LUSAKA — Africa’s top copper producer, will not reintroduce a mining windfall tax it scrapped in 2009 because it may force mine closures, the Finance minister said today.
“Mining has a long gestation period and we don’t want to tax mines out of business,” Alexander Chikwanda said on state-owned ZNBC radio.
“In fact, there are a lot of complaints from mines on the government’s hike in the mineral royalty tax from 3% to 6%, but we need to strike a balance,” he said.
Zambia’s former Mines minister Wylbur Simuusa said in February the country could bring back the windfall tax if copper prices hit $10 000 per tonne. Prices are now at around $8 455.
But Chikwanda said that could push up mine production costs by as much as $500 per tonne, which he said would be too high.
Zambia scrapped the 25% windfall tax in 2009 following complaints from miners that it raised production costs and discouraged investment.
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The new government of President Michael Sata doubled royalties on copper miners to 6% in the 2012 budget to bring in revenue to increase social sector spending and farm subsidies, a move miners have warned may cause them to scale back operations.
Foreign miners operating in Zambia include First Quantum Minerals, London-listed Vedanta Resources Plc and Glencore of Switzerland. —Reuters