Zambia says mines have failed to show impact of new higher taxes
A government official says companies missed last week’s deadline to submit financial models
Lusaka — Mining companies operating in Zambia have failed to show how higher taxes introduced in 2019 will affect their profitability despite objecting to the new framework, says a senior government official.
Africa’s second-largest copper producer increased its sliding scale for royalties of 4%-6% percent by 1.5 percentage points from January 1 and introduced a new 10% tax when the price of copper exceeds $7,500 a ton.
Zambia also plans to replace VAT with a sales tax by April to help bring down mounting public debt.
The Chamber of Mines said in December that as a result of the changes, more than 58% of Zambia’s copper producers would be loss-making at current prices.
Paul Chanda, permanent secretary for mines, said his ministry had asked individual mining companies to provide financial models by Friday last week on how the new taxes would affect them, but none had done so.
“We wanted them to show how the new taxes will affect production and profitability, but so far we haven’t received anything,” said Chanda.
“Two mining companies have written to us asking us to give them more time but we haven’t heard anything from the others.”
Mining companies may lay off more than 21,000 workers because of reduced capital expenditure over the next three years resulting from the higher taxes, the Chamber of Mines said last month.
Mining accounts for more than 70% of Zambia’s foreign-exchange earnings. Companies operating in the country include First Quantum, Glencore, Barrick Gold and Vedanta Resources.