January 17, 2018

Zambian copper mines will pay price-driven royalties

In an apparent bid to sustain stressed mining companies, Zambia’s cabinet has ratified a new system in which mines will be required to pay royalty fees proportional to the copper price.

In a statement, government spokesman, Chishimba Kambwili, said: “Cabinet approved the proposed tax measures which are aimed at sustaining operations in the mining industry, securing jobs for citizens as well as collecting more tax revenue in times of relatively high copper prices.”

Mining companies had forwarded a proposal for a price-based royalty structure to alleviate the burden during the period of low prices (currently it is said the prices are at a six-year low). This development will restore confidence in government’s commitment to enable the mining sector, the biggest contributor to Zambia’s fiscus prevail over the recession.

Over and above the revised royalty structure, the cabinet has approved the suspension of 10% export duty on ores and concentrates for which they are no processing facilities in Zambia and to remove the variable profit tax on income from mining operations. The government will maintain the corporate income tax for mining companies at 30% while a flat mineral royalty rate of 6% would be introduced for precious metals and gems, according to Kambwili. For minerals and base metals other than copper, royalties will be fixed at 5%.

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