13 February 2008
Ndola — A MINES expert and the Mineworkers Union of Zambia (MUZ) have urged the Government to go ahead and enact a new mining regulatory law that will ensure that the new tax regimes for the mining industry becomes a reality.
And Finance and National Planning minister Ng'andu Magande has maintained that the Government will not back-pedal on its stance on the new tax regimes.
"We don't consult tax payers. The position in the mine stands," Mr Magande said in an interview yesterday.
University of Zambia (UNZA) head of mining engineering department Mathias Mpande and MUZ president Rayford Mbulu said in separate interviews that Government should not relent in its effort to ensure that Zambians got a fair share from the mines.
Dr Mpande said that the Development Agreements (DAs) that the Government had entered into with the mines after privatisation were illegal.
He said that at the time the agreements were entered into, the Mines and Minerals Act did not have provisions for such agreements.
Dr Mpande who is a former deputy Mines minister, said the amendment to the Mines and Minerals Act to facilitate DAs was only done when it was observed that the law had been contravened.
He said the Act was amended after the DAs had already been signed, a move that was illegal.
Major mining companies in Zambia and the Chamber of Mines of Zambia have rejected the new tax regime for the mining industry arguing that they were not consulted and have threatened legal action against the Government.
The Government recently revised the tax regime for the mining industry by raising mineral royalty tax to three per cent from 0.6 per cent.
The Government pegged corporate tax at 30 per cent and introduced windfall taxes to be triggered at different price levels.
Dr Mpande said the Government should revert to the old Mines and Minerals Act, which did not recognise the DAs and ensure that the new tax regime was entrenched in the Act.
"There was an amendment to cover the illegality. This was a fraud to the Zambian people," he said.
Dr Mpande said mineral legislation was dynamic and there was nothing wrong for the Government to nullify the agreements.
"There is no way mineral agreements can be cast in stone. It is wrong for any one to say the agreements can not be violable," he said.
Dr Mpande said the cost factor was an important aspect in determining the mineral royalty tax.
Dr Mpande named the costs involved as infrastructure, exploration, energy and human capital.
He said in the Zambian scenario the majority of the costs were being borne by the Government.
And Mr Mbulu said that it was very regrettable that the mining companies were now threatening the Government with legal action.
He said the move by Government to introduce the new tax regimes, which would be effective April 1, was long overdue.
"The Government has made a right decision. The communities where these companies have been operating from have not benefited from the mines. This is a timely decision," he said.
He said Liberia recently concluded the negotiations without taking legal action while Uganda, Tanzania, Nigeria, Guinea and the Democratic Republic of Congo (DRC) were in the process of re-negotiating.
Mr Mbulu said the circumstance had now changed as copper prices were fetching higher prices on the international market as compared to the time when the development agreements were entered into.
Mr Mbulu urged the mines to engage the Government into re-negotiations.
He said it was the union's position that no mining company can pull out as they had put up substantial investments while at the same time making huge profits.
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