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Possible solution to Zambian mine tax dilemma

Aerial view of the
Konkola Deep site
at Shaft Four
Ndola, Zambia — MININGREVIEW.COM — 19 February, 2008 – Latest developments surrounding serious differences between the Zambian government and the country’s mining industry over proposed new tax regimes indicate the possibility of the parties taking positive combined action to avert the threatening crisis.

The government recently revised the tax regime for the mining industry by raising mineral royalty tax from 0.6 to three per cent%, pegging corporate tax at 30% and introducing windfall taxes to be triggered at different price levels.

Major mining companies and the Chamber of Mines of Zambia immediately rejected the new tax regimes for the mining industry, arguing that they had not been consulted, and threatened legal action against the government.

Last Thursday President Mwanawasa invited mining companies opposed to the new mines tax regime to seek audience with Finance and National Development Minister N’gandu Magande and his Mines counterpart, Kalombo Mwansa. He said the mining companies should be prepared to explain to Government why they were not happy with the proposed increase in tax for the benefit of the Zambians.

Now AllAfrica Global Media’s allAfrica.com website, quoting the Times of Zambia, reports that two of the country’s major mining companies have welcomed the president’s call for dialogue.

First Quantum Minerals country manager Chasanga Puta-Chekwe and KCM director of operations, C.P. Baid, were quoted in separate interviews as saying that it was good that the president had called for dialogue over the new tax regime.

Puta-Chekwe said the mines wanted to renegotiate the Development Agreements (DAs) in good faith. “The president’s remarks are welcome. We will renegotiate the development agreements in good faith," he stated.

Baid said KCM was looking forward to meeting with the government to chart the way forward over the new mines taxation.

He emphasised that his company would take into consideration the long-term interests of the Zambian economy while re-negotiating. “We are happy that the president has called for dialogue. We are more interested in the long-term growth of the sector," he said.