By Nicholas Bariyo
KAMPALA Uganda--Zambia's newly elected president has directed
the state tax body, Zambia Revenue Authority, to "expedite" talks
with miners and "promptly" resolve the impasse over the new mining
tax regime, the presidency said on Tuesday.
President Edgar Lungu said in his maiden address to cabinet that
he wants an amicable settlement to the standoff over the royalty
regime, as well as outstanding tax rebates to ensure the smooth
running of the mining industry.
The development comes as a major relief to miners operating in
Africa's second-largest copper-producing nation, currently
struggling under the burden of falling global copper prices. A
successful resolution to the standoff could stop more than 10,000
mine workers losing their jobs, as well as the closure of Barrick
Gold Corp.'s Lumwana copper mine.
"The ultimate aim is to protect jobs and keep mines profitable
at the same time.," Mr. Lungu said in a statement.
In January, Zambia starting implementing a new tax regime,
requiring open-pit mines to pay as much as a 20% royalty on their
revenue, up from 6% while underground mines would pay 8%
royalties', up from 6%.
The new tax regime has drawn the ire of mine investors,
prompting companies such as Glencore PLC and First Quantum Minerals
Ltd. to shelve expansion projects. Zambia has also been embroiled
in a separate row with the miners, over tax rebates, amounting to
$600 million.
Last week, Mr. Lungu won Zambia's tightly contested presidential
election, with around 27,000 votes, one of the narrowest wins in
the country's electoral history. He has since pledged to protect
jobs in the mining industry.
Rayford Mbulu, Zambia's deputy labor minister, told The Wall
Street Journal on the eve of the voting day that government had
opened talks with miners, signaling the possibility of a compromise
over the spat, that has been threatening to hobble the mining
industry, the main stay of the Zambian economy.
"I want to see increased dialogue and increased flow of
information that in fact we have been talking to the mine owners
over these matters." Mr. Lungu said.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
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