Zambia Chamber of Mines president Goodwell Mateyo says Zambia’s reduced copper export earnings as recorded by the Bank of Zambia (BoZ) is as a result of government’s excessive taxation on mining companies.
According to the BoZ’s MPC statement released last Wednesday, copper export earnings, at an estimated US $1 billion, were 23.2 per cent lower than in the preceding quarter following a decline in exports volumes and average realized prices.
Commenting on the development, Mateyo said the reduction in copper export earnings was a perfect opportunity for government to review the 2019 mining fiscal regime, which had still not been amended in the wake of the 2020 national budget.
“We have not received anything from government, but although you might wish to note that the MPC (Monetary Policy Committee) policy statement from Bank of Zambia indicates that there has been a significant drop in export earnings from mining. I think it was indicated in the MPC statement you can check in the quotes; I think it is 23.2 per cent,” Mateyo said in an interview.
“So, we see that the copper output continues to decline and our foreign exchange earnings from mining are also on a downward trend so this is a perfect opportunity for government to review its tax regime because the government, clearly, has increased so many taxes in the mines. We should have seen increased productivity from the mines, but what we are seeing is that the earnings from the industry are actually declining. They writing is on the wall that government must do something quickly to arrest this decline.”
He warned of adverse effects on the country’s economy growth if government hesitated to review the tax regime going into the New Year.
“Obviously, the economic growth is going to continue to be subdued. Of course, economic growth is contributed by a number of things: there is agriculture output, growth from non-traditional enterprises, but something like 10 to 12 per cent of Gross Domestic Product GDP contributions is directly from mining industries; 50 per cent from directly and indirectly from around the mining chain. So, obviously, as long as mining output continues to decline even our economic growth profile is going to continue to be subdued,” he cautioned.
And Mateyo, who is also Mopani Copper Mines’ general legal counsel, attributed the current low copper prices on the international market to the ongoing China-United States trade war.
“What I can say is that, obviously, in the short-run, copper prices will be affected by the trade war and everything else on the international market. But in the medium-term the outlook is still quite positive. The trade wars between China and the U.S. have already affected copper prices, but the outlook in the long-term remains positive. There is no copper prices set in Zambia; it is an international price. But I do know that the (trade wars) are largely responsible for prices not being what it should have been at the moment,” said Mateyo.