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(REUTERS) Zambia's new mines minister says tax not enough

Zambia's new mines minister says tax not enough
Thu Sep 29, 2011 9:04am GMT
REUTERS/Eliseo Fernandez
By Chris Mfula

LUSAKA (Reuters) - The tax the Zambian government is getting from mines in Africa's top copper producer is not enough and may need to be reconsidered, new mines minister Wilbur Simusa said shortly after being appointed to the post on Thursday.

Simusa's comments could unnerve investors who were not expecting a major shake-up after newly-elected President Michael Sata assured in his campaign he would not bring back mining windfall tax.

"The money we are getting from the mines in form of tax is not adequate and we are going to sit down with them and discuss so that we reach a win-win situation," Simusa, a mine engineer said.

Copper mining is Zambia's economic mainstay and any plans to increase the tax could hurt the industry target of doubling annual copper output to 1.5 million tonnes by 2016.

According to the World Bank, copper accounts for 70 to 75 percent of Zambia's export earnings, but the mining industry as a whole contributes only about 10 percent of its tax revenue.

Former President Rupiah Banda told Reuters in March audits had revealed that up to $200 million was owed in back taxes.

Banda's administration had already begun a drive to boost tax revenue from mining companies and this could improve social stability if the nation's mineral wealth is more evenly spread.

But while any moves to get more cash from miners may signal continuity with Banda, it does not mean the industry will like it. A well-known anti-corruption campaigner, Sata has also questioned copper export data and some experts say his concerns are legitimate.

Miners operating in Zambia include Canada's First Quantum Minerals, London-listed Vedanta Resources, Glencore International AG and Metorex of South Africa.

Labels: MINING, WINDFALL TAX

posted by MrK @ 5:26 PM