Zambian Parliament Approves New Royalty Regime To Support Copper Industry

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The Zambian Parliament has recently approved a new royalty regime for the copper industry.

The approved royalty’s structure was previously announced by the Zambia Chamber of Mines (ZCM) in February 2016 .

It would be effective for all operations started in April 2016 and awaits final approval by the Zambian President Edgar Lungu.

The bill establishes royalties of 4%, 5% and 6% that vary depending on the international copper price.

It seeks to boost the government profits when prices are high while supporting the flow of activities in the copper industry when the prices are low, Zambia’s Minister of Information Chishimba Kambwili explained.

According to the new regime, the lowest royalty applies when copper prices are below USD 4,500 per tonne while the highest one applies when prices are above USD 6,000 per tonne.

A royalty of 5% applies when the copper price fluctuates between both values.

In addition, the Zambian cabinet approved a suspension of a 10% duty on exports of ores and concentrates of materials that cannot be processed in Zambia, Bloomberg reported.

Zambian lawmakers also removed a variable profit tax on income from mining operations while kept unchangeable the corporate tax rate at 30%.

The new structure is encouraging for the Zambian copper industry, however, more is needed to ensure long-term competitiveness as a country, the President of ZCM Nathan Chishimba added.

Zambia is one of the main copper producers in the world with 711,515 tonnes in 2015.

The Sub Saharan country ranks second in Africa behind the Democratic Republic of Congo (DRC) with a production of 905,000 tonnes in the same period.

In the world, Zambia ranks 8th within the top 10 producers of copper with Chile heading the list.

According to the ZCM, since the year 2000 the copper industry has helped Zambia to keep GDP growth rates from 7% to 10%.

The Zambian copper industry has received more than USD14bn in Foreign Direct Investment (FDI) in the last ten years according to the same source.