SMM, 7 Dec: (DRC) increases in mining taxes and royalties in Zambia and the Democratic Republic of the Congo are creating an atmosphere of uncertainty, according to Jonathan Barnes, an assistant adviser to the international metals and minerals research institute Roskill copper.

Despite the rich reserves of the copper belt, the positions of the governments of Zambia and the Democratic Republic of the Congo on taxes and royalties, as well as operational difficulties, have created a difficult environment for existing miners and investors who are planning potential projects.

Zambia's finance minister, Margaret Mwanakato (Margaret Mwanakatwe), said last September that the country would impose a new mining tax and raise royalties to reduce the budget deficit. Joseph Kabiyra, President of the Democratic Republic of the Congo, signed a new mining law in March, raising royalties and taxes for mining companies and making them law. The new mining method increases the royalties for copper from 2% to 3.5%.

Mr Barnes points out that copper prices are low and that the economies of Zambia and the Democratic Republic of the Congo are largely dependent on taxes from copper mining. "it is not helpful for these countries to raise taxes and royalties at a time when copper prices have not yet reached levels where the industry can 'afford' these extra expenses."

He warned that investors would consider prospects in an environment more conducive to mining. He said investors would avoid the risk of an investment environment because the government would take the opportunity to raise taxes and royalties in the face of a shortage of resources.

"if Zambia and the Democratic Republic of the Congo fail to promote and develop the growth needed by the copper industry, other countries will seek to meet this demand," Barnes concluded. "