Development Agreements to be scrapped and replaced by new mining law

Following Wednesday's report that the Parliamentary committee had objected to the poor qulity of evidence on the new mining regime offered by Finance Ministry officials, today the Times of Zambia reports that Ministry officials have been back in Parliament and have offered more detail on the legal and financial provisions by which reforms will proceed.

Acting Secretary to the Treasury, James Mulungushi, giving evidence to the expanded parliamentary committee on estimates, chaired by Itezhi-Tezhi MP, Godfrey Beene, said a new mining regulatory law will be proposed which will, among other things, remove the requirement to enter into Development Agreements. Section nine of the Minerals Act will be proposed for amendment by repeal and replacement. "The new mining regulatory regime will, therefore, do away with the requirement for Development Agreements," he said.

Attorney-General Mumba Malila, also giving evidence to the committee said, "We hope the mining companies will understand where we are coming from. We want to handle this amicably." Mr Malila said the DAs could not stop the Government from making a law and said all the good things in the DAs would be captured in the law. He said in an event where the mining companies dragged the Government to court, Government was ready to proceed and defend its position.

He said the legislative committee looking into the new tax regime in the mining sector had completed the draft report, which would soon be presented to Parliament for enactment.

Dr Mulungushi also told the committee that additional revenues expected as a result of the new measures were U.S.$415 million and the estimates were based on a projection of $3.2 per pound and annual production of about 600,000 metric tonnes. Dr Mulungushi said the Government proposed that the revenues to be raised be set aside in a special account, which would also act as some form of stabilisation fund. He said this was necessary in order to avoid serious macro-economic implications such as damage to the non-copper export sector as a result of exchange rate appreciation." Additionally, setting aside the revenues in a special account will smoothen expenditure because mineral revenues tend to be more volatile and uncertain than other revenue types," he said. Dr Mulungushi said the resources in the special account would be utilised in accordance with the normal transparent procedures in consultation with Parliament.

Dr Mulungushi said the special account would be a permanent feature in which all mining revenues should be deposited and the amounts to be utilised in the annual Budget would be determined and agreed with Parliament. Earlier, Dr Mulungushi asked the committee if it could allow his team to sit in camera, taking into consideration that the matter to be discussed was sensitive, critical and highly technical. But Mr Beene said the committee allowed the media to cover the sitting as the issue being discussed had already been brought to the attention of the public by President Mwanawasa in his address to the House and Finance and National Planning Minister, Ng'andu Magande in the Budget.