A truck travels underground to collect ore at the Chibuluma copper mine. Photo: Reuters

INTERNATIONAL – Zambia’s proposed mining tax increases will hit mineral exploration and production in Africa’s second-biggest copper producer, companies involved in exploration said on Tuesday.

Zambia plans to introduce new mining duties, replace Value Added Tax with sales tax and increase royalties to help bring down mounting debt, its finance minister said while delivering the 2019 budget speech last month.

The Association of Zambian Mineral Exploration Companies (AZMEC) said in a statement the measures proposed in the budget would not help the growth of the nation’s mining sector.

Mineral exploration is an inherently high cost and high-risk activity, AZMEC President Geoffrey Mulenga said.

He added that no new viable copper discoveries had been made in Zambia over the past decade.

“Dramatically increased exploration activities are now required, more than ever, if Zambia is to remain a leading copper producing nation,” he said.  

Without new mineral discoveries, Zambia’s mining industry would continue to stagnate and ultimately contract, hitting tax collection, employment and export revenue, he said.

Mining firms represented by Zambia’s chamber of Mines have opposed the proposed tax. The chamber has said that some companies had scrapped expansion plans because of the higher mining taxes, but did not name them.