ZCCM-IH says the uncertainty in the 2019 mining fiscal regime may affect its profitability and dividends payable to government.
And ZCCM-IH has increased its shareholding in Copperbelt Energy Corporation (CEC) to 24 per cent from 20 per cent.
Speaking during ZCCM-IH’s annual report presentation for the year ending March 31, 2018, in Lusaka, ZCCM-IH chief executive officer Dr Pious Kasolo expressed concern on the uncertainty created by the 2019 mining fiscal regime, which had unsettled mining firms on long-term growth prospects.
The 2019 mining fiscal regime, which took effect January 1, 2019, has seen an increase in mineral royalty rates by 1.5 percentage points at all levels of the sliding scale.
It also introduced import duties of five per cent on copper and cobalt, while also hiking export duty on precious stones and gemstones to a rate of 15 per cent, a situation that had prompted mining companies to threaten job cuts, while compelling KCM to downsize its Nchanga Smelter operations due to low availability of concentrates.
When asked to what extent the 2019 mining fiscal regime had affected ZCCM-IH’s profit projections in view of some mining companies’ move to downsize operations on account of the higher taxes, Dr Kasolo said accurate projections were not known at this stage, but expressed concern on ZCCM-IH’s long-term profitability and dividends payable to government.
“At the moment, we can’t say how it’s going to affect ZCCM-IH because most of these taxes haven’t come to fruition. But by projecting some of our investee companies, what we’ve looked at and discussed with them…I can give an example of Lubambe (Copper Mine). The funding to develop that mine has become a bit difficult because the banks have become quite tight with their money because they are not sure about the tax regime in Zambia, when it’s going to change. So, Lubambe is finding it difficult to raise capital,” Dr. Kasolo told journalists at Southern Sun Hotel, Monday.
“So, in hindsight, what will happen is that if this are not mitigated, then ZCCM-IH is going to be affected because we get our dividends from these companies. So, I hope the tax debacle is going to be resolved without affecting production in development of these mines.”
And Dr Kasolo announced that ZCCM-IH increased its shareholding in Copperbelt Energy Corporation (CEC) to 24 per cent from 20 per cent.
“…With CEC, we’ve increased our shareholding from 20 per cent to 24 per cent and we hope to go up to about 34.9 per cent, hopefully,” disclosed Dr Kasolo.
ZCCM-IH posted an increased profit after tax of K975 million during its financial year ending March 31, 2018, from K729 million in the previous corresponding period, triggered by high copper prices.
On the other hand, total dividends paid out last year amounted to K98 million down from K135 million during its financial year ending March 31, 2017, according to company data.