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Zambia abolishes contentious windfall tax in Mining industry

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Sabasaba, Feb 8, 2009.

  1. S

    Sabasaba Member

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    Feb 8, 2009
    Joined: Jul 12, 2007
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    If it had happened to Zambia! Can we see it coming to Tanzanian Mining Industry?

    Follow this report by Mining Journal

    ZAMBIA has abolished its controversial 25% windfall tax, in an effort to keep its struggling mining industry
    afloat. Mining minister Maxwell Mwale said the windfall tax would be dropped entirely despite the fact
    it would have been imposed only at a copper price of between US$2.5/lb and US$3/lb (about US$5,510/t) and so would not be applicable at current copper prices, hovering around US$1.5/lb (US$3,405/t).

    The minister said the tax was being dropped because of concerns previously raised by mining companies
    operating in the country. “We have done away with the windfall tax because it did not take into
    account company’s operating costs,” Mr Mwale told Mining Journal.

    “Things are fluid, but there are no plans to reintroduce the tax in the short term,” he added.
    Zambia relies on copper mining for more than 60% of its revenue, and prior to the economic downturn planned to increase taxes to take advantage of soaring commodity prices.
    But mining companies strongly disputed the proposal, which would increase their contributions to 47%.

    A 15% variable tax will still apply, however, Mr Mwale said. The government has introduced
    other measures to support the mining industry and reduce operating costs, including halving duty on heavy fuels from 30% to 15% and removing customs duty on copper powder, flakes and blisters.
    Katherine Welch-Mining Journal
     
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