Zambia says will not reintroduce mine windfall tax
miningweekly.com
By: Reuters
25th August 2009
LUSAKA - In a bid to boost foreign mine investment, Zambia said on Tuesday it will not reintroduce the controversial windfall tax it applied when copper prices rose last year, despite the current rally in metals prices.
The introduction of a 25% windfall tax and other taxes in 2008 was backed by the World Bank to help Zambia raise funds required to build schools, roads and provide health and education services in the southern African country.
Mines and Minerals Development Minister Maxwell Mwale said the government would not reintroduce the tax, which was scrapped in January, as it could scare away foreign investors.
"We believe that the government policies should not be determined by short term conditions such as the price of copper," Mwale told Reuters, a week after the Chamber of Mines of Zambia said investors wanted stable policies in mining.
"We realised that windfall tax was an addition to the cost of production and that it was discouraging investment," he said.
Mwale said following increased production by many copper producers, most of the estimated 12 000 employees who lost their jobs because after the fall in the prices of metals in 2008 could be re-employed.
Zambia said two weeks ago it will not refund foreign mining companies the millions of dollars they paid in taxes when the controversial tax was in force, but could revise existing taxes.
Last year, Zambia introduced a 15% profit variable tax, 25% mineral windfall tax and raised corporate tax to 30% from 25% and mineral royalty to 3% from 0,6%, upsetting foreign mining firms.
Copper mining is Zambia's economic mainstay and the mines are a major employer for many of its 12-million people.
Some of the foreign mining companies operating in Zambia include Canada's First Quantum Minerals, London-listed Vedanta Resources, Equinox Minerals and Glencore International of Switzerland. |
