Mar.8 (Reuters) - Zambian President Rupiah Banda ruled out windfall taxes for mining companies currently enjoying record copper prices, saying on Tuesday that changing the rules for foreign investors was plain bad business.
With an election looming in the next six months and copper at $10,000 a ton, Banda is under pressure to maximize revenue from the sector, but said he would not be lured into a move that would damage the southern African country's long-term prospects.
"There are agreements between us and the companies. When they come, we agree to the ground rules for them to be there," he told the Reuters African Investment Summit in Johannesburg.
"It is not good for business to keep shifting just because the prices have changed. We have got to have principles and lines which we are going to follow."
Copper fell to below $3,000 a ton in late 2008 -- shortly after Banda came to power -- but has since recovered sharply on the back of a resumption in demand from resource-hungry Asian economies, most notably China and India.
It hit a lifetime high of $10,160 on Feb 14.
"The issue of windfall tax is a major issue. Everybody is talking about it in the country. The opposition are hoping to use it as a major tool against me but I think we will be able to explain it to the people," he said.
Banda also said a tax audit of mining companies conducted under the umbrella of the Extractive Industries Transparency Initiative, a voluntary minerals code, should allow the government to recover more than $200 million in unpaid dues.
"We have done an audit of three mines and that is going to bring us more money after the audit," he said. "From one or two of these companies we already have in excess of $200 million."
Zambia is Africa's biggest copper producer, with annual output of around 800,000 tons.
Exports of the metal account for 70 percent of foreign exchange earnings, although the kwacha currency's close links to the copper price are being diluted by the growing influence of flows into Zambia's short-term debt markets.