Mining companies 'coming round' to new taxes

Bloomberg report that Kalmoba Mwansa, Zambia's minister of mines and mineral development believes that companies that resisted increased taxes are "coming around'' after talks with the government, he said.

"We're holding a dialogue to make sure they understand,'' Mwansa said in an interview from Toronto, declining to name companies protesting the increase. "It was a failure on their part to understand how it would affect them. I don't think there will be a confrontation with us.''

"The industry has now been revived, and I don't think there should be the same tax regime,'' Mwansa said. "Things have changed. People from Zambia can share in the wealth.''

Mwansa estimates the nation's mines will produce about 606,000 metric tons of copper this year, 800,000 tons in 2009 and as much as 1 million tons in four years. The mines had 520,000 tons of production last year, Felix Nkulukusa, Zambia's chief budget analyst in the finance ministry, said in the interview.

Zambia's government isn't concerned the higher taxes will drive companies to scale back investments in Zambia in favor of neighboring Democratic Republic of Congo, which has a 10th of the world's copper reserves and more than half its cobalt, Mwansa said. Other companies in the region are also looking to raise taxes, he said, declining to name any.

"Taxes can't scare anyone'' Mwansa said. "What should scare people is instability, and we are stable and predictable. The reality in the neighborhood is that countries will revisit their contracts to get a bit more.''