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Zambia’s largest miner First Quantum are up in arms against the revised mineral royalty taxes saying the proposal to review the regime will have devastating impacts on the Country’s Mining Sector and capital investments as well as new projects.
Recently, the mining company announced plans to put aside its planned U$$1 billion investment in Zambia because of unreliable mineral policies in the industry and that it would seek to observe the development before proceeding with its intended plans.
In his budget speech, Finance Minister Alexander Chikwanda recently announced the review in mineral royalties between eight percent to 30 percent in the 2015 budget but the mining company says the proposed redesigned mining fiscal regime will deter capital investment in the existing and new mining projects.
FQML Government Affairs Manager Johan Gladston told the Times of Zambia recently that the 2015 budget speech does not provide incentive to the mining sector.
Gladston says FQML operates Kansanshi Mine which is the largest Copper Mine in the World and is the country’s biggest mining producer of Copper and Gold in Zambia.
In reacting to Chikwanda`s speech, Gladston says the new mining tax system did not encourage investments in new capital projects and that would inevitably lead to fewer new jobs and less opportunities for wealth creation in Zambia`s mining sector.
Government has by October 10 decided to increase the mineral royalty threshold for open cast and underground mining operations to 20 percent and eight percent in next year’s budget.
Gladston says the 2015 budget addresses additional capital projects which include the smelter expansion and sulphide processing expansion at Kansanshi jointly valued at more than U$$billion in Solwezi.
As the largest corporate tax payer in Zambia, FQML will have to wait for the actual implementation of the minister of finance`s 2015 budget address to analyse the full impact of the renewed tax system, he says.
And Kitwe District Chamber of Commerce president Raj Karamchand expressed concern with the changes in the tax regime saying the increase in mineral royalties’ taxes for the mining sector will greatly affect the operations of the mines.
Karamchand says most mining companies will find it challenging to start new projects because of the high taxes.
