Zambia launches major overhaul of mining tax, increases royalties
Zambia, Africa's second largest copper producer, will rise underground mining royalties to 8% from 6% as part of major overhaul to the industry's tax system, Finance Minister Alexander Chikwanda said in his 2015 budget speech on Friday.
The country, looking for ways to boost revenue collection from companies including Glencore (LON:GLEN), Barrick Gold (ABX), First Quantum (TSX:FM) and Vedanta (LON:VED), also announced that royalties for open-pit mines are now 20%, Reuters reports.
Chikwanda was reportedly considering scrapping corporate income tax for mines and increasing royalties instead for months, as it is simpler to administer.
The African nation, which last year lost its position as Africa's top copper miner to Congo for the first time since 1998, has been withholding $600 million in VAT refunds owed to mining firms, after companies failed to produce import certificates from destination countries.
So far Glencore and First Quantum have taken measures to step up pressure on the government.
Last week the commodities trader and mining giant idled operations at its zinc mine and cancelled over $800 millions worth of copper projects in the country.
First Quantum, which operates the Kansanshi Copper Mine, Zambia’s largest mine by output, said in June it had put investments worth $1.5 billion on hold over withheld refunds.