Zambia compromises on windfall tax?

The Zambian government has agreed a revised tax regime with copper mining companies operating in the country, dropping the 15% export levy on copper concentrates for some firms and permanently scrapping the 25% windfall tax, people familiar with the matter said Thursday to Dow Jones.

According to these sources, the government has agreed to waive the 15% export levy on copper concentrates for some firms and acceded to the companies’ request not to reinstate the 25% windfall tax. However, the 15% variable profit tax, applicable when global copper prices rise above a certain limit, will remain in place.

Secretary to the Treasury Likolo Ndalamei said copper mining companies had also agreed to keep paying 3% royalties and a 30% corporation tax.

Company officials couldn’t immediately be reached for comment.

Separately, Chamber of Mines Director Fredrick Batubonse confirmed that the state had concluded talks with the companies and come to an agreement as to how mining firms would be taxed.

Batubonse said that since last year, the government has been talking to individual mining companies operating in the country about the tax regime that was introduced in 2008, which hiked royalties and taxes in the sector.

“The negotiations were between government and individual companies,” he said “If any of our members [are] not satisfied, they will come back to us but so far, we have not received any complaints,” he added.

The Chamber of Mines warned earlier this year that the tax regime risked curtailing future investments in Zambia’s copper mining sector because it had eroded investor confidence. Since 2004, at least $5 billion has been invested in Zambia’s copper mining sector and the country is on course to produce at least 1 million metric tons of copper by 2011.

Last year, Zambia produced 690,000 tons of copper.

Copper Mining companies operating in Zambia Include London-listed Vedanta Resources PLC (VED.LN), Toronto-listed First Quantum Minerals Ltd. (FM.T), Equinox Minerals Ltd.(EQN.T) and Swiss commodity trader, Glencore International AG.

Source: Dow Jones

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