ZAMBIA Chamber of Mines chief executive officer Sokwani Chilembo has warned that the country will miss out on an opportunity to cash in on the growing demand for copper if the tax regime is not looked at.

Speaking during a presentation to parliament on money bills, Monday, Chilembo said jurisdictions with lower grade ore were taking advantage of the demand, urging government to make Zambia more competitive.

Chilembo said Zambia now held the ignominious record of having suffered the most fiscal changes of any copper producing country in the world over the last 12 years.

“With regard to the million tonnes target, the constant shifting of goal posts has made it impossible for businesses to stick to plan. If you planned to break even after eight years, you know mines take seven years to build, it may take up to 12 years for you to break even, if in that time you suffer six changes which effectively push back your break even date by six months, you will be looking at a break even after 15 years instead of 12. Now Zambia holds the ignominious record of having suffered the most fiscal changes of any copper producing country in the world over the last 12 years. That’s why we are stuck,” Chilembo said.

He elaborated why he felt the Zambian business environment was disincentive.

“It makes no sense, you cannot charge people for business that is not taking place in your country and the real danger here is this, we have a once in a generation opportunity, market opportunity to take advantage of the increased demand for Copper, for Cobalt, for Manganese, for Gold. If we do not position ourselves well, we will miss the opportunity but to position ourselves well, we just need to look at the numbers. Right now, Betrama has announced the opening of three new copper mines, their grades are far lower than ours, why is this happening? We need to make ourselves competitive and be dispassionate about the analyses. The historical issues and allegations that have been raised can be dealt with in the corporate governance structures. We are a lucky country, 80 percent of the industry has government shareholding in it, those are the avenues where redress or investigation can be sought, as a shareholder, that is the most clinical [way] to go about it because tax creates too much collateral damage. We have several mines that have gone on care and maintenance recently as an example,” Chilembo said

“You cannot charge a business for people trading in its shares. If we took the example of Zambeef, this would mean that anybody trading in Zambeef’s equity offshore above the market capitalisation 10 per cent of US$10 million in Zambeef’s shares is going to generate a property transfer tax bill for Zambeef, that’s just a typical example of what we mean when we talk about it for a listed company. And if you are a private company and you decide to do a private capital raising, bringing in an additional shareholder, as long as it is above 10 per cent of the value of your Zambian investment. In which you may not even have 100 per cent, you will be taxed on that transaction as well. It’s a disincentive. These [bills] will introduce a transaction tax for having a business in Zambia for anything you want to do anywhere around the world as long as what you are doing is worth more than 10 per cent of your shareholding in Zambia. If Zambia is a small part of your investment, it becomes an unfair surcharge.”

He said the mining industry needed to be looked at as a business.

“I think the key thing that has to change is that we need to have government look at the industry as a business and consider its petitions as nothing more than business propositions. The numbers speak for themselves. When we say we are unable to afford the cost of capital, this is a fact, it is not something which we are drawing from thin air. If the industry is being accused of all manner of collusion, we have courts of law for redress, we have the period of time over which incidences have occurred and redress has been sought,” he said.

“The bills that are presented to you today have generated the usual response which is the word attack. These are not attacks, these are postmortems of events, they need to be viewed as such, these are not attacks, this is simply stress testing the business case and we should not be hypersensitive of things schemed about that because if we don’t do so rigorously within our own borders, the markets outside of these borders will do so for us, penalise us. And that penalty shall manifest in an increased cost of capital and you will see it becoming very difficult for anybody to raise capital to do any form of business in this country if we execute this.”

Chilembo said the mining sector should be looked at beyond cash in order for the country to get more than it is getting from the sector at the moment.

“With regards to is this the best that we can get from the mining sector, we need to look at this beyond cash. If we look at it beyond cash, our future is very bright, we have these endowments, there is much potential to build a pipeline of new mines which with the correct environment we can do far better than we are now and even better than the baseline that I just presented to you all if we correct the tax situation,” said Chilembo.

The money Bills include; The Banking and Financial Services (Amendment), the Mines and Minerals Development (Amendment), the Skills Development Levy (Amendment), the Income Tax (Amendment), the Financial Intelligence Centre (Amendment), the Excess Expenditure Appropriation, the Public Procurement, the Supplementary Appropriation, the Value Added Tax (Amendment), and the Property Transfer Tax (Amendment) Bills of 2020.