INTRODUCTION

The Mines and Minerals Development Act No. 11 of 2015 (the "Mines Act") is an Act that provides the law relating to the exploration for mining and processing of minerals, payment of mineral royalties and matters connected with or incidental to the foregoing. On 27 December 2022, Parliament enacted the Mines and Minerals (Amendment) Act No. 29 of 2022 (the "Amendment Act") which amended the Mines Act with effect on 1 January 2023.

This legal alert highlights the amendments to the Mines Act brought about by the Amendment Act.

  1. What is Mineral Royalty Tax?

In terms of section 2(1) of the Mines Act, MRT is defined as a payment received as consideration for the extraction of minerals. Under section 89 of the Mines Act, the following are liable to pay to MRT:

  1. Holders of the following mining rights and licenses:
    • Large -scale mining license;
    • Large -scale gemstone license;
    • Small-scale mining license;
    • Small-scale gemstone license;
    • Artisan's mining right, and
    • Mineral trading permit.
  1. Any person without a mining right, but in possession of minerals extracted from Zambia on which mineral royalty has not been paid by the supplier of the minerals.
  2. All persons carrying out quarrying of industrial minerals, this includes the quarrying of gravel, clay and sand.
  3. All persons that mine minerals for use as inputs or raw materials in their manufacturing process e.g., cement and lime manufacturers.
  1. Mineral Royalty Tax in respect of Copper Under the Mines Act

Prior to the Amendment Act, section 89 (2) of the Mines Act, prescribed the following MRT rates where the base metal produced or recoverable under the license is copper: 

  1. 5.5% of the norm value when the norm price of copper is less than USD 4 500 per tonne;
  2. 6.5% of the norm value when the norm price of copper is USD 4 500 or higher per tonne but less than USD 6 000 per tonne;
  3. 7.5% of the norm value when the norm price of copper is USD 6 000 or higher per tonne but less than USD 7 500 per tonne;
  4. 8.5% of the norm value when the norm price of copper is USD 7 500 or higher per tonne but less than USD 9 000 per tonne; and
  5. 10% of the norm value when the norm price of copper is USD 9 000 or higher per tonne.
  1. Mineral Royalty Tax in respect of Copper Under the Amendment Act

Following the Amendment Act, where the base metal produced or recoverable under the license is copper, the MRT payable is applied at an incremental value in each price range at the rates set out below:

  1. 4% of the norm value when the norm price of copper is less than USD 4 000 per tonne;
  2. 6.5% percent of the norm value when the norm price of copper is USD 4 000 or higher per tonne, but less than USD 5 000 per tonne;
  3. 8.5% of the norm value when the norm price of copper is USD 5 000 or higher per tonne, but less than USD 7 000 per tonne; and
  4. 10% of the norm value when the norm price of copper is USD 7 000 or higher per tonne.

The norm value in terms of the Mines Act has been benchmarked against the monthly average London Metal Exchange cash price per tonne multiplied by the quantity of the metal.

CONCLUSION

This legal alert has set out the amendments to the Mines Act brought about by the Amendment Act. Should you have any questions on this legal alert or need any advice relating to the amendments to the Mines Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.