Mines resist new taxes
Mines resist new taxesBy Bright Mukwasa
Tuesday February 12, 2008 [03:00]
MINING companies in the country have threatened to use legal means to block the government from implementing the new mining fiscal regime. Appearing before the extended parliamentary committee on estimates yesterday, the mining companies urged the government to use the instruments within the development agreements to effect the proposed mining tax regime before it is passed into law.
Among the mining companies that appeared before the committee were Mopani Copper Mines Plc (MCM), Lumwana Copper Mines (LCM), Chibuluma Copper Mines, Kansanshi Copper Mines, Konkola Copper Mines (KCM) and Non-Ferrous Corporation Chambishi Mines.
Submitting before the committee, First Quantum Minerals country manager Chisanga Puta-Chekwe said if the fiscal regime was implemented, Kansanshi Copper Mines would be in trouble with its shareholders.
Puta-Chekwe said there were procedures that needed to be followed by both government and the mines before the new tax regimes could be implemented.
He explained that in cases where the agreements were violated, litigation was sought in many instances by the affected party.
He said it was important for the government to adequately inform the international community about the new mining fiscal regime or they risked making the country an unattractive investment destination for future investments in the mining sector.
And Chamber of Mines president Passmore Hamukoma said despite government having promised the mining companies to renegotiate the new tax regime, government did not engage them.
Hamukoma, however, said the mining companies were open to renegotiation before the mining fiscal regime could be implemented.
“We have not been called to discuss the fiscal issues affecting the mines, therefore we have not had a chance of explaining the effects of not being in consultation with the other arm which has put the new tax regime,” Hamukoma said.
Hamukoma, who is also MCM chief services officer, said the development agreements were legally binding and the sector had no problem in abiding by them.
Chamber of Mines general manager Frederick Bantubonse said earlier on, President Mwanawasa wrote to the mines indicating voluntary negotiations of the new tax regime.
“The President wrote to us on the development agreements of which we have no problem with it being a legally binding document, he requested for voluntary negotiations, but we were surprised that the President went ahead to announce the new tax regime without our say,” Bantubonse said.
Chibuluma Mines general manager Ed Mounsey said the new tax regime would harm investments made by Metorex Mines into the development of Chibuluma South copper mine if the regime is implemented.
“The investment made by Metorex will not be recouped, they will be no dividends or profit externalisation and so these are some of the effects on the company if the new tax regime is passed into law,” Mounsey said.
“Therefore, government should not pass the Bill in its current state, instead they should carry out an independent review of proposed tax changes for the viability of the mines, and we urge you to encourage government to negotiate with mining companies.”
KCM operations director CP Baid said the mine was looking forward to meaningful dialogue before the tax regime was implemented.
Mopani chief financial officer Gavin Heale said if the new tax regime was implemented, it would lead to the mine suspending some of its expansion projects currently taking place.
“We acknowledge the development agreements but we are concerned with the process with this situation at hand,” Heale said. “It could see some projects being cancelled because the current situation seems unsustainable, of course this would also make the life of mines questionable.”
NFC Chambishi mines-corporate affairs manager Nelson Jilowa said the budget speech on the mining tax regime seemed to override the development agreements the company signed with the government at the beginning of its operations.
Recently, finance minister Ng’andu Magande declared that there would be no room for the mines to negotiate with the government the new mining fiscal regime.
Labels: KANSANSHI MINING PLC, KCM, LUMWANA MINING COMPANY, MCM, MOPANI, PARLIAMENTARY ESTIMATES COMMITTEE, WINDFALL TAX
posted by MrK @ 3:54 AM
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