Government must urgently review the 2019 mining fiscal regime to ensure that growth in the sector is sustained and tax revenues to the Treasury are maintained, insists the Zambia Chamber of Mines.
But Mines Minister Richard Musukwa says government will not tolerate any kind of arm-twisting from the mining sector, advising them that government’s doors remains wide open on any pressing issue troubling players, including the disputed fiscal regime.
Speaking during a keynote address at the 2019 Zambia International Mining and Energy Conference (ZIMEC) in Lusaka, Thursday, Zambia Chamber of Mines president Goodwell Mateyo appealed to government to revisit the controversial 2019 mining fiscal regime.
The 2019 mining fiscal regime, which took effect from January 1, 2019, increased mineral royalty rates by 1.5 percentage points at all levels of the sliding scale, and so far resulted in some mining companies significantly scaling-down their operations.
“The industry has since been faced with a mining tax regime that leaves our mining destination as an outlier, with higher tax rates compared to peer mining jurisdictions. Honourable Minister of Mines (Musukwa), we continue to respectfully request that the government revisits the mining tax regime, which only serves to deter investment in the sector,” Mateyo appealed.
“We further request that serious consideration be given to the counter-proposals on mining taxation as submitted by the Chamber of Mines.”
He expressed continued optimism that the punitive fiscal regime would be reformed.
“As a Chamber, we remain resolutely committed to meaningful engagement with the government. As president of the Chamber, personally, I remain quietly optimistic that through dialogue we shall be able to find a balance between a tax regime that encourages investment in the sector on the one hand, and one that also ensures that the government is able to generate sufficient resources from the sector to finance its development goals and agenda,” he said.
And Mateyo, who is also Mopani Copper Mines’ general legal counsel, called on government to expedite completion of the Cost of Survey Study to attract much-needed private sector investment in the energy sector.
“Hon Minister of Energy (Matthew Nkhuwa), it will be important that the Cost of Survey Study that has been relaunched is successfully concluded to ensure that cost reflective tariffs are in place to attract further investment in the sector,” said Mateyo.
But Musukwa said that government’s doors remained wide open on any pressing issue troubling the mining sector, including the disputed fiscal regime, insisting that the usual “arm-twisting” tactics will not be tolerated.
He argued that the mining industry’s prospects remained positive this year despite the ongoing turbulence with some mining companies scaling down operations.
“…However, despite the setbacks, the mining sector is poised to continue registering positive growth because government stands ready for constructive dialogue with all stakeholders to address the concerns and avert any adverse consequences. At this juncture, I wish to extend a leaf to all affected parties, Mr president of the Chamber of Mines, to engage with government and come up with justifiable solutions for implementing some of the (fiscal) changes that have been suggested,” said Musukwa.
“To that effect, I also wish to inform this gathering that government will not take kindly to any form of arm-twisting on the part of the industry with regard to their obligations. Zambia is open to investment. However, government’s expectation is for the investors to operate within the confines of the law! Failure to do so will result in government imposing sanctions and disengaging with the unwilling partners who don’t want to cooperate with government and the people of Zambia.”
The ninth successive ZIMEC indaba closed, Friday, and was held under the theme: “Creating an attractive investment framework to catalyse Zambia’s mining & energy sectors.”