Association of Zambia Mineral Exploration Companies (AZMEC) fears that the proposed new changes to the country’s mining tax regime will dent mineral exploration and production.
The latest tax measures are aimed at getting more revenue from the mining sector. Geoffrey Mulenga, AZMEC President says the proposed measures will not spur mining sector growth but affect the potential to conduct mineral exploration.
“Since Zambia’s independence, only two discoveries have been made. Dramatically increased exploration activities are now required, more than ever, if Zambia is to remain a leading copper producer,” Mulenga said.
The AZMEC president said unless new deposits were discovered and developed, the mining industry in Zambia would continue to stagnate and ultimately contract with negative consequences for the nation as tax collection, employment, suppliers and export revenue all contracted.
Margaret Mwanakatwe, Finance Minister said the government intends to increase mineral royalty rates by 1.5 percentage points at all levels of the sliding scale as well as introduce a fourth-tier rate at 10 per cent on the sliding scale mineral royalty regime which would apply when copper prices rise beyond US$7500 per tonne.
In addition, government also wants to make mineral royalty tax non-deductible for income tax purposes and introduce an import duty at the rate of five per cent on copper and cobalt concentrates.
Another proposal is to introduce an export duty on precious metals, including gold, precious stones and gemstones, at the rate of 15 per cent.
Statistics indicate that mining accounts for about 70 per cent of the country’s foreign exchange earnings.