Lusaka, Zambia — MININGREVIEW.COM — 14 December 2009 – The government of Zambia “’ Africa’s top copper producer “’ will maintain existing mining taxes over the long term, even after it had scrapped the development agreements it had with various mining companies.
Finance minister Situmbeko Musokotwane told a media briefing here that Zambia did not intend to reintroduce a 25% mining windfall tax, because that could force some mining companies to close.
The Chamber of Mines of Zambia, which represents foreign mining companies, said the country faced an uncertain long-term mining outlook’ despite a resurgence in copper prices and government assurances of stable mining taxes in 2010.
“The most important thing is stability in taxes at a reasonable level for both the investors and the people of Zambia, which I can guarantee. It should not necessarily be by law,” Musokotwane said.
He pointed out that most of the mines had invested very heavily in new equipment and needed to be given time to recover from initial losses before they could be taxed.
Musokotwane said that although the price of copper had risen, the government would not bring back the high mining taxes it scrapped earlier this year because that would be in the interest of neither the country nor the investors.
“If we impose tax on revenue on old mines they will end up closing, and we don’t want to head in that direction. We don’t want to create job losses,” he added.
Musokotwane emphasised that foreign investors need not be skeptical over Zambia’s mining prospects because the country realised that attracting foreign direct investment (FDI) was key to development.
Zambia has been waiving taxes, including a 25% import duty on imported equipment and 16% percent value added tax, for foreign companies investing in economic zones, in a bid to attract more investment and create jobs. “We will push very hard on the issue of attracting investment, because this is what will develop our country,” Musokotwane said.