Continental and Regional Mining Sector Analysis and Zimbabwe's Positioning

Oct 20, 2014
Kwame Mutumbanje

Zambia
Zambia Africa’s second largest copper producer, will raise underground mining royalties to 8% from 6% as part of major overhaul to the industry’s tax system, Finance Minister Alexender Chikwanda said in his 2015 budget speech. Open pit operations were also awarded a tax increase of upto 20% in a bid to get more tax from companies like Barrick Gold, Glencore.

The African nation, which last year lost its position as Africa’s top copper producer to Congo for the first time since 1998, has been withholding $600 million in VAT refunds owed to mining firms, after companies failed to produce import certificates from destination countries.

So far Glencore and First Quantum have taken measures to step up pressure on the government.

Last week the commodities trader and mining giant idled operations at its Zinc mine and cancelled $800 million worth of copper projects in the country. First Quantum, which operates the Kansashi Copper Mine, Zambia’s largest but output, said in June it had put investments worth $1,5 billion on hold over withheld funds.

Democratic Republic of Congo
DRC- well known for its vast mineral wealth, long standing civil war, corruption, policy discoed has threatened investors away. In June 2004, the Canadian Adastra Minerals acquired the right from DRC Ministry of Mines to exploit the tailings. In February 2006 it was reported that Adastra was putting together the financing to build a tailings recovery plant. At that time, Adastra was facing hostile takeover bid from the larger First Quantum Minerals (65%), with Gecamines mines and institutional investors having minority share.

In August 2009, DRC government revoked First Quantum’s license due to dispute over renegotiating the contract. First Quantum stopped operations in September 2009, throwing about 700 people out of work. First quantum had spent$750 million on acquiring and developing the property. First Quantum took out an auction against the DRC government in the International Chamber of Commerce Court of Arbitration.