20100903
africanews

LUSAKA (Reuters) - Zambia's main opposition leader on Friday said the government should restore mining agreements with foreign investors which it cancelled and reinstate tax concessions, in a major u-turn from his previous position.

Patriotic Front (PF) leader Michael Sata, previously a strong advocate of higher mine taxes, told Reuters that the government should reinstate development agreements it signed with the foreign investors to restore investor confidence and attract further investments.

Copper mining in Zambia, Africa's largest producer of the metal widely used in construction, is the main earner of the country's foreign exchange.

Some foreign investors such as Canada's First Quantum Minerals have threatened to take Zambia to court for suspending the development agreements, which waived payment of taxes by the foreign mines for periods of between 5-17 years.

Zambia's mine taxes include a 15 percent profit variable tax, 25 percent corporate tax and a 3 percent mineral royalty.

"The mines were privatized on certain binding agreements and from the time the government introduced the illegal tax regime new jobs are not being created because major expansion projects have been suspended," Sata said.