Lusaka, Zambia — MININGREVIEW.COM — 13 June 2008 – Some foreign mining firms have suspended multi-million dollar projects in Zambia in the wake of the government’s introduction of new mining taxes, citing uncertainty and difficulties in raising investment capital.
Reuters reports from here that Chisanga Chekwe-Puta – the Zambian country manager for Canadian miner First Quantum Minerals – said Mopani Copper Mines (MCM), in which First Quantum has a 16 % stake, had suspended construction of a mining shaft after the authorities introduced new taxes. The company is majority owned by Swiss company Glencore International AG.
“Mopani has suspended construction of another shaft which could have employed 2 000 people, and another 600 jobs have been lost because First Quantum’s Bwana Mkubwa copper processing facility cannot build a roaster,” Chekwe-Puta told Reuters.
Speaking during a Euro-money conference organised to showcase investment potential in the Zambian mining, manufacturing, agricultural and other sectors – other industry officials said the new taxes introduced in April would discourage more investment in the medium-term and slow the production of copper.
Zambia introduced a windfall profit tax at a minimum of 25% and raised mineral royalties to 3% from 0.6%.
The Reuters report added that the Zambian government had also introduced a variable profit tax at 15% on taxable income above 8%, and had raised corporate tax from 25% to 30%, effectively raising mining taxes to 47% from the previous 31.7%.
Chekwe-Puta said a lack of fresh investments would constrain smelter capacity and ultimately affect the country’s copper and cobalt production.
Frederick Bantubonse – the head of the Chamber of Mines of Zambia, which represents some foreign mining firms – said there were serious doubts within the industry if the mineral-rich country would attain its 1.million ounce copper production target by 2009. “We should have easily reached that target, but with the new taxes, I doubt whether that will be the case,” he warned.