Mines Minister in Africa’s second largest copper producer, Zambia, said the state will not be arm twisted by using workers as sacrificial lambs in the mining tax saga. The Honourable Minister Richard Musukwa assured the nation that jobs will be preserved. This was established in a morning interview on Kwacha Good morning Zambia program on 22 Dec.
Zambia’s MinFin proposed an increase in the 2019 mining taxes by 1.5% for mineral royalty across the spectrum with a 10% tax if the price of copper exceeds $7,500/mt. The MinFin also proposed a shift to sales tax from a value added tax system effective 01 April 2019.
Negotiations between the Chamber of Mines and the MinFin have not yielded any results and as such mining houses have resorted to laying off staff offset operational cost. The chamber of mines in a statement in the week said the new tax would increase effective tax rates by between 86% – 106% which would make over 50% of mines in Africa’s copper producer unprofitable. First Quantum Mining – FQM said its operational costs would rise 20% and that throughput production would decline significantly. To this effect mines would remain profitable on condition that it leans staffing by over 1,000.
The Zambian government through the Home Affairs Ministry retaliated by threatening to revoke work permits of mine management if the implement job cuts.
“Government is open for discussions and mining houses must mirror their cost profile with the new mining tax profile. The mines need to put up numbers to justify their causes because numbers clearly don’t lie,” The Mines Minister said.
“Workers being sacrificial lambs is a matter that the state will not entertain. We have indicated that if the mining company are serious about cost saving measures the should start with expatriates who are so much in numbers at the expense of Zambians,” Musukwa said. Any layoffs will need clearance from the mines ministry after financial models are shared. These are just schemes by mining houses claiming that they are making losses, he said.