The Zambia Chamber of Mines says copper production is likely to be drastically lower than last year because the new tax regime is forcing mines to cut production.
In a statement, Thursday, Chamber of Mines president Goodwell Mateyo noted that the Konkola Copper Mines (KCM) frenzy was distracting citizens from the real issues which were posing a threat to the entire industry.
According to the Chamber, present forecasts are that copper production, both concentrate and finished copper, will now be drastically lower than last year, and could be as much as 100 000 tonnes lower.
“A ‘good’ tax is one that does not distort economic activity; consumers and businesses continue to buy and sell as they did before. But the 2019 mining tax regime is distorting behaviour. It is forcing miners to do the unthinkable – to cut production – because many cannot afford to continue producing as before,” Mateyo said.
He also said the Chamber would respect due legal process when commenting upon the legal action taken by ZCCM-IH against KCM.
“The recent declaration by the Minister of Mines at KCM’s head office in Chingola was reassuring, and we do respect due legal process. But we are deeply troubled by current public discourse, in both mainstream and social media, the content of which is alarming and shows none of the Minister’s moderation. Investors need to see clear and consistent guidance from Government, the ultimate owner of ZCCM-IH, on its intentions and the actions it proposes to take,” Mateyo said.
He said he was concerned about the nature of debates surrounding KCM.
“We must strive for a less emotive investor narrative. Zambia needs investment. The government needs bond holders, businesses great and small need capital, and Zambia’s mines need continuous investment to remain productive. There is a shortage of capital in Zambia, so we must look elsewhere for this investment,” said Mateyo.
“But, this is an opportune time to think about the type of investor Zambia wants to encourage – because not all are alike. We must ensure the business environment in Zambia attracts responsible investors, and it is high time we acknowledge the many players within the mining sector that are the responsible, good corporate citizens we want, and should wish to keep. Ultimately, the Chamber is concerned about the future of the entire industry, rather than that of its individual members. The KCM story has created a social media frenzy, but it is distracting us from the real issue at play here – which is the increasingly unbearable tax burden in a country where most mines are already regarded to be high-cost operations, not least because of the hundreds of millions of dollars in outstanding VAT repayments that have eroded cash flow.”