Zambia withdraws plan to increase mining royalties

14 April 2015 (Last Updated April 14th, 2015 18:30)

Zambia has consented to finance and mines ministers' proposed changes of its plan to raise mining royalties.

Zambia has consented to finance and mines ministers' proposed changes of its plan to raise mining royalties.

The Zambian cabinet's decision comes as the country works to resolve a six-month stand-off with mining companies over the new tax system.

Presidential spokesman Amos Chanda said a panel of ministers had been directed by Zambia's newly elected President Edgar Lungu to finalise details on the proposed changes before submitting their presentation for parliamentary approval next week.

"Zambia increased mineral royalties for open pit operations...threatening foreign investment in the country."

Reuters quoted a presidency statement that said: "This follows extensive consultations with the mining industry in the light of significant changes in the fundamental assumptions upon which the law was based and the sudden fall in the price of copper."

In March, Lungu said the country could consider temporarily reverting to tax regime of 2014 and instructed ministers to change royalties on mining firms by 8 April.

Earlier this year, Zambia increased mineral royalties for open pit operations from 6% to 20% and underground mines from 6% to 8%, threatening foreign investment in the country.

The cabinet is expected to confirm the amended details prior to the parliamentary presentation.

Glencore, Barrick Gold, Vedanta Resources and First Quantum Minerals are some of the mining companies operating in the continent's second top copper producer.