LUSAKA, Oct. 16 (Xinhua) -- The proposed new changes to mining tax regime will affect Zambia's potential to conduct mineral explorations, an industry body said on Tuesday.
In its 2019 budget unveiled last month, the Zambian government announced new tax measures in efforts aimed at getting more revenue from the mining sector, which accounts for about 70 percent of the country's foreign exchange earnings.
Finance Minister Margaret Mwanakatwe said the government intends to increase mineral royalty rates by 1.5 percentage points at all levels of the sliding scale as well as introduce a fourth tier rate at 10 percent on the sliding scale mineral royalty regime which would apply when copper prices rise beyond 7,500 U.S. dollars per ton.
Geoffrey Mulenga, the president of the Association of Zambia Mineral Exploration Companies (AZMEC), said the proposed measures will have negative consequences for the mineral exploration sector as it runs contrary to THE government's policy of increased mineral exploration and growth of the mining sector.
He said mineral exploration was an inherently high cost, high risk activity and added that no new viable copper discoveries had been made over the past 10 years in the country.
"Since Zambia's independence, only two discoveries have been made. Dramatically increased exploration activities are now required, more than ever, if Zambia is to remain a leading copper producer," he said.
Zambia, he said, needed to match other countries like the Democratic Republic of Congo (DRC), where exploration has increased over the years, translating into increased production, employment and tax revenue.
Unless new deposits are discovered and developed, the mining industry in Zambia will continue to stagnate and ultimately contract with negative consequences for the nation as tax collection, employment, suppliers and export revenue all contract, he added.
The proposed changes in the mining tax regime have been received with mixed feelings, with mining firms saying it was a blow towards efforts to increase investment in the sector.
But the government has promised to put in a place a committee to review the tax proposals in consultation with stakeholders.
