Govt clarifies mines taxes - companies irritated at World Bank

An article in the Canadian publication, the National Post, suggests the Zambian Government has provided additional clarification on how its revised mines taxes will work. Presumably this refers to the 'practice note from the Zambian Revenue Authority' that some companies claimed to be waiting anxiously for, as reported in last week's blog. The article claims that the clarification is 'bad news for the companies' and also suggests that the companies believe the World Bank is heavily involved in the negotiations, and is politically supportive of the government, against the companies' interests.

The artice claims that First Quantum is still prepared to turn to international arbitration if discussions with the government and the World Bank do not go well. It quotes TD Newcrest's Greg Barnes: "We believe that the World Bank has been encouraging the Zambian government to increase its revenues from the mining sector via increased taxes and royalties," he wrote. He cut his target on First Quantum to $85.00 from $100.00 and maintained a "hold" rating.

Barnes' argues that the government has not been clear on whether Equinox Minerals 'greeenfield' development at Lumwana would be exempt from the new taxes. I think it has and the answer is no. But maybe he knows about some background negotiations that I don't.