Mines hope 2020 budget will restore Zambia’s mining sector

The Zambia Chamber of Mines says it hopes that the forthcoming 2020 national budget will help restore the mining sector’s productivity and return Zambia to its previous position as one of the world’s leading copper producers.

And the Chamber has reiterated that Zambia is set to record lower copper production output this year by at least 100,000 metric tonnes, triggered mainly by the unchanged 2019 mining fiscal regime.

In a statement released, Monday, Zambia Chamber of Mines chief executive officer Sokwani Chilembo stated that the Chamber hoped that its submissions ahead of next year’s budget would be given serious consideration to help restore the mining sector’s productivity.

According to the statement, the Chamber already submitted detailed mining tax proposals, which aim to resuscitate the Zambian mining sector by putting in place competitive, stable and investor-friendly measures.

Some of the measures contained in the Chamber’s submission include a ‘true’ mineral royalty sliding scale as opposed to the present stepped scale capped at 7.5 per cent; restoration of deductibility of the mineral royalty against corporate tax and the removal of concentrate import duties, among others.

“The Chamber’s hope is that the full submission would receive rigorous consideration to secure an outcome that would grow production to above a million tonnes in five years and increase mining tax receipts by around a fifth. The revenue increase will be even higher if policy is adjusted enough to motivate operationalisation of just one or two of the promising large mining prospects our country has,” Chilembo stated.

And he reiterated that Zambia was set to record a drop in copper production this year.

Zambia recorded a marginal increase in its copper production last year to around 861,946 tonnes from 799,329 tonnes recorded in 2017, boosted by First Quantum Minerals’ (FQM) operations in Kalumbila District.

However, from January 1, 2019, government effected the 2019 mining fiscal regime, which caused turbulence with some mining houses recording lower copper output.

“This is a distant continental second behind the Democratic Republic of Congo (DRC), who trailed our volumes for seventy-five years until 2013 and now forecast above 1,200 million tonnes of production in 2019. Meanwhile, it is likely that our own industry will drop-off the global top 10 copper producer’s list,” stated Chilembo.

“With this current tax regime, we have slipped into reverse, while Zimbabwe has reviewed an earlier position to make mineral royalties non-deductible and in Namibia, the government has made the prudent decision to suspend implementation of non-deductibility for a year to allow for a more thorough risk assessment of its impact.”

Ministry of Mines data revealed that while copper output for the first three months of this year was higher than last year, production slumped and drastically lagged behind in April, May and June, closing the 2019 half-year period with 355,751 metric tonnes from 408,919.01 tonnes recorded in the corresponding period last year.

Output in the latter three months was recorded as 62,362.17 tonnes in April, 2019, down from 63,657.51 in April, 2018; 26,101.79 tonnes in May, 2019, compared to 69,861.74 tonnes last May, and 61,195.34 tonnes in June, 2019, down from 77,370.52 tonnes in the same month last year.

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