Zambia to Halt Issue of Mine Rights During Review of Rules

  • Announcement comes after mining act took effect in July
  • Indefinite suspension will be lifted once revision complete

Zambia suspended the award, renewal and transfer of mining rights while the government scrutinizes the regulatory framework for new legislation, the latest in a series of abrupt changes for the industry.

Lawmakers in July approved the Mines and Minerals Development Act, which revised royalties to 6 percent for underground mines and 9 percent for open-cast operations. The law was enacted Aug. 14, according to the Chamber of Mines.

The royalty cuts were deeper than initially proposed for underground operators and replaced a tax system introduced in January, after miners warned they would have to cut costs by shutting plants and shedding jobs.

The “initial policy shock and U-turn have had an overall negative impact on business and investor confidence,” Fitch Ratings Ltd. said on Aug. 21.

Zambia, Africa’s second-biggest copper producer, has been hit by a slide in the price of the metal to an almost six-year low. Miners are also grappling with power shortages as water levels decline at hydropower dams that the country relies on for more than 90 percent of its generation.

“The suspension, we assume, would be taken to give the ministry time to align its procedures to the new law,” Chamber of Mines Chief Executive Officer Maureen Jangulo said in reply to e-mailed questions Tuesday.

The government will resume issuing mining rights after completing the review of related regulations and procedures, Mines Minister Christopher Yaluma said in a statement published in the state-owned Zambia Daily Mail on Monday. He didn’t provide a timeline.

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