GHZ supports govt's proposal to raise mineral royalties
GHZ supports govt's proposal to raise mineral royaltiesBy Joan Chirwa
Tuesday February 13, 2007 [02:00]
GEMFIELDS Holdings Zambia Limited (GHZ) has supported government's proposal to raise mineral royalties for both base and precious metals to three per cent. And Equinox Minerals Limited vice president for investment relations and corporate development Kevin Van Nierkek has said his company would not be affected by the proposed taxes because of the ten-year development agreement signed with the government.
Commenting on the proposed increase in mineral royalties from 0.6 per cent to three per cent for base metals and two per cent to three per cent for precious metals, GHZ chief operating officer Alok Sood said most African countries had their royalties of above 2.5 per cent.
Sood said it was acceptable that mineral royalties for both base and precious metals be at the same level. Under the current system, base metals are being taxed at 0.6 per cent, while precious metals are contributing two per cent to the treasury.
"In fact, there should be a level playing field in the mining industry," Sood said. "Gemstones are a highly risky business, unlike base metals. A lot of money is put in for prospecting, and in some cases, you do not get the good quality stone, so you lose out." Sood said some countries had their mineral royalties at around five per cent, and the three per cent proposed by government was reasonable. And Nierkek said the new taxes and mineral royalties would not have any effect on Equinox Minerals because the development agreement signed with the Zambian government spelt out its own royalties and corporate taxes.
"We've already signed the agreement with government and this is for a ten-year period," Nierkek said. "Unless we enter into fresh agreements, everything is locked in the agreement signed."
Haywood Securities vice president and mining equity analyst Eric Zaunscherb urged government and the mining companies to agree on mineral taxes that would benefit both sides. Zaunscherb, whose company has its headquarters in Canada, was in Livingstone for the just ended Africa 2007 mining congress. "The 0.6 per cent mineral royalty sounds too low, but again the three per cent is on the high side. I hope the Zambian government and the mining companies in the country compromise. I think something in the range of 1.5 per cent wouldn't be very bad," he said.
Zaunscherb, however, said there should never be a situation where mineral royalties and corporate tax are both high. The government in this year's budget increased corporate tax from 25 per cent to 30 per cent.
Labels: 2007 BUDGET, ECONOMY, MINING
posted by MrK @ 4:38 PM
1 Comments:
I guess this is a matter of if it doesn't hurt, it isn't working. Mines should be owned by the state 100%. Remarkable how much the mining companies express their agreement of raising mineral royalty tax to international levels. I think Magande must be the most corrupt man in Zambian politics today, only secondt to Levy Mwanawasa. Consider that 80% of the population live on less than $1,- per day.
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