.Yaluma

By SYLVESTER MWALE –

MINERAL royalties will be cut further to six per cent from the nine per cent which was to take effect on July 1, this year, Mines Minister Christopher Yaluma has said.
Mr Yaluma said the tax adjustment would help create a level playing field between open and underground mining.
Open pit mining will, however, remain at the already pegged nine per cent.
The mine tax system was recently adjusted during a Cabinet meeting in April, this year, seeing the re-introduction of the 30 per cent corporate income tax on mining operations and mineral royalty tax for open cast and underground mining settled at nine per cent.
Mr Yaluma said in an interview in Lusaka yesterday that Government was currently discussing possibilities of the further adjustment.
“We are heading towards that route, we would like to reduce the tax to six per cent but it is too early for now to say that everything has been agreed,” Mr Yaluma said.
“As you know, underground mining is costly than open pit mining, so the tax for open pit cannot be the same as the tax for underground, it is for this reason that we have taken this direction”.
Mr Yaluma said it would be unfair for both open pit and underground mines to pay almost similar mineral royalties when the cost of operations for the two forms of mining was different.
Vendanta Resources, managers of Konkola Copper Mines’ underground and open cast mine, welcomed the latest plan by Government.
Vendanta Resources chief executive officer, Tom Albanese was quoted by Reuters recently stating that the revised tax system recognised the cost associated with underground mines.
“We welcome this move by the Government,” Mr Albanese said.
“The reduced royalty recognises the higher costs associated with Zambia’s deeper mines, especially given the high electricity and water pumping costs.”
The Zambia Chamber of Mines also backed the decision as it would increase revenue collection on a sustainable basis.
“We support and welcome Government’s desire to put in place a mining industry tax regime that will ensure adequate revenue collection on a sustainable basis and at the same time ensure that the mining industry remains economically viable on a long term sustainable basis,” ZCM president Jackson Sikamu said in a separate interview.
Government had raised the mineral royalty tax for underground mines from six to eight per cent in the 2015 national Budget. Similarly, the tax for open pit mines was increased from six to 20 per cent.
The decision prompted widespread criticism from mine owners with fears of mine closures and job losses leading to the fresh review of the tax system in April, this year.
Glencore, Barrick Gold Corporation, Vedanta Resources and Canada’s First Quantum Minerals are some of the foreign firms managing mines in Africa’s second largest copper producer.