Zambia is losing huge revenue from illegally-exported gold, says Minister of Mines and Minerals Development Richard Musukwa.
Rendering a Ministerial statement to Parliament, Thursday, Musukwa said illegal gold mining had denied the country of the much-needed revenue, as most of the gold reported ended up in the hands of foreign traders.
“Most of our gold, which is exported out of the country, is unreported because it is illegal. Illegal gold mining and trading has been taking place mostly by small-scale miners in different parts of the country, which include Vubwi, Rufunsa, Lundazi, Petauke and Luano dstricts. These illegal activities have denied the country of the much-needed revenue, as most of the gold exported ends up in the hands of foreign traders who take up the gold out of the country without paying any taxes to the government,” Musukwa said.
“There is need that this potential for the gold sub-sector to contribute to the revenue and job creation of our country is harnessed. As the House is aware, there have been reports of illegal gold mining in Mwinilunga in the recent past. Consequently, it is clear that the country is losing out in terms of revenue and associated benefits.”
He said government, through his Ministry, had commenced interventions aimed at controlling gold mining activities in order to ensure that planning and activities of gold was undertaken in an organized manner.
“My Ministry is implementing the following measures: revoking of licences that are dormant with gold potential; this will, indeed, pave way for licencing the locals as well as other serious investors who have demonstrated the ability to develop these areas. In addition, government, through the Ministry, will facilitate formalization of the gold miners and association and licence them. Number two: deployment of security personnel to remove any persons with illegal mining or trading in these places,” he said.
“Government, through the Ministry, is creating a vehicle for marketing the gold produced in order to enhance revenue collection by curtailing illegal trade of gold and in the interim, the Bank of Zambia has already started purchasing gold as part of the country reserves. Further, government has plans to hold reserves in internationally-recognized institutions on agreed terms so that we can build a high profile in terms of our gold perspective. Number four: government will conduct preliminary geological explorations in the illegal gold mining areas to determine the quantity and quality of gold and the primary sources; this will generate information on the gold reserves in the mineralized area and provide stimulus increased development by both local and foreign investors.”
Musukwa assured that government through the Ministry of Finance would ensure all loopholes in taxation of minerals were addressed.
“For a long time, multi-national companies have short-changed our companies by tax evasion, tax transfer and all forms, ensuring that Zambia is on the periphery. That is why government, through the Ministry of Finance in the new tax measures, have stated very clearly that we have streamlined VAT in order to ensure all the loopholes that exist are addressed so that these issues relating to tax evasion, tax transfers are addressed,” Musukwa said.
“What has been happening is that over time, many mining entities that have been mining these resources, either copper, gold and so on have been declaring only one mineral and they have been using the other mineral as a profit margin at the expense of Zambia. In short, they have been a lot of unfair trades against the people of Zambia. We will be very mindful that the licences indicate two minerals. When you look at the licenses that we have given at a short snap, I have not seen any licences that we have issued for one mineral; so there is need to ensure they report both minerals in order that our country develops.”
And he also called on Zambians to fully participate in obtaining gold mining licences.
“We need to generate resources from the mining industry in order to invest in these and other sectors. The key and center people that must be in the forefront are Zambians. And what government is doing is, deliberately, we want to encourage Zambian-owned business to be in the forefront,” he urged.
“Government will ensure that people that exploit our resources are legal entities and that we will not promote illegality. So, all illegal miners must ensure that they follow the laid-down procedure in order to ensure they acquire licences. In fact, like we always give amnesty for people to surrender fire arms, those who got them illegally, we would ensure as a Ministry we give amnesty to all illegal miners that they formalize their businesses, they formalize their mining operations in order for government to be supported because this is an area where government is losing a lot of revenue.”
Musukwa hoped that the BoZ would utilize its purchases of gold in a bid to continue building the country’s reserves.
“I have stated that [the] Bank of Zambia has already started procuring gold as a start-up project. In short, we hope to ensure that we build gold reserves through Bank of Zambia. And in the process, we hope to escalate it to another platform such as Switzerland so as to ensure that we have an international perspective in terms of our gold reserves,” said Musukwa.