Zambia mulls cutting mining royalties even further
Zambia’s government is contemplating cutting the mineral royalties for underground mines below the recently revised 9%.
According to state broadcaster ZNBC, mines minister Christopher Yaluma said that lower taxes would make underground mining more cost effective.
Zambia set mining royalties for both open-pit and underground mines at 9% in April, abandoning a short-lived tax hike that would have seen the government charging as much as 20%.
The royalty increase prompted warnings of closures and thousands of job losses, underscoring a growing trend across the continent, where governments from Tanzania to Guinea are changing tax regimes and adjusting ownership structures to get a larger share of natural resources.
From 1997 to 2013, mining attracted $12.6bn in foreign investment to Zambia, according to industry figures. The capital injection helped the southern African nation become one of the continent’s star economic performers, with average annual GDP growth of 6.4% over the last decade.
Today, mining employs 90,000 people and contributes about three-quarters of the country’s foreign exchange earnings and 25-30% of government revenue.