Metorex in talks with govt over development agreement
By Chiwoyu Sinyangwe
Tuesday April 22, 2008 [04:00]
METOREX mine operations director Edward Legg has said the mining company is continuing talks with the Zambian government over the enforcement of development agreements rather than taking legal action. Legg, however said Metorex reserves the right to take legal action to enforce its development agreement with the government.
According to Business Day, diversified metals miner Metorex said it was analysing the effect of Zambia’s new super tax on copper mining profits on its Chibuluma South mine, where the company is increasing monthly ore production to 60,000 tonnes.
“The group had not decided to take legal action to enforce its development agreement, which included a tax stabilisation clause,” Legg told analysts on a visit to the mine last week. He said the mining company reserved its right to do so, although it was continuing talks on the issue with the government through the Zambian Chamber of Mines.
And Chibuluma Mines general manager Edward Mounsey said the extra taxes on copper mines would not affect Metorex’s Sable Zinc operation in Zambia.
Chibuluma South, which had been mining 40,000 tonnes of ore a month, was ramping up production to 50,000 tonnes a month and was expected to reach that target this month,
He also said the mine was also about to recommission an old leach plant to treat a surface stockpile of about 60,000 tonnes of copper oxide, which it believes can be processed profitably at current copper prices.
The government this month raised the corporate tax rate to 30 per cent from 25 per cent with effect from April 1, and hiked the royalty on copper profits to three per cent from 0.6 per cent. It has also imposed a windfall tax on copper profits, which kicks in when London Metal Exchange copper prices exceed a certain level.
Some mining companies in the country like Konkola Copper Mines have already accepted the new mining regime.
Labels: DEVELOPMENT AGREEMENTS, METOREX
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Prof Saasa urges transparency in mining pacts re-negotiations
By Joan Chirwa
Tuesday May 29, 2007 [04:00]
An economic and business consultant has urged the government to be transparent in its re-negotiation of the development agreements with mining companies. Professor Oliver Saasa of Premier Consult Limited said the government should spell out its procedures in the re-negotiation of development agreements with mining companies for a wider input among stakeholders.
He was commenting on the announcement by Konkola Copper Mines (KCM) that it was ready to meet government if the state wants to re-negotiate the mineral royalty taxes on mining companies.
Metorex-which has its operations at Chibuluma Mine-earlier indicated that it may agree to a tax on windfall profits from its Zambian assets following discussions with President Levy Mwanawasa.
“Government has not yet come out publicly on how it wants to go ahead with the re-negotiation of the development agreements. What is important is to have clarity on the issue,” Prof Saasa said.
He said the decision by KCM and Metorex to agree to re-negotiate their development agreements with the government was commendable.
“The mining companies have been quiet over this issue and you may wonder why. I think it was a good decision for them to do things quietly,” Professor Saasa said.
He cautioned government and other stakeholders against treating mining companies in a way that would portray them as ‘culprits’.
“Again, the fact that KCM has agreed to meet government for the re-negotiation of the development agreement with government does not mean they will accept the proposals for an increment in taxes,” Professor Saasa said. “The development agreements signed earlier tied the hands of government…but government now has to be very careful in handling this issue.”
KCM director of operations CP Baid told a parliamentary committee on Mining and Economic Affairs that visited the mine on Friday that his company was ready to renegotiate mineral royalty taxes.
And Metorex chief executive officer Charles Needham was quoted by the miningmx.com as saying: “In an environment of super profits, after recovery of investment, consideration would be given to windfall tax linked to the copper price.”
On Sunday, University of Zambia Development Studies lecturer Dr Francis Chigunta said the current investments in the mining sector were a systematic looting of Zambia’s resources hidden in development agreements.
Labels: KCM, METOREX, MINING CONTRACTS, OLIVER SAASA, WINDFALL TAX
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