Cap Mining Royalties at 7.5% - Zambia Chamber of Mines

Zambia’s Chamber of Mines has advised that mineral royalties should be capped at 7.5 percent in the 2020 budget. This is to safeguard the health of the mining sector and promote additional investment.

A Zambian Mine.
Source : daily maverick.co.za

The mining body had this as part of its proposals to the finance ministry. It argued that the 2019 mining tax regime had raised the tax burden on mines to unsustainable and noncompetitive levels.

Africa’s No.2 copper producer increased its sliding scale for royalties of four to six percent by 1.5 percentage points and introduced a new ten percent tax when the price of copper exceeded 7,500 dollars per tonne.

The scale is adjusted so that royalties are paid at higher levels as commodity prices climb and are reduced as prices fall.

The mineral royalty tax should also be tax-deductible for mining firms as making it non-deductible as Zambia does amounts to taxation on revenue not received, it said.

The chamber said a proposed switch to a non-refundable sales tax from a refundable value-added tax should be delayed for at least two years until it is refined.

It also urged a waiver on import duty on copper and cobalt concentrates, saying Zambia had excess smelting capacity which should not be forfeited to competing neighbouring states.

Zambia should also keep mining energy tariff increases in step with inflation over the next three years until a cost of service study is completed and a new tariff plan agreed with industry, it said.

A ministry of finance spokesman was not immediately available for comment.

Foreign mining companies operating in Zambia include First Quantum Minerals, Barrick Gold and Glencore.