World Bank to respect existing mining pacts in Zambia

A senior World Bank official said the international financial institution will not force Zambia to tear up existing contracts with miners, the Post reported on Friday.

"We deny ever suggesting that the (Zambian) government should unilaterally abrogate or change things," World Bank country manager Ohene Nyanin was quoted as saying.

"The government is sitting down to negotiate ... what we hope for is that both sides will get what is needed to ensure that investment will continue." Nyanin said.

Miners were worried by mounting rumors of a nonnegotiable reshuffle of Zambia's existing mining regime, as Mopani Copper Mines (MCM) CEO Tim Henderson accused international donors on Wednesday of "allegedly inciting" the government to force the renegotiations of the mining agreements, according to the Post.

Henderson said donors including the International Monetary Fund and the World Bank, which were anxious to ease the burden of funding their projects in the poverty-stricken country, were behind the Zambian government's backdoor plan.

Nyanin described the accusation as groundless and said he was informed that the Zambian government had decided not to impose a new regime for the existing investment agreements without reaching consensuses with investors.

Zambia sold most of its state-owned mines to foreign investors during the recession of the copper market in the 1990s but the price rebounded shortly after the Millennium and at least tripled over the past five years due to tremendous demands from Asian economies.

In order to get more share of the increased copper revenue, the Zambian government announced in February to raise the mineral royalty tax from 0.6 percent to 3 percent , a movement strongly opposed by copper investors.

Nyanin said the current regime had "served the government and the people of Zambia well because investments have flown in," but the policies governing the mining industry did need amendments " with the changed circumstances and higher copper prices."

Nyanin said it would be good if an understanding can be reached so that Zambia could avoid losing foreign capitals and remain to be a good investment destination for the mining and other sectors.

He also asked the Zambian government to provide more infrastructures in mining areas along with an appropriate fiscal regime.

"That's what we are looking for and if by doing so, the increased revenues would also result in improvement of Zambian lives," Nyanin said.

Source: Xinhua