Zambia pricing itself out of global mining market -industry body

According to Mining News Pro - Africa`s No.2 copper producer plans to introduce new mining duties, replace value-added tax (VAT) with a sales tax and increase royalties, from January, to help bring down mounting public debt.

Mining accounts for more than 70% of Zambia`s foreign exchange earnings and companies operating in the southern African nation include First Quantum, Glencore and Vedanta Resources.

"The proposed regime will result in over 58% of Zambia`s copper producers being in a loss-making position at current prices," Zambia Chamber of Mines` President Goodwell Mateyo told a news conference.

The government estimates that mining tax revenues will rise to $1.3-billion next year following the tax increases, from $800 million this year. The chamber, however, expects revenues would rise to only around $840-million, Mateyo said.

The government still owes mining firms around $550-million to $600-million in VAT refunds, which the revenue authority has promised to pay by next year, Chamber CE Sokwani Chilembo said.

Concerns about Zambia`s rising debt, alongside accusations of additional hidden borrowing and government corruption, have spooked investors and Western donors in recent months.

The International Monetary Fund has put on hold talk about an aid package due to Zambia`s debts, which it describes as unsustainable.