Zambia expresses its willingness to engage in dialogue with miners on tax increases

SMM, Oct. 8: Zambia's Ministry of Finance said Sunday it is willing to talk to mining companies about the government's plans to raise mining taxes.

Big miners such as First Quantum, Glencore (Glencore) and Vedanta Resources (Vedanta Resources) often criticize the Zambian government for raising its operating costs.

"We are still willing to engage in dialogue with mining companies that are willing to discuss amicably and transition to a new mining tax system," Minister Margaret Mwanakat (Margaret Mwanakatwe) was quoted as saying in a Treasury statement. "

A tax policy review committee will be appointed to deal with technical issues related to tax reform, and the Zambian Ministry of Mines has taken note of criticism from the Zambian Mining Association, the statement said.

The mining association said this week that some companies had cancelled expansion plans for tax increases and that copper production in Zambia was likely to fall.

The tax increase is part of a government effort to reduce the fiscal deficit as a share of gross domestic product (gdp) from 7.4 per cent this year to 6.5 per cent in 2019.

Mining accounts for more than 70 per cent of Zambia's foreign exchange earnings.

In recent months, concerns about Zambia's rising debt, coupled with allegations of implicit borrowing and government corruption, have unnerved investors and western donors.

Because of Zambia's debt problem, the International Monetary Fund (IMF) shelved discussions on the aid package. According to IMF, Zambia's debt is unsustainable.