THE Zambia Chamber of Mines says government’s revision of the economic growth target to 5.8 per cent is “too optimistic”.
And the Chamber of Mines has continued to press government for the same royalty tax rate for all mines, rejecting a proposal to reduce royalties for underground mines to six per cent from nine per cent.
Finance minister Alexander Chikwanda last Tuesday cut the economic growth target to 5.8 per cent from the initially projected seven per cent after a slowdown in the global economy led to weak commodity prices.
But Zambia Chamber of Mines chief executive officer, Maureen Jangulo-Dlamini, said that was too optimistic given the projected lower copper prices and a slowdown in copper output which might cripple government revenue.
“Obviously, the government must have looked at fundamentals but I wouldn’t say it [revised target] is achievable. It’s a bit being over-optimistic given a slowdown in mining activity,” Jangulo-Dlamini said on the sidelines of the mining and energy conference in Lusaka last week.
She explained that a fall in copper prices remained a big challenge for mining companies to scale-up production.
Jangulo-Dlamini further said some mining companies were also still holding back on their planned investments because of the unresolved Value Added Tax refunds with the government.
She hoped that the government and the mining firms would agree on a tax regime that would encourage investment.
Meanwhile, Jangulo-Dlamini maintained that the government should introduce the same royalty tax rate for all mining operations to attract investments in the country.
The government set royalties for open cast and underground mining operations at nine per cent in April, rolling back from earlier plans to charge as high as 20 per cent for open pit mines.
It has, however, proposed to cut further mineral royalties for underground mines to six per cent because underground operations were more expensive than open cast ones.
“But our stand is that you cannot create a tax regime that differentiates on mining methods. That doesn’t work because then we are making assumptions that open cast mines are cheaper, which is not the case,” said Jangulo-Dlamini.
“We need to have one tax regime that is applicable to either underground or open pit.”