Lusaka, Zambia — MININGREVIEW.COM — 28 January 2009 – Zambia may cut taxes on mining companies in its annual budget this week as the global financial crisis saps demand for copper, which is the country’s main export.
In a telephone interview from here, Zambian Chamber of Mines president Nathan Chishimba told Bloomberg News that talks between the government and industry about reconciling a higher tax regime with lower metals prices had started.
Zambia – Africa’s largest copper producer – introduced higher taxes last year to take advantage of soaring metals prices, but demand for copper has since crumbled as the collapse of the U.S. housing market led to a drop in orders from builders. Mines minister Maxwell Mwale has revealed that more than 3 000 jobs have been lost across the Zambian mining industry as companies close operations.
Miners want Zambia to scrap a windfall tax and other variable rates, and to reduce corporation tax to allow them to maintain operations while reducing costs.
Revenue from mining royalties soared almost fourfold in the first six weeks after the new tax structure came into operation last year, according to the Zambia Revenue Authority.
Copper accounts for about 70% of Zambia’s export income. Various foreign companies such as First Quantum Minerals Limited, Vedanta Resources Plc and Glencore International AG operate in the country.