Lusaka, Zambia — MININGREVIEW.COM — 02 October 2008 – A senior member of government in Zambia says his government is willing to re-negotiate mining taxes set earlier this year with the foreign mining companies facing difficulties arising from the new taxes.
In April this year, the government increased the mineral royalty from 0.6% to 3% and corporate tax from 25% to 30%. It also introduced a windfall profit tax at a minimum 25%, and a variable profit tax at 15% on taxable income above 8%, effectively raising overall mining tax from 31% to 47%, despite industry objections.
In an interview with Reuters, mines and mining development minister Kalombo Mwansa said his government was involved in advanced talks with Canada’s First Quantum Minerals, which has raised serious objections to the new fiscal regime.
“There have been discussions between First Quantum and the ministers for justice and finance over the tax issue,” Mwansa said. “We are ready to keep mining viable so that the mining companies keep expanding and remain profitable.”
Mwansa added that negotiations to cut some taxes would be extended to other mining investors who approach the government over their operational difficulties. “We are open to dialogue if there are problems at individual mines, because the taxes were introduced to benefit the government while the firms remain viable,” Mwansa said.
He assured foreign investors that Zambia remained a safe destination for copper mining and government policy would continue to safeguard investors. “There is no going back on our policies to safeguard foreign investments,” Mwansa added. “There is no cause for alarm because the environment is conducive to the protection of investments.”