ZERO IMPORT DUTY ON COPPER CONCENTRATES
Zambia has a mining history that spans over 100 years. Mining continues to play a major role in the economic development of the country, with copper being approximately 77% of total exports.
Consequently, it is always predictable that the country’s budget contains fiscal and monetary reforms relating to the mining sector. The 2021 national budget was no exception.
The Minister of Finance, in favour of the mining industry, proposed to remove the 5% import duty on copper ores and concentrates of HS Code heading 2603.
The proposal seems to be aimed at addressing the negative impact of the preceding mining tax amendments, which not only affected future operations or plans for mining companies due to rises in procurement costs, but also created a sense of an unstable mining tax regime.
An indication that import duty on metal concentrates would be removed was first made on Friday 27 March, in an official statement which announced the removal of export duty on precious metals, although the statement did not give the date on which the tax relief will become effective. The objective at the time was to ease the pressure on copper and cobalt producers during global lockdowns imposed to halt the spread of COVID-19 and sharp declines in commodity prices.
The newly proposed measure will undoubtedly stimulate local processing of copper ores and concentrates and ultimately enhance the mining sector value chain.
Other than the import duty on copper ores and concentrates, no other substantive tax changes in relation to the mining sector have been logged in the nation’s ZMW 119.6 billion purse proposed. Therefore, the current taxes applicable to the sector will continue to apply. However, the following sector policies are worth highlighting:
- Government, through ZCCM-IH plc, has established Zambia Gold Company Ltd to spearhead gold mining and trading activities in the country. This is in light of Government’s objective to create a diversified and export-oriented mining sector;
- Government, through ZCCM-IH, is in negotiations with Glencore to acquire a majority stake in Mopani Copper Mines; and
- Government is actively working towards finding a strategic investor to improve operations and production at Konkola Copper Mines (KCM) following the commencement of liquidation proceedings at KCM.