The 2019 mining fiscal regime risks resulting in more job losses due to the shutdown of copper smelting and refining plants on the Copperbelt Province, says the Zambia Chamber of Mines.
And the Chamber is hopeful that Mines Minister Richard Musukwa’s recent pronouncement of an industry-wide waiver on import duties on ores from the Democratic Republic of Congo (DRC) will be followed through soon with a Statutory Instrument, which in-turn would help production.
Responding to a press query, Chamber of Mines chief executive officer Sokwani Chilembo stated that the 2019 mining fiscal regime the risked triggering the export of more jobs due to diminishing smelting and refining capacity being lost to the DRC.
“The risk of exporting jobs by permanently losing smelting and refining capacity to the DRC through more closures is very real and increasing by the day as is that of any of the lower grade operations going onto care and maintenance without the relief of adjustment to the 2019 mining tax regime. A case in point of the former is that of Chambishi Metals Plc shutting its operations from January to June by which time the business had innovatively managed to restore its cobalt ore import toll processing section to sustainability under the duty regime, but had to lay off hundreds as it shuttered copper toll processing. Procurement from suppliers has also suffered across the industry as in most others as the July Stanbic Purchasing Manager’s Report made evident,” Chilembo stated.
But he added that the Chamber hoped that Musukwa’s recent pronouncement of an industry-wide waiver on import duties on ores from the DRC will be followed through soon with an SI, which in-turn would help production.
Zambia’s copper production for the 2019 half-year dropped to 355,751 metric tonnes from 408,919.01 tonnes in the corresponding period last year, triggered by slashed output at Konkola Copper Mines (KCM) Plc, among other factors, according to official Ministry of Mines data.
“Production declines to June have been partly due to just such cost-saving measures being taken from January, 2019, in response to the new mining tax regime. Effective cessation of ore imports from the DRC due to the 5 per cent import duty and the eventual exhaustion of limited stockpiles of imported ores from about May meant that options of blending with lower grade and lower sulfide content local ore by smelters and refiners ended and this also affected throughput. The industry is anxiously hopeful that the announcement made by the Minister of Mines and Minerals Development three weeks ago of an industry-wide waiver of import duties on ores from the DRC will be followed through with a Statutory Instrument soon,” he added.
And he observed that there was need to urgently waive off export duties on gemstones and precious metals to restore commercial viability.
“The waiver of the high export duties on gemstones and precious metals is also urgently required to restore the viability of these segments. Waving these duties will spur operators to save the gemstone sector that is presently at great competitive price disadvantage, globally, and also to grow precious metal production. Being competitive is a first step to attracting capital (both local and foreign) to partner with local capacity and, thereby, formalize the two sectors’ emergent exploration and development potential in a structured manner that will empower more Zambian producers and benefit the Treasury,” stated Chilembo.
The 2019 mining fiscal regime, which hiked mineral royalty rates raised by 1.5 percentage points across all levels of the sliding scale, among other punitive measures, remains unchanged despite an outcry by miners since its formal implementation from January 1, 2019.