UPDATE 1-Zambia sets mining royalties at 9 pct - presidency source

Tue Apr 14, 2015 6:16am EDT
 
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By Chris Mfula

LUSAKA, April 14 (Reuters) - Zambia has proposed to set its mining royalties at 9 percent for both open-pit and underground mines, a source in the presidency said on Tuesday, in an attempt to prevent looming job cuts and mine closures.

Zambia's decision to increase royalties for open pit mines to 20 percent from 6 percent and those for underground mines to 8 percent from 6 percent in January had rattled unions and miners, forcing the government to review the plan.

Global mining firms running mines in Africa's second-largest copper producer had expressed concern that the new royalties could harm their earnings, and some warned of shaft closures that could have led to the loss of about 12,000 jobs.

"We are reverting to the 2014 mining tax regime except that the mineral royalty will now be at 9 percent across the board," the source told Reuters.

Zambia's cabinet had approved the proposed changes at a meeting on Monday.

The proposed changes to the mining royalties came about after Zambian President Edgar Lungu last month directed the finance and mining ministers to amend them by April 8, saying the southern African nation could consider temporarily reverting to the tax regime that prevailed in 2014.

Zambia's cabinet will discuss details of the proposed changes on Monday before they are presented to parliament for approval at a later date that was not immediately disclosed.

Some of the foreign firms running mines in Zambia include Glencore, Barrick Gold Corp, Vedanta Resources and Canada's First Quantum Minerals. (Editing by James Macharia)