GOVERNMENT PLANS REVIEWING THE ZAMBIAN MINING TAX REGIME

The Zambian government is getting from mines in Africa’s top copper producer is not enough and may need to be reconsidered, new mines minister Wilbur Simusa said shortly after being appointed to the post.
Mr Simusa’s comments could unnerve investors who were not expecting a major shake-up after newly-elected President Michael Sata assured in his campaign he would not bring back mining windfall tax.
Mr Simusa, a mining engineer by profession, says the money the country is getting from the mines in form of tax is not adequate therefore there will discussions with the mines in order to reach a win-win situation.
Copper mining is Zambia’s economic mainstay and any plans to increase the tax could hurt the industry target of doubling annual copper output to 1.5 million tonnes by 2016.
According to the World Bank, copper accounts for 70 to 75 percent of Zambia’s export earnings, but the mining industry as a whole contributes only about 10 percent of its tax revenue.
Former President Rupiah Banda told Reuters in March audits had revealed that up to 200 million dollars was owed in back taxes.
Banda’s administration had already begun a drive to boost tax revenue from mining companies and this could improve social stability if the nation’s mineral wealth is more evenly spread.
But while any moves to get more cash from miners may signal continuity with Banda, it does not mean the industry will like it. A well-known anti-corruption campaigner, Sata has also questioned copper export data and some experts say his concerns are legitimate.
Miners operating in Zambia include Canada’s First Quantum Minerals, London-listed Vedanta Resources , Glencore International AG and Metorex of South Africa