Zambia approves new royalty system for copper mines

17 February 2016 (Last Updated February 17th, 2016 18:30)

Zambia has approved a new plan to introduce a price-based royalty system for copper mines in an effort to keep open mining operations in the country.

Zambia has approved a new plan to introduce a price-based royalty system for copper mines in an effort to keep open mining operations in the country.

The charges, ranging from 4% to 6%, vary depending on the price of copper and are also aimed at preventing further job cuts.

The new royalty structure has been approved by Zambian President Edgar Lungu following requests from mining lobbies to ease the tax burden amid weak commodity prices.

"We recognise now is the right time to deliver a transformation programme that will meet the needs of all our customers and drive further economic growth for both the region and country."

Reuters quoted government spokesman Chishimba Kambwili saying: "Cabinet approved the proposed tax measures which are aimed at sustaining operations in the mining industry, securing jobs for citizens as well as collecting more tax revenue in times of relatively high copper prices."

Besides the new royalty system, Zambia approved the suspension of export duty on ores and concentrates which is 10% at present.

The corporate income tax for mining companies is expected to be maintained at 30% and for precious metals and gems a flat 6% mineral royalty rate would be in place, Kambwili said.

Royalties for minerals and base metals excluding copper will remain 5%.

The changes are required to be approved by the Parliament.

Weak prices have compelled companies such as Glencore and Vedanta Resources to axe several jobs and halt operations at their mines in Zambia.