Zambia Defers Customs Duties For Foreign MinersPublished by MAC on 2007-08-20
Source: Reuters ()
Zambia defers customs duties for foreign miners
20th August 2007
Zambia will defer payments on customs duties in a bid to boost foreign investment in its mining industry, finance minister Ng'andu Magande told Reuters in a weekend interview.
Magande said Zambia's Treasury will defer payments on a 30% customs duty on imported mining equipment for up to one year to give companies a chance to get operations going smoothly and gain profits from copper and cobalt projects. "I can't tax somebody who is not making profits," he said.
The Treasury has said it would raise mineral royalties to 3% from 0,6% and corporate tax to 35% from the current 30%t for mining companies following a rise in global metals prices.
Magande said negotiations on royalties, which were scheduled to start in September because Zambia was hiring foreign consultants on the talks. "We should be able to start this process by the end of September or October. Everybody thinks that perhaps within three months we should be through with the negotiations," he said.
Copper mining earns the bulk of Zambia's foreign exchange but analysts say the country does not reap enough benefits becaue the mines are owned by foreigners. He noted there was no fresh investment from new foreign companies but that existing projects were expected to raise output.
"Most of the big companies that have already had (investment) plans are saying to us that the highest curve of investments is this year and then next year we will see production coming up," said Magande.
Foreign firms operating in Zambia include London-based Vedanta Resources Plc, Canada's First Quantum Minerals, Swiss firm Glencore International AG and Australia's Equinox Minerals Ltd.
Most of Zambia's big copper mines are majority-owned by foreign firms, with the government holding no more than a 14 percent stake in any one venture.
Zambia forecasts finished copper output to hit 670 000 t in 2007 from 515 000 t the previous year.