Zambia is unlikely to collect a projected $415 million from new mining taxes this year because of disruptions in power supply, which cut production in the copper and cobalt mines, a senior official said.
The new tax regime, which came into effect on April 1, increased mineral royalty to 3 percent from 0.6 percent, while corporate tax on miners rose to 30 percent from 25 percent.
Zambia also introduced a 15 percent variable profit tax on taxable income above 8 percent and a minimum of 25 percent windfall profit tax.
The first money of the projected $415 million this year will start coming in June, said Emmanuel Ngulube, permanent secretary in the Ministry of Finance.
But, the power outage is a big challenge because it will indeed affect the production of the mines. Therefore we expect the revenue to reduce, he said.
Zambia has a power deficit of about 250 megawatts and this led state utility Zesco Ltd to ration power due to rising demand for electricity from the copper mines.
Derek Webbstock, the chief executive of Luanshya Copper Mines, which operates Baluba copper mine and Chambishi Metals Plc, Zambia's leading cobalt producer, said the company lost $5 million after the two power failures in January.
Industry officials said they stopped operations at some mines in the mineral-rich southern Africa country to avoid endangering lives of miners and damaging equipment.
The power outages also caused partial flooding at mines as water could not be pumped out.
Miners said the new tax would discourage investment in the sector, a major employer and foreign exchange earner for Zambia.
Frederick Bantubonse, the head of the Chamber of Mines of Zambia, said mining companies might also face problems raising capital for mine upgrades and expansions.
Konkola Copper Mines, a unit of London-listed Vedanta Resources Plc
Ngulube said none of the mining companies had taken the government to court over the new taxes.
(Editing by Phumza Macanda and Christopher Johnson)
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