Zambia: The tone is rising between President Lungu and mining operators.

The introduction of the new mining tax in Zambia, announced for 1 July, continues to generate tensions.

In fact, the new tax, intended to replace the value-added tax, is causing considerable concern within the mining community, with several operators – including the Vendata and Glencore groups – warning against the risk of job losses in the sector. An opposition that Zambian President Edgar Lungu swept aside, with the head of state excluding this tax reform project from being revisited. « Sales tax will be applied and VAT will disappear. Those who disagree will leave, » the president warned last Friday in Ndola, a town located in the Copper Belt, 300 km north of the capital Lusaka. « Too much is too much, » he concluded, « people are tired and we don’t scare investors because others will come.

Share of copper mining revenues in Zambia’s export earnings
($9.71 billion in 2017). Source : UN COMTRADE.

As a reminder, the Zambian government announced in September 2018 its intention to increase taxes on mining (from 3% to 9%), as the country was seeking to cope with financial difficulties ($8 billion, or 34% of GDP). « Mineral resources are destined to run out one day. It is essential to structure an effective tax regime for the mining sector to ensure that Zambians benefit from the mineral wealth that our country has, » Zambian Finance Minister Margaret Mwanakatwe told parliamentarians at the time.
Copper revenues represent 71% of Zambia’s export earnings, which is the second largest African producer after the DRC.