December 12, 2009 / 2:42 PM / 10 years ago

Zambia won't reintroduce high mine taxes - Finmin

LUSAKA, Dec 12 (Reuters) - Zambia, Africa’s top copper producer, will maintain existing mining taxes over the long term even after it scrapped development agreements it had with mining companies, Finance Minister Situmbeko Musokotwane said.

Musokotwane said at a media briefing in Lusaka on Saturday that Zambia did not intend to reintroduce a 25 percent mining windfall tax because that could force some mining companies to close.

The Chamber of Mines of Zambia, which represents foreign mining companies, said this week Zambia faced an uncertain long-term mining outlook despite a resurgence in copper prices and government assurances of stable mining taxes in 2010.

“The most important thing is stability in taxes at a reasonable level for both the investors and the people of Zambia, which I can guarantee. It should not necessarily be by law,” Musokotwane said.

Musokotwane said most of the mines had invested very heavily in new equipment and needed to be given time to recover from initial losses before they could be taxed.

Musokotwane said although the price of copper had risen, the government would not bring back high mining taxes it scrapped earlier this year because that would neither be in the interest of the country nor the investors.

“If we impose tax on revenue on old mines they will end up closing and we don’t want to head in that direction. We don’t want to create job losses,” Musokotwane said.

Musokotwane said foreign investors need not be skeptical over Zambia’s mining prospects because the country realised attracting Foreign Direct Investment (FDI) was key to development.

The southern African country of 12 million people has been waiving taxes, including a 25 percent import duty on imported equipment and 16 percent value added tax, for foreign companies investing in economic zones, in a bid to attract more investment and create jobs.

“We will push very hard on the issue of attracting investment because this is what will develop our country,” Musokotwane said.

Foreign mining companies operating in Zambia include Canada’s First Quantum Minerals (FM.TO), London-listed Vedanta Resources Plc VED.L, Equinox Minerals EQN.TO EQN.AX, Glencore International AG [GLEN.UL] of Switzerland and Metorex MTXJ.J of South Africa. (Reporting By Chris Mfula; Editing by Victoria Main)

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