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(REUTERS) Zambia willing to renegotiate new mining taxes

Zambia willing to renegotiate new mining taxes
Tue 30 Sep 2008, 12:37 GMT

LUSAKA, Sept 30 (Reuters) - Zambia is willing to renegotiate mining taxes set earlier this year with foreign firms facing difficulties arising from them, a minister said on Tuesday. In April, mineral royalty rose to 3 percent from 0.6 percent and corporate tax to 30 percent from 25 percent.

The government also introduced a windfall profit tax at a minimum 25 percent and a variable profit tax at 15 percent on taxable income above 8 percent, effectively raising mining tax to 47 percent from 31 percent, despite industry objections.

Mines and Mining Development Minister Kalombo Mwansa told Reuters in an interview the government in the mineral-rich southern African country was in advanced talks with Canada's First Quantum Minerals , which has raised serious objections to the new fiscal regime.

"There have been discussions between First Quantum and the ministers for justice and finance over the tax issue," Mwansa said.

"We are ready to dialogue to keep mining viable so that they (mining companies) keep expanding and remain profitable."

Mwansa said negotiations to cut some taxes would be extended to other mining investors who approach the government over their operational difficulties.

"We are open to dialogue if there are problems at individual mines because the taxes were introduced to benefit the government while they (firms) remain viable," Mwansa said.

He said Zambia's mining industry was thriving despite the global financial turmoil because most big players had committed funds way ahead of the credit crunch in the U.S and Europe.

"Everything is on course in spite of the global financial squeeze with the major players like the Chinese continuing with the building of a (key) copper smelter and Konkola Copper Mines (KCM) proceeding with the Konkola Deep Mining Project (KDMP)," Mwansa said.

The KDMP, which will come on stream in 2010, is expected to be Zambia's largest single producer of copper metal, with output projected at 150,000 tonnes per year.

Mwansa said Australia's Equinox Minerals Ltd. , was due to start producing copper at its Lumwana mine before the end of the year while South Africa-based TEAL Exploration and Mining was progressing well with its Konkola North copper project.

He assured foreign investors that Zambia remained a safe destination for copper mining and government policy would continue to safeguards investors.

"There is no going back with our policies to safeguard foreign investments. There is no cause for alarm because the environment is conducive for the protection of investments," he added.

Copper and cobalt mining is Zambia's economic lifeblood and the vast copper mines are a major employer in this southern Africa country of 12 million people.

(Editing by Michael Roddy) (Reporting By Shapi Shacinda, Lusaka newsroom +260-977843609/260-955779523)

Labels: CANADA, FIRST QUANTUM MINING, KALOMBO MWANSA, WINDFALL TAX

posted by MrK @ 8:54 PM