October 13, 2011 / 6:03 AM / 8 years ago

Zambia eyes 35 pct stake in mine projects: Minister

LUSAKA (Reuters) - Zambia will negotiate larger stakes in projects with foreign mining firms and plans to revamp tax collection to improve transparency and maximize benefits for itself, the minister of mines said.

A mine worker looks on underground in Modderfontein east mine, outside Johannesburg, February 3, 2009. REUTERS/Siphiwe Sibeko

Zambians striking over poor pay at Chinese mines returned to work this week after winning a nearly 100 percent pay rise, just over a fortnight after a new president took office on the promise of improving mining conditions.

Long-time opposition leader Michael Sata won election in Africa’s top copper producer on September 20 on a populist platform that included criticism of foreign investors and promises to improve the lives of workers.

“We would like to increase our shareholding to at least 35 percent in all the projects, but that will depend on how well we negotiate with the mining firms,” Mines Minister Wylbur Simuusa told Reuters in an interview.

Simuusa said the decision to seek a higher stake in the mines did not amount to nationalization of the mining sector in the Southern African country.

“We just want to have more benefits from the mines. There is no cause for apprehension, because nothing will be done without consulting the mining companies,” he said late on Wednesday.

Foreign mining companies operating in Zambia include Canada’s First Quantum Minerals, London-listed Vedanta Resources Plc, Glencore International Plc, Barrick Gold, Brazil’s Vale and Metorex of South Africa.

Simuusa said the existing tax collection mechanism was difficult to administer and its revision would lead to greater tax compliance by the mines.

“We want to introduce a tax collection mechanism based on production or earnings. Under the current system, which is profit-based, some mines have been declaring losses for the last 10 years,” Simuusa said.

NEW EXPORT GUIDELINES IN TWO WEEKS

Simuusa said mining companies should cooperate with the government because the new measures were intended to benefit both the country and the investors.

“The future of mining in Zambia is bright and we expect mining to remain the backbone of the economy for the next 50 years,” Simuusa said.

New guidelines for metal exports would be announced soon, he said.

“We hope that the new export measures will be in place within two weeks,” he said.

President Sata has been concerned — analysts say with good reason — that copper exporters are misreporting the amount of ore leaving Zambia. Last week Zambia suspended export permits to put the new guidelines in place.

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