 5% on copper and cobalt concentrates
- Introduce an export levy on precious metals including gold of 15%
- Abolish Value Added Tax and introduce a non-refundable Sales Tax (no detail on Sales Tax rate yet announced).
Impact on First Quantum Minerals
Impact of the Mineral Royalty rate increase by 1.5% on 2017 All In Sustaining Cost (AISC):
- Kansanshi AISC per pound would increase from $1.54/lb to $1.58/lb
- Sentinel AISC per pound would increase from $2.19/lb to $2.23/lb
- Group AISC per pound would increase from $1.65/lb to $1.68/lb
First Quantum Minerals expects that there would also be an impact of the non-refundable Sales Tax on C1 and AISC however the rate is not yet known.