Zambia’s President Edgar Lungu has initiated talks with mining companies to resolve tax and royalty issues.

The newly elected President has also directed the government to settle its dispute with the companies over new royalties and VAT refunds, Reuters reported.

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On 1 January, Zambia is said to have tripled its mining royalties from 6% to 20%, causing friction between the government and mining firms that are currently facing a decline in global commodity prices.

"The new royalty limit may result in shaft closures and lead to around 12,000 job losses."

In December, Zambia’s Chamber of Mines said the new royalty limit may result in shaft closures and lead to around 12,000 job losses.

Responding to the changes, Toronto-based Barrick Gold announced plans to suspend operations at its Lumwana copper mine, which is thought to support nearly 4,000 direct jobs in the region.

Despite various threats by mining firms to cut jobs and investment, Lungu has promised to maintain the increased tax rates.

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Zambia Finance Minister Alexander Chikwanda is due to meet with mining companies to discuss the situation and Lungu is hoping for ‘an amicable settlement that must end in a win-win outcome for both the mining companies and the people of Zambia’, the news agency reported.

Zambia is claimed to be the second-largest copper producer in Africa, and revenues contribute to around 70% of foreign exchange earnings in the country.