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(REUTERS) Zambia opposition moves to block Chinese mine deal

Zambia opposition moves to block Chinese mine deal
By Shapi Shacinda
Wed Jun 24, 2009 2:36pm GMT

LUSAKA (Reuters) - Zambia President Rupiah Banda said on Wednesday he was willing to review copper mining taxes and he criticised the country's opposition for blocking a Chinese firm from running a big mine.

The opposition has said it wants to curb China's widening influence in the country's mining sector, saying Chinese firms have a poor safety record and pay low wages to workers.

Banda's government in May picked China's NFC Africa to take a majority stake in the closed Luanshya Copper Mines (LCM), which shut down in December after making losses, leading to job cuts. The Chinese firm was due to officially take over the mine on Wednesday.

"I'm shocked that the so-called opposition leaders have been pushing for the blocking of this transaction through a court process," Banda said.

"If this matter goes to court, and we all know how long court processes take, who is going to suffer? It is obvious that it is the workers and their families."

Banda said lower prices of copper, together with higher food and oil prices had placed enormous pressure on the economy, leading Zambia to cut its 2009 economic growth forecast to 4.0 percent from a previous forecast of 5.8 percent.

Banda said he was willing to review copper mining taxes set last year for Africa's top producer of the metal, after foreign firms raised objections to the new fiscal regime.

The controversial mining taxes were introduced because of a need to increase spending on infrastructure in the southern African country.

Zambia earlier this year scrapped the 25 percent windfall tax introduced last year under pressure from foreign owners of its copper mines.

The government last year also introduced a new variable profit tax, which effectively raised mining tax to 47 percent from 31 percent, despite industry objections.

"It is the intention of my government to re-engage mining companies through dialogue in resolving any of the outstanding (tax) issues, which may have a risen," Banda told a news conference.

Foreign firms operating in Zambia include Canada's First Quantum Minerals, Australia's Equinox Minerals Ltd. Swiss firm Glencore International AG and London-listed Vedanta Resources Plc, the country's largest copper producer.

Labels: CHINESE, CORRUPTION, MINING, RUPIAH BANDA, WINDFALL TAX

posted by MrK @ 3:14 PM