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LUSAKA. — Zambia’s biggest mine has threatened to suspend operations if the country’s parliament approves the 2015 budget which has come up with a new tax regime for the mining industry, a statement seen by Xinhua yesterday said.
Finance Minister Alexander Chikwanda recently announced the 2015 budget in which the government has come up with a new tax regime for the mining industry in Africa’s second largest copper producer.
The new mining tax regime has seen the introduction of eight percent mineral royalty tax on underground mining and 20 percent mineral royalty on open cast mining.
Previously, the mineral royalty was pegged at six percent.
The new tax regime will also see a 30 percent corporate income tax rate on income earned from tolling, a 30 percent corporate income tax on income earned from processing of purchased mineral ores, concentrates and any other semi-processed minerals, currently taxed as income from mining operations.
The mining industry has expressed concern over the tax regime, saying it will negatively affect operations.
Lumwana Mine, owned by Canada-headquartered Barrick Gold Corporation said in the statement that it will suspend its operations if the proposed increase in mineral royalty taxes was approved in the 2015 budget.
The company said the proposed changes in mineral royalties will have a negative impact on its financial viability.
Under the proposed mineral royalty regime, the mine will be required to pay more than triple in mineral royalties from $45 million to be paid this year to $150 million next year, the statement added.
According to the statement, the mine will be responsible for 37 percent of the new tax revenue that the government expects to raise from the new royalty regime as it will be taxed on gross revenue regardless of the mine’s profitability. — Xinhua
Online Reporter