Lusaka, Zambia — MININGREVIEW.COM — 06 September 2010 – Zambia’s main opposition leader says the government should restore the mining agreements it cancelled with foreign investors, and reinstate tax concessions.
In a major reversal of his previous position, Patriotic Front (PF) leader Michael Sata “’ previously a strong advocate of higher mine taxes “’ told Reuters that the government should reinstate development agreements it signed with foreign investors to restore investor confidence and attract further investments.
The news agency reports that some foreign investors such as Canada’s First Quantum Minerals have threatened to take the Zambian government to court for suspending the development agreements, which had waived payment of taxes by the foreign mines for periods of between 5 and 17 years. Zambia’s mine taxes include a 15% profit variable tax, 25% corporate tax and a 3% mineral royalty.
“The mines were privatised on certain binding agreements and from the time the government introduced the illegal tax regime new jobs are not being created because major expansion projects have been suspended,” Sata pointed out.
“In order to retain and attract investors we must honour our agreements and also establish a stable, predictable and unambiguous tax regime,” said the politician, whose party controls the majority of municipal councils in the mineral-rich Copperbelt region.
Mines minister Maxwell Mwale said Sata’s comments were aimed at wooing voters ahead of the 2011 presidential election, after he narrowly lost the 2008 presidential vote to Rupiah Banda.
“The PF leader has always advocated higher mining taxes, but has now changed," Mwale added.
The Zambian government is currently in talks with companies which raised concerns about the changes to the mining laws and the impact the tax measures had on incentives.