Mineral Royalty

Mineral Royalty

All rights of ownership in searching for, mining and disposing off of minerals in Zambia is vested in the president on behalf or the Republic. Therefore, any person who is granted the privilege of extracting the minerals from the ground must pay Mineral Royalty.

A mineral is defined as any substance, whether in solid liquid or gaseous form occurring naturally in or on earth or under water, formed by or subjected to a geological process, or any substance occurring in tailing dams, slag dumps, waste rock damps, residue waste rock dumps, residue stockpiles, or residue deposits. The definition excludes water which is not taken from land or any water body for the extraction of any minerals from it, and Petroleum,

The privilege of extracting minerals is granted the following classes:

  1. Large Scale Mining License
  2. Large Scale Gemstone License
  3. Small Scale Mining License
  4. Small Scale Gemstone License; and
  5. Artisan’s Mining Right

For tax purposes minerals are classified as either:

  1. Base Metal– non-precious metals such as iron, copper, nickel, aluminum, lead, zinc, tin, magnesium, cobalt, manganese, titanium, scandium, vanadium and chromium.
  2. Energy Minerals– minerals used to generate energy such as coal and uranium.
  3. Gemstones– nonmetallic substances used in jewelry, such as amethyst, aquamarine, beryl, corundum, diamond, emerald, garnet, ruby, sapphire, topaz, and tourmaline.
  4. Industrial Minerals– rocks such as barites, dolomite, feldspar, fluorspar, graphite, gypsum, ironstone, when used as a fluxing agent kyanite, limestone, phyllite, magnesite, mica, nitrate, phosphate, pyrophyllite, salt, sands, clay, talc, laterite, gravel.
  5. Precious Metals- high value metals such as gold, platinum, silver, palladium and selenium.

That taxable value for Industrial and Energy Minerals and Gemstones is the gross value, which is the realized price for sale Free on Board at the point of export in Zambia or point of delivery within Zambia.

For Base and Precious Metals, it is the norm value, which is based on the London Metal Exchange (LME) cash price, the Metal Bulletin price if the metal is not quoted on the LME, or the or the price at any other market that is approved by the commissioner general, if the metal is not quoted on the LME and Metal Bulletin markets.

The current mineral royalty rates are as follows:

Description Rate
1. Base Metals (Other than Copper) Copper) 5% o n norm value
2. Energy and Industrial Minerals 5% on gross value
3. Gemstones 6% on gross value
4. Precious Metals 6 % on norm value
5. Copper if price is less than US$4,500 per ton 4%
6. Copper if price is US$4,500 but less than US$6,000/ton 5%
7. Copper if price is US$6,000 and above/ton 6%

 

The accounting period for Mineral Royalty is a calendar month and the due date for filing returns and making payment is the 14th day of the month following the accounting period.

Mineral royalty is however deductible from the gross the turnover when calculating profits for Income Tax computation purposes.

Mineral Royalty

All rights of ownership in searching for, mining and disposing off of minerals in Zambia is vested in the president on behalf or the Republic. Therefore, any person who is granted the privilege of extracting the minerals from the ground must pay Mineral Royalty.

A mineral is defined as any substance, whether in solid liquid or gaseous form occurring naturally in or on earth or under water, formed by or subjected to a geological process, or any substance occurring in tailing dams, slag dumps, waste rock damps, residue waste rock dumps, residue stockpiles, or residue deposits. The definition excludes water which is not taken from land or any water body for the extraction of any minerals from it, and Petroleum,

The privilege of extracting minerals is granted the following classes:

  1. Large Scale Mining License
  2. Large Scale Gemstone License
  3. Small Scale Mining License
  4. Small Scale Gemstone License; and
  5. Artisan’s Mining Right

For tax purposes minerals are classified as either:

  1. Base Metal– non-precious metals such as iron, copper, nickel, aluminum, lead, zinc, tin, magnesium, cobalt, manganese, titanium, scandium, vanadium and chromium.
  2. Energy Minerals– minerals used to generate energy such as coal and uranium.
  3. Gemstones– nonmetallic substances used in jewelry, such as amethyst, aquamarine, beryl, corundum, diamond, emerald, garnet, ruby, sapphire, topaz, and tourmaline.
  4. Industrial Minerals– rocks such as barites, dolomite, feldspar, fluorspar, graphite, gypsum, ironstone, when used as a fluxing agent kyanite, limestone, phyllite, magnesite, mica, nitrate, phosphate, pyrophyllite, salt, sands, clay, talc, laterite, gravel.
  5. Precious Metals- high value metals such as gold, platinum, silver, palladium and selenium.

That taxable value for Industrial and Energy Minerals and Gemstones is the gross value, which is the realized price for sale Free on Board at the point of export in Zambia or point of delivery within Zambia.

For Base and Precious Metals, it is the norm value, which is based on the London Metal Exchange (LME) cash price, the Metal Bulletin price if the metal is not quoted on the LME, or the or the price at any other market that is approved by the commissioner general, if the metal is not quoted on the LME and Metal Bulletin markets.

The current mineral royalty rates are as follows:

Description Rate
1. Base Metals (Other than Copper) Copper) 5% o n norm value
2. Energy and Industrial Minerals 5% on gross value
3. Gemstones 6% on gross value
4. Precious Metals 6 % on norm value
5. Copper if price is less than US$4,500 per ton 4%
6. Copper if price is US$4,500 but less than US$6,000/ton 5%
7. Copper if price is US$6,000 and above/ton 6%

 

The accounting period for Mineral Royalty is a calendar month and the due date for filing returns and making payment is the 14th day of the month following the accounting period.

Mineral royalty is however deductible from the gross the turnover when calculating profits for Income Tax computation purposes.