African countries that play host to big mining companies want more earnings from the increase in commodities sales.
2015 was a tough year for African countries as most economies were badly hit by the global commodity slump which stunted economic growth that led most economies into recession and reduced allocated funds for budgets.
After two turbulent years, most economies began to recover in 2017 and mines began soaring once again, boosting profits and bumper rewards for shareholders. However, the governments of these economies can no longer take unprofitable returns to their coffers so they decided to increase mining tax rates.
Zambia- Africa’s second-biggest copper producer recently handed a $7.9 billion tax assessment letter to First Quantum Minerals Ltd. and said it is planning an audit of other miners in the country.
The Zambian government has over the years, struggled with bulging fiscal deficits and its failure to secure a $1.3-billion bailout from the International Monetary Fund could be behind the tax assessment an analyst told Bloomberg.
First Quantum is not the first miner to be hit with a huge tax bill in Africa as Tanzania based Acacia Mining Plc took a hit in 2017 that crippled the company. Tanzania sent its biggest gold miner, Acacia Mining Plc a demand for a $190 billion payment equal to almost two centuries’ worth of the gold miner’s revenue.
Glencore’s Katanga Mining Ltd. is not left out, as the world’s biggest commodity trader is having challenges with its host country-Democratic Republic of Congo (DRC)- over a new mining code that dramatically boosts taxes. Mali does not want to be left out as the West African country says it would soon follow the footsteps of DRC.
Recently, there seems to be a greater dissatisfaction from some African governments’ other than money, as many of them have played host to companies who have failed to keep their own side of the deal.