Lusaka, Zambia — MININGREVIEW.COM — 07 April 2008 – One of Zambia’s leading copper producers, Mopani Copper Mines Plc (MPC), is reported to be firing 40 expatriate managers in a bid to cut costs to counter the government’s new tax code that will see mining firms pay more in royalties and other taxes with immediate effect.
Reporting from here, Bloomberg News quoted the Zambia Daily Mail as saying that 15 managers at Mopani have already been given notice, but the source of this information has not been revealed.
The assets owned by the company include the Mufulira mine, smelter and refinery, and the Nkana Mines concentrator and cobalt plant, all located in Zambia’s Copperbelt province.
Mopani is 81%-owned by Switzerland’s Glencore International AG, while Canada’s First Quantum Minerals Ltd. owns 19% of the company.
All foreign firms involved in the copper-rich central African nation – like Glencore and First Quantum – are required to start paying the higher taxes this month. The mineral royalty has increased from 0.6% to 3%, while corporate tax on the miners has risen from 25% to 30%. Zambia also has introduced a 15 percent variable profit tax on taxable income above 8 percent, and a minimum 25 percent windfall profit tax has been enacted.
Reuters reports that the bigger tax bite has outraged mining firms who have said the move could discourage investment in the sector, which is a major employer in Zambia and accounts for a large share of foreign earnings.
Chamber of Mines of Zambia head Frederick Bantubonse said the new taxes flew in the face of development agreements that had exempted foreign investors from paying taxes for as long as 20 years in some cases.