Mining companies respond to new tax regime

The Post reports today the response of a number of mining executives to the new tax fegime announced on Friday.

The most interesting thing about the responses is that they suggest the companies had not been consulted about the changes, let alone involved in negotiating the detail. This analysis accords with reports arriving with MineWatchZambia that Norwegian advocates brought in by the government to assist in negotiations with the companies have not yet sat down with mining executives. This suggests how far the debate has moved on in the last year and positive impact of campaigns in Zambia for a re-working of relations with multinationals in bolstering the government's position. The government looks like it is doing the one thing mining companies and foreign donors were initially determined to prevent, and which senior civil servants told me during research interviews for the For Whom the Windfalls? report that they would avoid: a unilateral action by government to overrule development agreements, rather than a re-negotiation of the contracts with the companies.

The Post suggests that Luanshya Copper Mines (LCM) chief executive officer Derrick Webbstock said it is understandable that Zambians needed to benefit from mineral resources revenue.Webbstock told The Post that, "We accept the President's announcement. We are not here for confrontation or to argue with government, but it is a pity that we were not consulted before."

Lumwana Mining Company corporate affairs manager Nathan Chishimba said the government should ensure that the new mining taxes must not work against further investment in the sector: "Government is right to put up changes to the mining tax regime to secure more benefits for the country... But as government seeks equitable systems of benefiting from the mining sector, it is important to ensure a balance between the benefits and also to ensure the investment climate remains favourable and we hope this development will not work against further investment in the sector."

No comments have yet been heard from the two biggest mining houses. The Post was unable to reach MCM executives while KCM communications advisor Sam Equamo said the mining giant was still consulting before a comprehensive statement could be issued on the matter.