HomeBase MetalsWindfall tax will not be re-introduced in Zambia

Windfall tax will not be re-introduced in Zambia

Maxwell Mwale,
Zambian Mines
Minister
 
Lusaka, Zambia — MININGREVIEW.COM — 28 August 2009 – A decision not to re-introduce a windfall tax on foreign operators in the Zambian mining industry is expected to spur fresh investments in Africa’s largest copper producer, as metals prices rally on the global market.

Commenting on the decision, Nathan Chishimba “’ president of the Chamber of Mines of Zambia (CMZ), which represents foreign mining companies “’ said the decision by mines minister Maxwell Mwale was good for policy stability.

In a bid to boost foreign mine investment, the Zambian government announced earlier in the week that it would not re-introduce the controversial windfall tax it applied when copper prices rose last year, despite the current rise in world metals prices.

“We are confident that a well considered policy stance along the lines outlined by the minister will enable Zambia to have a mutually equitable tax regime that recognises national interest and provides an atmosphere that accommodates a favourable investment climate,” Chishimba told Reuters.

He said it was "unfair" to mining companies for the government to base policy considerations for the industry only on the price of copper.

Last year, Zambia introduced a 15% profit variable tax and a 25% mineral windfall tax, and it raised corporate tax to 30% from 25% and mineral royalties to 3.0% from 0.6%, upsetting foreign mining firms.

But the Zambian government said two weeks ago that it would not refund foreign mining companies the millions of dollars they had paid in taxes when the tax was in force. They could, however, revise existing taxes in October during the budget for 2010.

Copper mining is Zambia’s economic mainstay and the mines are a major employer for many of its 12 million people.

Major foreign mining companies operating in Zambia include Canada’s First Quantum Minerals, London-listed Vedanta Resources Plc, Equinox Minerals and Glencore International AG of Switzerland.

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