U.S. Ambassador to Zambia Daniel Foote has called on government and communities to support the mining sector and ensure the country’s economic backbone continues to provide jobs, tax revenue, and export earnings.
Speaking during a visit to First Quantum Minerals’ (FQM) Sentinel Mine at Kalumbila last week, Ambassador Foote encouraged dialogue between mining companies, government, and communities to ensure all appropriately benefit from the enormous investment of FQM and others.
Foote urged the government to ensure responsiveness and facilitate a conducive business environment for the mines and prospective investors.
The plans include an additional 1.5 percentage point increase on all mineral royalty bands, with a new 10 percent mineral royalty when the copper price exceeds US$7,500 per ton.
Critically, mineral royalties will now be non-deductible for corporate income tax purposes. Other plans announced last month include the introduction of a sales tax to replace VAT, meaning companies will not be able to reclaim tax on input purchases.
“After seeing the mine and its impressive modern facilities, and the enormous investment that has been made as well the impressive investment that has been made into communities and some of the corporate social responsibility, I think it is a great example of what can be done in Zambia with the right investment. I encourage government and the communities to continue to work to create the right conditions to attract additional investors and to ensure that people who have invested heavily in Zambia can continue to successfully do business,” said Ambassador Foote.
Copper accounts for 70 percent of Zambia’s exports, and through its Sentinel and Kansanshi mines, FQM produces half of that copper.
The company, which has invested US$6.4 billion in Zambia, employs over 8,800 direct employees. It is the country’s largest taxpayer, having paid US$3.4 billion to the Treasury since 2005.
FQM Country Manager General Kingsley Chinkuli explained that if introduced, the recent Budget proposals threatened the stability of the mining sector and would result in the scaling back of investment plans, job losses and reduced tax revenues across the industry.