Lusaka, Zambia — MININGREVIEW.COM — 17 June 2010
Africa’s top copper producer, Zambia, needs stable laws governing its mining sector for the country to continue attracting more investment, even after scrapping a controversial tax on revenue.
Making this statement in an interview here with Reuters, Chamber of Mines of Zambia general manager Frederick Bantubonse said that future investment into the southern African country’s mines would depend on stability in legislation.
Zambia plans to increase its copper production to 1 million tonnes next year, from just below 700 000 tonnes in 2009, in the wake of rising investments in the sector over the last seven years, following a rally in global metals prices and increasing metals demand.
“The potential for mining in Zambia is good, but people must understand that mining is long-term and requires stability in terms of the total legislation covering mining,” Bantubonse told Reuters, but he gave no further details.
He said mining companies were happy with the government’s withdrawal of the controversial, revenue-based windfall tax, which had made them liable to pay tax even when they were recording losses.
“With the existing tax regime the outlook is good, but it will also depend on the outcome of ongoing consultations with the government where we are looking at the entire mining sector,” Bantubonse added.
In 2008, Zambia increased company income tax to 30% from 25%, raised mineral royalty from 0.6 to 3%, introduced a 25% windfall tax, and separated hedging income from mining income for tax purposes. Following protests from mining companies, the government last year removed the windfall tax, but kept the other taxes.