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Evoked Tax Incentives –No Harm on Zambia’s investment potential, says report

Recent adjustments made by the Zambian Government on mining incentives given to multinational companies operating in the Southern African and Africa’s top copper producer will not harm the country’s desired investment growth in the sector, a report says.

Recently, the Government reviewed various incentives accorded to mining companies in their pursuit to increase their copper outturn as the country strives to raise output of the red metal from the prevailing 960,000 tones per annum to the projected 1.5 million tones per annum by 2016-spurred by the oncoming projects.

The report is titled: ‘Mining in Africa Country Investment Guide and was released during the ongoing 20th Mining Indaba in Cape Town, South Africa held under the theme-‘Investing in African Mining’.

It notes that revoked tax incentives, increase in mining royalties and more stringent laws regarding financial reporting have not been sufficient to substantially affect investment in the Zambian mining sector.

Zambia is among seven other countries in Southern Africa, Zambia inclusive as earned a position among the top 20 most exciting African countries. These include Mozambique, South Africa, Malawi, Zimbabwe, Namibia, Botswana and Madagascar.

The guide examines five regions on the continent – Central Africa, East Africa, North Africa, Southern Africa and West Africa – encompassing a total of 53 countries.

The eight Southern African mining states have been categorized into two groupings noting those offering a low-risk environment with proven geological potential and others offering greater risk, yet less exploited mineral resources.

South Africa, Botswana, Namibia and Zambia are in one category while Zimbabwe is embraced in the latter grouping. Mozambique and Malawi are in another.

The guide has on South Africa noted that despite the country having had labour disputes and falling production in recent years, it continues to dominate African mineral production-a potential that upholds its reputation.

The guide notes that the increased mechanisation of the local mining sector could be beneficial to the country once implemented.

It further notes that South Africa still has geological potential, and increased mechanisation of its mines-all which are labour intensive compared to other mining jurisdictions which if maximized could create a revival of the industry.”

The guide noted on Botswana’s diamonds strength as being predominant over other mineral potential the country is endowed with and that although Botswana has recorded the second-largest amount of coal in Africa it remains to develop its infrastructure to maximize the resource.

Namibia remains one of the few African states which have formulated an official strategy for engaging with emerging economies, commending the country for its efforts, what with the influx of direct foreign investment.

Zimbabwe has been cited the most risky jurisdiction for investors of any type, although it has not been completely written off, given its holding of the August 31, 2012 Presidential and general elections last August coupled with its undisputed and vast mineral potential the country is endowed with. According to the country’s mineral reserves, Zimbabwe has approximately 30 percent of the world’s diamond reserves with additional and substantial deposits of gold, platinum, coal, among other metals lying unexploited in various parts of the country.

Mozambique and Malawi have been cited as being ‘slightly higher risk investment destination points largely because of their relatively under-developed mining sectors. It however notes Mozambique’s potential in coal industry while Malawi’s emerging uranium metal and other strategic minerals as being key to foster growth of the African state, noting that the two countries have potential to grow substantially if the sectors are nurtured.

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