Chinese Mining Firms Won’t Halt Operations in Zambia

The Zambian parliament recently approved the 2015 national budget, which among other things has introduced a new mining tax plan. The new tax law has since been assented to by the acting Zambian president. The new tax plan has seen the increase in mineral royalty taxes from six to eight percent for underground mines and to 20 percent for open pit mines, with some mining firms threatening to halt operations. Halting operations was not the best solution to tackle the problem but dialogue.

The Chinese firms have started consulting the government over the new tax plan and hoped that an amicable solution will be found after the talks. Zambia’s acting President Guy Scott said last week that the government has begun talks with the mining firms following the change of the mining tax plan.

Last year, Canadian-based mining giant, Barrick Gold Corporation, announced plans to initiate a process of suspending operations at its unit in Zambia following the government’s decision to approve the budget which contains the controversial new tax plan. The Toronto-headquartered mining giant, which runs Lumwana Copper Mine in northwestern Zambia, said the introduction of the new mineral royalty has left it with no option but to initiate the process of suspending operations to reduce costs.

The new Mines and Minerals Act of 2014 replaces the 2008 Mines and Minerals Act and has stirred a debate in Africa’s second largest copper producer, with mining firms threatening to cut down on operations while the government has insisted that it will not bow down to the pressure from mining firms, saying the new law is a win-win situation for both parties. The industry body said the southern African nation will lose in excess of 158,000 tons in copper production next year while over 12,000 workers will lose jobs in the sector due to the implementation of new mining tax plan.