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Friday, 30 May 2008

Lumwana & The New Mining Tax, revist'd.....

The National Post appears to agree with the position discussed here that Equinox believes that the Lumwana DA, which contains a copper price participation clause, also protects it from the new windfall tax.

Update: Reuters reporting that RBC Capital Markets regard the new regime as "very negative" for mining companies. Noting that First Quantum (owners of Kansanshi) and Equinox still believe their DAs should take precedence.

6 comments:

  1. From the Reuters article:

    Phillips pointed out the act states that all existing agreements will cease to be binding.

    So while Equinox and First Quantum have a moral/economic case, keeping their DAs in place is legally impossible.

    The only option is to sign new ones or renew the old ones or something.

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  2. It is definitely illegal...

    But if the government does not enforce it......it may be up to ordinary Zambian citizens to bring private lawsuits..

    It may well come down to that...though there's no precedence that I can remember...reasonable governments always follow their own laws...and seek to enforce them...

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  3. It is definitely illegal...

    It's illegal unless they sign a new one.

    If the existing agrements cease to be binding, the easy move is to sign a new agrement.

    That said, there could be litigation depending on the content of those existing agrements. As you said "reasonable governments always follow their own laws and seek to enforce them".

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  4. I have to take a closer look at the mining bill...it does I think leave room for new agreements...it certainly does not appear to rule out future one....though MrK would be quick to point that any DAs are illegal under Zambian law, unless approved by Parliament....apparently only Parliament can set tax legislation... In any case the whole point of the legistlation was that this should be the clear and transparent framework that replaces existing DAs.....it would be political difficult for government to sign a separate one...

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  5. though MrK would be quick to point that any DAs are illegal under Zambian law, unless approved by Parliament....apparently only Parliament can set tax legislation... In any case the whole point of the legistlation was that this should be the clear and transparent framework that replaces existing DAs.....it would be political difficult for government to sign a separate one...

    Why would it be difficult ?

    You think they'd be resistance from the parliament if the new recently-opened mines argue that it's unfair to expect them to contribute as much as established, amortized operations ?

    ReplyDelete
  6. Most Parliamentarians favour government led ownership of these things. If a new mining starts and runs away after, some would see that as a good thing. lol!

    ReplyDelete

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