Zambia will suspend a 15% export duty on gemstones but not diamonds from Jan. 1 after the move that was intended to raise more revenues instead undermined production, the finance minister said on Thursday.

Bwalya Ng’andu told Reuters the suspension of the export duty, announced in the official gazette on Friday, was a concession to miners after the upfront tax had hurt output.

“The industry was bleeding and production was falling,” he said by telephone.

The export duty still applies to diamonds.

South African gemstone miner Gemfields Group Ltd, which had seen its profits hit by the duty, welcomed the suspension of the duty, which had been one issue in a broader row with the mining industry about tax rates.
Africa’s second-largest copper producer has tried to levy higher taxes on the miners, a key part of its economy, as it grapples with high levels of debt and low growth.

Push back from the industry has already forced it to roll back plans to replace its value-added tax with a non-refundable sales tax, another point of contention between miners and the state.

Source: Reuters