The mining industry in Africa’s red metal producer will finally earn tax deductibility on mineral royalties for corporate tax purposes as proposed by the MinFin head Dr. Situmbeko Musokotwane in the estimates of revenues and expenditure for 2022.
“Madam Speaker, to attract investment and boost production in the mining sector, I propose to re-introduce the deductibility of mineral royalty for corporate income tax assessment purposes. This measure is in line with international best practice. The revenue loss from this measure is projected at K3.2 billion,” Dr. Musokotwane said.
For a long time the mining tax regime in the Southern African nation has constrained growth in the sector resulting in weak exploration investment propensity that saw the Democratic Republic of Congo (DRC) surpass Zambia in copper production. With rising copper prices on the London Metal Exchange (LME), the proposed change in the tax regime that will make Zambia more attractive investment destination. Global decarbonization efforts aligned to a green agenda continue to drive industrial commodities higher as the world gears up for the electric car era and other renewable energy projects that will require more copper, lithium and cobalt.
Within a decade, Zambia is expected to scale copper production to 3 million metric tons. The Southern African nation is in the middle of addressing fragilities in the sector bordering on investors perception following the controversial take over of Vedanta’s Konkola Copper Mines (KCM) by the state in 2020. Other key concerns include capitalization of Mopani Copper Mines (MCM) and actualization of key pipeline projects while exploration continues.
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