The move puts an end to a nearly nine-month standoff that has hit output and profits in Africa’s second largest copper producer.
The country's national pension fund has bought 15.9 million shares of Zambia's Consolidated Copper Mines-Investment Holdings for almost $80 million.
Underground mining royalties cut to 6% from 9%.
Mines minister Christopher Yaluma said reducing royalties below the recently revised 9% would make underground mining more cost effective.
Africa’s second-biggest copper producer, may lose as much as four days’ output of the metal after the country’s power grid went down on Monday, the mines chamber said.
Barrick Gold Corp. has backtracked on its decision to suspend operations at its Lumwana open pit copper mine in Zambia after the cabinet reduced mining royalties.
The announced changes will be effective on July 1, once parliament has approved them.
The government intends to set its mining royalties at 9% for both open-pit and underground mines.
Government claims it was not notified according to the law.
But the fund warned that only further tightening of fiscal and monetary polices would contain the country's large deficits.
Zambian government rethinking steep royalty hikes that went into effect on January 1.
The new rules only apply to future payments and not amounts already owed.
Newly elected President Edgar Lungu wants to keep mining royalties at 20%, as opposed to the 6% companies were paying a month ago.
The situation may soon change, as authorities have began talks with the country’s top miners, signalling the possibility of a compromise over the country’s new tax regime.
Despite the government announcement Tuesday that it will push ahead with plans to more than triple mining royalties.
Move will leave up to 12,000 jobless and it is likely to sour the already fractious relationship between the government and mining companies.
The Canadian giant had earlier said it would consider such a move in the event the new tax regime was approbed.
There are indications Zambia may be backing away from plans to impose a 20 per cent royalty rate on open pit mining in the country, a top executive with Barrick Gold Corp said on Thursday.
The increased mining tax framework included in Zambia's 2015 Budget earlier this month has been subject to criticism as, according to the Chamber of Mines of Zambia (CMZ), it will reduce the country's attraction for mining investment and reduce employment.
The miner, Zambia's largest foreign investor, operates Kansanshi mine, the eighth largest copper mine in the world, as well as the country's biggest.
Energy and Water Development Minister Christopher Yaluma says security wings have managed to trace some illegal gold miners and dealers on the black market in the ongoing investigations.
Underground mining royalties will go up from 6% to 8%; underground taxes now 20%.
Zambia’s mines minister says the company has not officially communicated the government its intentions as required under the country's law.
The company is cutting 169 jobs at the mine.
The standoff marks a major setback for the miner, which is in the process of upgrading its copper assets in Zambia hoping to increase output by at least 50% by 2017.
The business group argues the sector must be nurtured to generate the revenues needed for the country’s economic diversification.
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