Chinese mining firms decide not to halt operations in Zambia

BEIJING (Scrap Monster): The Chinese Ambassador to Zambia Yang Youming on Friday announced that the firms operating in Zambia will not halt mining operations on account of higher mining tax announced in 2015 national budget. He stated that the country will continue dialogue with Zambian authorities. He further added that halting operations will not be the best manner to tackle the situation.

The Zambian parliament had approved a new mining tax plan proposed during the national budget for the year 2015. According to the new plan, mineral royalty taxes for underground mines will be increased from 6% to 8%, whereas those for open pit mines will be raised to 20%.

Many mining majors had threatened to close down mining operations. The Canadian mining major Barrick Gold Corporation had announced that it would be forced to suspend operations at Lumwana Copper Mine in northwestern Zambia upon introduction of new tax rule. According to the company, the rising costs make it unprofitable to carry out mining operations in the African nation. However, the Zambian government believes that the new law has helped to create a win-win situation for both parties.

Meantime, the Chinese firms expressed the hope that an amicable solution will be reached at the earliest. The firms have already initiated consultations with government officials.

The representative body of foreign mining firms- The Zambia Chambers of Mines however expressed fears that the implementation of the new tax scheme would make more number of operations economically unviable, thereby leading to further mine closures. It anticipates job loss of around 12,000. Also, the new policy may see the country’s copper production declining by nearly 158,000 tons.