Zambia, Africa’s second largest copper producer, has recently announced that it will introduce a variable tax on mineral royalties that will be adjusted according to metal prices.
Government spokesman Amos Chanda said the royalty taxes will range between 3 percent and 9 percent for open-pit and underground mines and will be calculated using the global price of metals, adding that it may come in as soon as the first quarter of 2016.
The Zambian government had already cut mineral royalties in June for underground mines to 6 percent from 9 percent and those of open cast mines to 9 percent from 20 percent following an outcry by mining firms.
Zambia’s Chamber of Mines, which had suggested the idea of a sliding tax, welcomed the government’s decision.
Chamber of Mines President Nathan Chishimba said “We are anxiously looking to the government implementing it, especially in this low price environment”.
An electricity shortage and weaker copper prices due to slower growth by top consumer China have put pressure on Zambia’s mining industry, threatening output, jobs and economic growth in the southern African nation, and put its currency on the back foot against the dollar.
Chanda said the government wanted stability in the mining sector and expected the new mineral royalty to run for a period of at least 3-5 years.
“Parliament will have to approve this royalty and it is possible that we can have it introduced in the next quarter,” he said.
