Mining companies operating in Zambia have not replied to government requests to show the impact of higher taxes introduced this year despite objecting to the new framework, Reuters reported Jan. 3, citing a senior government official.
Permanent Secretary for Mines Paul Chanda said the ministry asked mining companies to provide financial models to assess the impact of the new taxes on production and profitability by Dec. 28, 2018, but none of them did so.
Chanda said, "[T]wo mining companies have written to us asking us to give them more time but we haven't heard anything from the others."
Glencore PLC, First Quantum Minerals Ltd., Vedanta Resources PLC and Barrick Gold Corp. operate in Zambia.
The country increased its sliding scale for royalties of 4% to 6% by 1.5 percentage points and introduced a new 10% tax when the price of copper exceeds US$7,500 per tonne to help tackle debt.
Additionally, Zambia plans to substitute value-added tax with a sales tax by April, according to the report.
In December 2018, the Zambian Chamber of Mines warned that the country's recent tax increases for the resources sector may lead to about 21,000 job losses and US$500 million in capital expenditure cuts over the next three years as mining companies would be forced to substantially scale back operations.