The Zambian cabinet has approved a proposal to drop a recent hike in royalties demanded on mining operations as the continent's second top copper producer seeks to resolve a six-month standoff with mining companies over the controversial tax system.

Newly elected President Edgar Lungu has directed a panel of ministers to finalize details of the proposed changes ahead of their presentation for parliamentary approval next week, Amos Chanda the presidential spokesman said Tuesday.

The development caps months of bickering between mining companies and the Zambian government and is a major relief to miners who have been struggling to cope with spiraling costs amid suppressed global metal prices.

"The President hopes that the changes will promptly eliminate market anxieties in the mining sector and forestall any potential instability," Mr. Chanda said, adding that the decision came after "extensive" consultations with the mining industry following the sudden drop of international copper prices.

Zambia announced a new mining tax regime in October last year requiring open-pit mines to pay up to a 20% royalty on their revenue, up from 6%, while underground mines would pay 8%, also up from 6%.

The new tax regime rattled investors, prompting companies such as Glencore PLC and First Quantum Minerals Ltd. to shelve expansion projects worth $1.5 billion. Barrick Gold Corp. threatened to close down its Lumwana Copper Mine citing higher royalties.

With nearly 12,000 mine jobs under threat, Mr. Lungu directed cabinet to resolve the impasse in February shortly after winning the country's tightly contested presidential elections.

Mr. Chanda said that due to the changing business environment, Zambia's copper production is now projected to drop to 839,000 metric tons this year from an earlier estimate of around 960,000 tons.

Copper prices dropped by around 15% last year, before sinking to five year lows in January, weighed down by reduced demand from China, the world's largest consumer. The prices have since remained volatile, hurting copper-reliant economies in Africa such as Zambia and Congo.

The World Bank said in a report Monday that slowing commodity prices will bring down sub-Saharan Africa's growth rate to 4% this year, the lowest in two decades.

SERBIAN President Tomislav Nikolic says Minister of Foreign Affairs Harry Kalaba’s visit to Serbia will enhance bilateral and multilateral co-operation between the two countries.
President Nikolic said Mr Kalaba’s visit to his country shows the good relations between the two countries.
He said this yesterday when Mr Kalaba paid a courtesy call on him at his office in Belgrade.
This is according to a statement issued yesterday by Ministry of Foreign Affairs public relations officer Alick Banda.
President Nikolic said it is the duty of Zambia and Serbia to develop and maintain the good relations that have existed for a long time.
“Many countries in the world are turning to Africa for different reasons but Serbia has been there for Africa for a long time as a friend and development partner.
“Serbia is still willing to offer more scholarships to Zambian students to study in Serbia in areas such as military and health and is ready to support Zambia’s cause in this respect,” he said.
President Nikolic also said Serbia will continue to support the fight against terrorism and contribute to the efforts by the United Nations (UN) and European Union (EU).
He said he would be delighted to welcome President Lungu to Belgrade in the near future and exchange further bilateral engagements.
And Mr Kalaba commended Serbia for its intention to continue co-operating with Africa and Zambia in particular and to increase the volume of trade and investment, which is very low at the moment.
He said it would be important for Zambia to engage Serbia in terms of training in various fields as well as technology transfer.
Mr Kalaba said Serbia and Zambia could collaborate in joint ventures and explore investment opportunities in areas such as agriculture, manufacturing, tourism and mining.
He emphasised that Zambia needs to add value to its products to help move away from exporting raw products.
Mr Kalaba informed President Nikolic that Zambia is strategically located with eight neighbours, which makes the country the best investment destination in the region and in Africa.
He said the chambers of commerce of both countries should work together to ensure more economic co-operation is achieved between Zambia and Serbia.
Mr Kalaba also met Prime Minister of Serbia Aleksander Vucic with whom he discussed t
he possibility of the Serbian Airline flying into Zambia.