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Zambia To Pursue Mining Tax Regime Changes

by Lorys Charalambous,, Cyprus

22 April 2016

The Zambian Government has confirmed its proposals to redesign the royalty regime for mining companies by introducing the Mines and Minerals Development (Amendment) Bill into the National Assembly.

The new regime follows an aborted attempt to hike royalties last year, when the Government had to retract its attempt to impose split royalty rates of eight percent and 20 percent on underground mining and on open-cast mining operations, respectively. They have been replaced, in the interim, by keeping the previous six percent royalty rate for underground mining and fixing a nine percent rate for open-cast operations.

Under the new proposed legislation, which would be retroactive to April 1, 2016, the Government has proposed a system of variable royalty rates for copper production. The rate would be four percent when prevailing copper market prices are less than USD4,500 per metric ton, six percent when prices are USD6,000 per metric ton or greater, and five percent for all prices in between.

In addition, a flat mineral royalty rate of five percent is to be set for other base metals and minerals, except for a rate of six percent for precious metals and gemstones.

The new system is aimed at sustaining Zambia's significant copper mining operations, and the jobs they provide, in a period of low mineral prices. The Government has said that the change is "necessary to sustain continuous operation of existing mining companies, and avert the suspension of mining operations and job losses."

TAGS: tax | business | mining | royalties | law | legislation | tax rates | Zambia

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