What a Result!

President Levy Mwanawasa of Zambia has announced the cancellation of all tax concessions for copper mining companies operating in Zambia, saying they were ‘unfair and unbalanced’ and that in their place ‘The government has, therefore, decided to introduce a new fiscal and regulatory regime in order to bring about equitable distribution of the mineral wealth.’

The change is dramatic. Without them mining firms would have earned US$4 billion in the 2008/9 financial year but would only have paid tax of US$300 million. Revenue is expected to rise to US$650 million after the change.

So, Richard Murphy supports governments unilaterally breaching contracts, does he?

Zambia signed legally-binding development agreements with various mining firms to pay fixed taxes for periods ranging from 15 to 25 years at time when copper prices were low at the international market.

Gosh, that\’ll be good for future business investment in Zambia, won\’t it?

3 comments on “What a Result!

  1. They only have to wait a while before another company comes along with a CEO more interested in his short-term bonuses than the long-term interests of his shareholders. That’ll be almost all CEOs, I suspect.

  2. Zambia was doing so well, too, compared to Zimbabwe. Now we get to witness the stereotyped decline of a third world kleptocracy into renewed poverty, famine, and disease. Again. And again.

    This is only the beginning, deami. It’s all downhill from here.

  3. I am tracking this development in detail via a blog on the website http://www.minewatchzambia.com
    If you want detail on why Zambia is absolutely right to rip up the Development Agreements (and it’s not yet clear that’s what they are doing – the Finance Minister is probably on his feet offering more detail as I type this) have a look at the original report ‘For Whom the Windfalls?’ also available on that site.

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