Mining sector has stagnated – ZCM

The Zambia Chamber of Mines (ZCM) has observed that the mining sector has stagnated because too much pressure has been mounted on it to service other sectors of the economy.

ZCM President Nathan Chishimba observed that the mines did not seem to be contributing much to the country because Zambia’s needs had grown faster than the mines were able to cope with.

“The historical understanding of the value of the mining sector to the country has been as a source of revenue and this understanding has led to a situation where the industry has somewhat stagnated, it hasn’t grown as much it should. Therefore, as the rest of the country’s needs expand with time, it’s appearing not to contribute as much as it should, when in fact what it should do is actually to be a key driver of growth in the economy. That’s the role which it should be taking up presently but it’s not in the growth mode presently, the growth is slower than it should be. We seem to have lost track of how mining should really be looked at. Mining is a long term business, typically it will take 10 to 20 years to prospect and develop a mining operation and we haven’t had many examples of that Zambia at the moment because the industry is now mainly perceived as a source of revenue, which is contrary to the actual natural pattern of looking at a mining company,” Chishimba explained.

“Typically for instance you will take 10 to 20 years to prospect, you take probably another five years to develop and build a mine…this process involves several billion Dollars to try and get to an operation and then obviously the pay back can’t come in two to three years, it will take typically about 20 or so years before you recover the investment that you put in a mining operation. Now, in our country right now we have allowed a narrative where we look at mines mainly as a source of revenue and that has significantly impacted on the mining sector because there is a lot of pressure to get as much revenue as we can from these operations in a very short period of time. We haven’t invested much but we hope to reap more, if you look at the President’s speech when he opened the Chambishi South Hall project, he was talking about in the order of K13 billion that has gone into the mining operations in the last 10 to 15 years. Now that’s a staggering amount of money that requires extended periods to get pay back from. So because of the way we look at mining in Zambia, we tend influence our policy makers who then try to put policies that are designed to maximise revenue rather than to foster the long term growth of the sector, which is unfortunate.”

Chishimba said it was important to realize that mining needed an intensive, detailed investment plan.

“We can remedy this situation by taking a longer view. I think it’s important to view mining in its correct context. The way a mine starts is not through privatisation, it starts from a very detailed and intensive level of investment which then results in the mining operations. And we have seen a situation where those countries that have encouraged this time of long term view are getting the biggest benefits from mining. I would also like to say that mining is our comparative advantage as a country. So we need to look at a very strategic way of encouraging mining to assist our efforts to diversify into the other sectors,” he said.

Meanwhile, Chanda admired the growth of the mining sector in the neighbouring DRC and hoped for the same in Zambia.

“Congo is a very interesting case, when you at the common headlines, Congo represents confusion and so on but they have down well in one respect, which is to manage their mining sector very strategically. The DRC actually created an environment where exploration investment was very high to the extent that they were among the top 10 destinations globally for exploration investments in the world. And then after that, they did put in place a very proactive mining fiscal regime which remained in place for over 10 years. Essentially they set in place all the ingredients that are essential for good mining investments to the extent that the top four mining companies in the world are actually in Congo running operations there and that’s what we rate trying to advocate in Zambia that we need a very strategic approach and all these ingredients to come into place,” said Chishimba.

“Exploration investment must flow into Zambia, right now are hovering at very low levels, I think below $10 million annually as exploration investment. I know exploration investment globally has dropped but we need to be running with the big dogs by being able to attract all those big players in the world to come to Zambia. And there is no reason why they cannot come to Zambia. So I think we need to be predictable, we need to be able tpo have a very consistent approach to mining taxation, mini g policies and all other ingredients that represent a favourable environment for the sector to grow.”

         

Mirriam Chabala

About Mirriam Chabala

Mirriam Chabala is a Zambian journalist who covers current affairs and writes in-depth feature articles on social issues.
Email: mirriam [at] diggers [dot] news

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