Zambia is expecting mining revenues to rise 30% by 2013 from about 4% last year as mining companies start making profits on high metal prices.
Finance Minister Situmbeko Musokotwane said high international metal prices are expected to help foreign mining companies offset carryover losses and meet the threshold to pay company income tax.
Canada’s First Quantum Minerals, which operates Zambia’s Kansanshi mine, is the only mining company in the country that has paid tax after it completed its expansion and started operating profitably.
High metal prices in the next three years will help mining companies pay more tax than projected, leading to increased revenue, the minister said.
“We envisage a period when the revenue from the mining companies operating in Zambia will constitute about one-third of the total revenues that we are going to collect,” Musokotwane said.
Last year mining tax revenues fell half to 388.5bn kwacha ($76m) compared to 917bn kwacha ($180m) in 2008.
Zambia is keen to preserve this growth and as result it would not implement its controversial mining windfall tax, Musokotwane said.
The Australian Government’s proposed resource super profit tax has generated widespread criticism among miners, which have put major projects on hold and threatened to take projects offshore if the tax is implemented in 2012.
Musokotwane told news agency Reuters that introducing the windfall tax in Zambia could equal the death of the industry, leading to the closure of some mines and creating social unrest in the mineral-rich Copperbelt.
Copper mining is Zambia’s economic mainstay and mines are a major employer, providing 12 million jobs.