Zambia Chamber of Mines urges moderation on mining royalties to protect sector

ZAMBIA ought to cap mining royalties at 7.5% in 2020 in order to protect the country’s mining sector, said Reuters citing the Chamber of Mines.

In proposals submitted to the finance minister, the chamber said raising the tax burden on mining firms would damage the industry and give away business to the country’s neighbours.

Zambia last year increased its sliding scale for royalties of 4% to 6% by 1.5 percentage points and introduced a new 10% tax when the price of copper exceeds $7,500 per ton. The scale is adjusted so that royalties are paid at higher levels as commodity prices climb and are reduced as prices fall, said Reuters.

“If the 1.5% increment on each band of the sliding scale is to be maintained, the maximum rate should be capped at 7.5%, for an LME [London Metal Exchange] copper price equalling or exceeding $7,500/ton,” the Chamber of Mines said.

The mineral royalty tax should also be tax-deductible for mining firms as making it non-deductible as Zambia does amounts to taxation on revenue not received, it said. “Zambia is the only mining jurisdiction not allowing a deduction for these costs,” it said.

The Chamber said a proposed switch to a non-refundable sales tax from a refundable value-added tax should be delayed for at least two years until it is refined. It also urged a waiver on import duty on copper and cobalt concentrates, saying Zambia has excess smelting capacity which should not be forfeited to competing neighbouring states.