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Thursday, 5 September 2013

Are the Development Agreements making a return?

Zambia might consider tax breaks or incentives to mining companies to discourage them from scaling down capacity due to poor performance of copper prices and rising production costs, particularly for underground copper mines.

Mining companies hit by the sluggish performance of the red metal are holding talks with the Zambian government, which has said it will consider miners’ cases on merit. Mines Minister Christopher Yaluma recently Metal Bulletin that companies facing viability problems are making submissions to government to help ease their plight. Yaluma said that government would be flexible when addressing concerns affecting copper production.
“For most underground mines, production costs have been going up, at a time when the price of copper has not been doing well. We have to look at this situation and see how we can assist...We will decide whether to give tax breaks or concessions or any other form of incentive which can encourage them to produce more. But we also have to look at their performance data, we are looking at a trend spilling over the past six months and whatever proposal each individual companies makes to us, it has to be backed with production data". (Source : Metal Bulletin, August 2013)
Is this even legal? I thought the Mines and Minerals Development Act, 2008 forbids creation of "case by case" development incentives? May be the law was changed. In any case, we fought the Development Agreements for many years. Now Yaluma wants to bring them back. I can't understand how our country operates. I have always said the lack of Parliamentary oversight in Zambia on mining policy is our undoing. We are our own enemies. When are we going to embrace transparency?

 Chola Mukanga | Economist 
Copyright © Zambian Economist 2013

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