Zambian Finance Minister mocks Zimbabwe indigenisation plans

Zambian Finance Minister Dr Situmbeko Musokotwane has mocked Zimbabwe and South Africa for planning to raise government stake in foreign mines to boost indigenous benefits from extractive industries.

Dr Musokotwane also launched a scathing attacks at key donors advocating higher taxation of the vast mining sector, accusing them of trying to blackmail Zambia into killing its lifeblood through high taxes.

Zimbabwe has announced that it will proceed with plans to take majority stakes in foreign-owned diamond mines in the east of the country but will spare a Chinese-owned mine from a state takeover in a move to curb smuggling and increase indigenous benefits from the natural resources.

Dr Musokotwane said key mines - all of which are foreign-owned would continue to be operated by the private sector as a way to spur growth which has seen copper output reach unprecedented high levels of 819,000 metric tonnes last year.

"Good luck to Zimbabwe; good luck to South Africa, but for us, this is a path we have trodden before in the 1970s when we were being told by Britain that 'if you take over the mines, then you are going to be rich but the very opposite happened," Dr Musokotwane said during a BBC-organised debate on Africa's benefits from mining. "The miner in 1970s was a happier miner than a miner during the period of state ownership of the mines."

Dr Musokotwane said foreign-operated mining operations in the country had not yet reached a point where they could share their resources with ordinary Zambians.

"I know there are issues of how much we are getting from the mines, but please also remember the countries you are talking about like South Africa, Brazil including Zimbabwe, have been mining for years and years," Dr Musokotwane said.

"The mining companies there have reached a point where they could share the resources with the public. Some of these mines you are talking about in Zambia just opened today and tomorrow you are saying 'start paying tax."

Mining which is the biggest industry in the country accounts for 80 per cent of the foreign exchange earnings which contribution to the gross domestic product is at 9.7 per cent, and accounts for a paltry two per cent of total revenue collected by Zambia Revenue Authority annually.

And Dr Musokotwane accused key donors calling for higher taxation of the mining firms of wanting to kill the vast mining sector.

He said Zambia's taxation level of the mining sector was consistent with trends in leading mining operations like Australia, Canada, Russia and United States.

Dr Musokotwane also attacked key NGOs calling for higher taxation, accusing them of pursuing Western interests at the expense of the country through the money they receive.

"Why are they pointing at Zambia that you have gone overboard," said Dr Musokotwane. "Why are you not saying the same thing with Australians, the same thing with South Africans?"

There have been concerns about the low revenue in taxes Zambia is getting from the mining sector despite a record rise in copper prices.

The Rupiah Banda administration, reversed an earlier decision by late President Levy Mwanawasa to introduce windfall taxes on super profits citing fears of investors shunning to invest in the country.