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Perception that mines make huge profits flawed – LumwanaBy Derrick Silimina on 18 Jun 2019
Barrick’s Lumwana Mining Company says the perception that mining companies always make huge profits is flawed and unrealistic.
And the mining giant says there is need to consider key factors that drive the operations of the industry in Zambia.
Speaking during a panel discussion at the just-ended ninth Zambia International Mining and Energy Conference and Exhibition (ZIMEC) in Lusaka, Lumwana Mining Company country manager Nathan Chishimba argued that the general perception that mining companies always made huge profits was flawed and unrealistic.
He noted that the perception that mining companies made huge profits among Zambians also affected the type of mining fiscal policy being formulated.
“That’s a very flawed perception about mining and that, unfortunately, is what has affected the mine taxation in our country,” Chishimba said during the panel discussion dubbed: “Establishing Mutual and Beneficial Fiscal Regime.”
He also wondered why most Zambians perceived mining as having come from the privatisation era, explaining that even before the mines were privatised in the early 1950s, millions of dollars were spent to develop the assets.
“So, if we do not understand that distinction, especially if we are the authorities that are responsible to craft the tax policy, then we will be crafting policies that are biased against people who are developing, exploring and also those who are trying to sort out the challenges of closing down these assets. We need to understand the full spectrum before we start applying any unfavourable taxation,” Chishimba, a former Zambia Chamber of Mines president, added.
“Whenever you meet someone along the streets and they find you are in the mining sector, the first thing they will ask you is: ‘why aren’t you paying enough tax?’ So, the connotation is that mining equals revenue. So, the way I would like to look at this issue is that, we should separate the two and understand how the game plan for the mine sector should be and then we understand what type of fiscal regime will create those conditions to create a vibrant sector. Without that distinction, the discussion will be an endless cycle of accusation and counter-accusations.”
And he stressed that mining was not all about extracting minerals as it evolved around several distinct stages.
“I think when you ask most people what a mine is, they look at the Copperbelt and all that, but it hinges on distinct stages. There is exploration, which is a very important part of mining. You don’t explore, you don’t find anything from the mines. Then there is the development where you are now actually developing the infrastructure in order to exploit the minerals and then there is, of course, the operations as well as the keeping of the mine when you are finally closing down,” he explained.
Meanwhile, reflecting on the ninth ZIMEC theme: “Creating an Attractive Investment Framework to Catalyse Zambia’s Mining and Energy Sector,” Chishimba noted that without prioritising investment in all the key distinctive stages of mining, developing the sector would almost be impossible.
“If I am sitting at the Treasury, what I want is a very healthy mix of exploration projects, development projects, mature mining operations and all the operations that are required. So, in Zambia, when we say a mine, we immediately imagine head gear; we imagine the mineral deposits and we imagine all sorts of things ignoring the effort that is required to develop that mine so that it gets to a stage where it has everything,” observed Chishimba.
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