VOTENevers Mumba, the presidential candidate for Zambia’s main opposition party, has promised to review the controversial mines royalty increase if he wins the southern African country’s national election later this month.

Recently, Zambia has raised the royalties on mines. The new tax regime will see levies for open-cast mines increase from 6% to 20%, while those for underground mines will rise to 8%. Corporate tax of 30% has also been scrapped in order to counter transfer pricing.

Economic growth could be stifled

These royalties are threating the growth of mines in Zambia, many of which have already downscaled their development plans. Production has been brought to a halt at mining company Barrick Gold’s Lumwana mine.

Furthermore, jobs throughout the country’s industry are being threatened as well. Zambia’s mining lobby has estimated that as many as 12 000 job losses could be expected. The Chamber of Mines  has expressed concern that Glencore and other companies could be pushed to cancel their projects in Zambia, which could cost the country over 158 000 tons during 2015.

“The moment you raise it [the royalty] to those levels without engaging those in that field you paralyse your efforts to build an economy,” Mumba said. “I’ve already made a passionate appeal to Barrick Gold. I’ve told them to hold their fire and see what happens” after the January 20 election, he said.

Light at the end of the tunnel

Mumba, president of the Movement for Multiparty Democracy, said that the increased taxes that came into effect on January 1 are “incredibly high.” Nevertheless, the former televangelist has promised to revisit these figures following a successful election.

Mumba was Zambia’s vice president under Levy Mwanawasa who died in office in 2008, is one of 11 candidates campaigning for the post. The elections were triggered by the October death of Michael Sata, who had ended 20 years of rule by Mumba’s party when he was voted into office in 2011.

What effect will the new Zambian mining tax have on the country’s economy? Have your say in the comments section below!

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