The Zambia Chamber of Mines welcomes the changes to the new 2015 Mines and Minerals Development (Amendment) Act which was passed by parliament last Friday.
The Chamber maintains its position that the question of having an equitable fiscal regime that promotes the competitiveness of Zambia’s mining sector is not a zero sum choice between Government on the one hand and the mining industry on the other. Rather, it is one of making appropriate and well thought out choices that will result in a vibrant and competitive Zambian economy that promotes overall growth in the long term for Zambia. Given the pivotal importance of the mining industry in promoting long term diversified economic growth, the mining industry supports the forward thinking policy shift by Government, which will no doubt bear fruit in time to come.
We also note that the Government’s decision marks a significant shift in outlook towards the sector, and it can only be of benefit to the industry and the economy in the longer term.
However, given the intense competition we face as a country from other mining jurisdictions in the world, more needs to be done to ensure long-term competitiveness and renewed investment in the mining sector, which is key to securing growth. We are sure that if the country maintains the same momentum as exhibited by the outlook that resulted in the most recent change to the fiscal regime, this should be achievable in the next few years.
We believe the prevailing low price environment continues to present significant challenges for the mining sector over the short to medium term.
The gesture by the Government is a good lifeline that will provide much needed relief. The simplicity, stability, predictability, and ultimately the attractiveness of Zambia’s minerals fiscal policy environment and taxation regime, is vital to providing the assurances these investments require, especially given that copper mining in Zambia is a high cost business.
For the mining industry, this is critical: the instruments used within a taxation regime, and the rates at which taxes are set, together establish the incentives and disincentives a mining company faces in deciding whether and how much to invest, how many workers to employ, and what ore to extract – which in turn can affect the life-span of the mine.
If Zambia is to attract this needed investment its mining taxation levels, particularly Mineral Royalty Tax, must at the very least lie within global norms. Given Zambia’s specific production conditions, many would argue that an even bolder approach is necessary.
Since 2000, on the back of rising copper demand from China, the Zambian copper mining industry has led the nation’s development, spurring GDP growth and helping to achieve annual growth rates of 7% to 10%. The industry has ploughed more than US$14 billion into new mining ventures and trebled the country’s annual mining output to around 800 000 tonnes. This mining growth has been key in taking government tax revenue from less than half a billion Kwacha in 2000 to a peak of K8 billion ten years later.
“We are the basket which holds all the proverbial eggs. Working together we have to create a high-growth, diversified economy which spreads risk and opportunities across the economy creates more jobs and widens the tax base,” said Mr Nathan Chishimba, President of the Zambia Chamber of Mines.
“As we are seeing in the current crisis, Zambia should not be relying only on mining for its future,”Mr Chishimba said.
We commend the government for this new spirit of dialogue and cooperation, and we look forward to continuing to work together to solve these and future challenges.
The Zambia Chamber of Mines has urged Zambians to download its report on Mineral Royalty Tax, after strong endorsement by leading business personalities, who said the report would promote greater understanding of a complex issue which affects them.
The report , A guide to understanding Mineral Royalty Tax (MRT), has already been distributed widely, and is available on the Chamber’s website at www.mines.org.zm
Stakeholders who have welcomed its publication, saying it will help to promote informed comment, include Osbert Sikazwe, Dean of the School of Mines at the University of Zambia; Maybin Nsupila, CEO of the Zambia Association of Manufacturers (ZAM); Yusuf Dodia, Chairman of the Private Sector Development Association (PSDA); prominent Lusaka businessman Mark O’Donnell; and Jackson Sikamo, country manager for Chibuluma Copper Mines.
Osbert Sikazwe, Dean of the School of Mines, said: “The report will help the public to understand the wider operations of the mining sector, and to appreciate the challenges faced by the industry. It will also help people to understand how policy is formulated to enhance the growth of the industry.”
Maybin Nsupila, CEO of the Zambia Association of Manufacturers (ZAM), said any measure intended to promote debate and understanding of MRT is welcome. “The discourse by many people has been on the physical contributions the sector makes to the country’s economic growth, without understanding how the linkages ultimately benefit the country. The MRT report will give people a broader and more informed perspective.”
Yusuf Dodia, Chairman of the Private Sector Development Association (PSDA), said: “Mining plays a pivotal role in economic growth. While there have been challenges on policy as well as tax changes, there has been little or no understanding of the challenges faced by the industry. The MRT report will widen debate and promote a more informed view.”
Jackson Sikamo, country manager for Chibuluma Mines, a division of Metorex, said: “The report will help all stakeholders to appreciate what MRT is, and what its implications on fiscal policy are. It will to better-informed dialogue and debate, which are necessary for the country to come up with equitable taxation policies.”
Prominent Lusaka businessman, and Chairman of Union Gold Investment, Mark O’Donnell, welcomed the release of the report, given the competition Zambia faces from other commodity-producing countries. These include the Democratic Republic of Congo, which has “maximized the benefits realised from the mining sector, spurred by various incentives which have increased foreign direct investment”.
Chenai Mukumba, international centre coordinator for Consumer Unity and Trust Society (Cuts), described the release of the report as timely. “The initiative will help ease the misunderstanding among various players, especially the citizenry, who lack information yet are the ultimate beneficiaries of the mineral wealth.”
Peter Sinkamba, Development Planner/Environmental Protection Activist on the Copperbelt, said: “The MRT report will help to strengthen citizens’ awareness, and promote dialogue on challenges, contributions and shortcomings on policy formulation that might stifle the effective contributions of the mining and copper sector to the country’s growth.”
Zambia Chamber of Mines
Download Guide here. In a bid to improve public understanding of mining taxation, and promote informed comment, the Chamber of Mines today released a report entitled “A guide to understanding Mineral Royalty Tax (MRT)”.
The short, 15-page report is available free of charge from the Chamber of Mines as a downloadable PDF on its website www.mines.org.zm
Commenting on the release of the report, Chamber of Mines president Nathan Chishimba said: “We have recently commended the Government for annoucing the introduction of a sliding scale system for the determination of MRT rates, linked to the prevailing copper price. In order for the public to really appreciate the significance of this move, we believe the whole subject of mining taxation, and MRT in particular, needs to be better explained.
In recent years, MRT has been a hot topic. We wish to set out the cold facts, to give Zambians an understanding of a critical issue affecting the mining industry, and the wider context of taxation and investment in which the issue is situated.”
He added: “The publication of this report signals a more proactive approach by the industry in educating the public about important strategic issues. It is a natural follow-up to the media conference we held in December last year to explain the current crisis facing the global copper-mining sector. In the weeks and months ahead, there will be more such initiatives as the industry continues to engage constructively with stakeholders and the broader public.”
“A guide to understanding Mineral Royalty Tax (MRT)” has been designed to be accessible to a lay audience, and deals with the subject broadly rather than in complex detail. It covers the present situation in Zambia, explains the motivations and mechanics of MRT, and gives an outside view of our mining-tax system by the IMF and World Bank, and ends with some thoughts on the future of the mining industry.
Among the key learning points of the report are the following:
The report also considers Zambia’s approach to MRT in comparison with other mining jurisdictions.
Issued by: Talent Ng’andwe
Zambia Chamber of Mines
At the Second Special Cabinet Meeting held on Monday,15th February, 2016 at Mulungushi International Conference Centre, Cabinet made the following decisions:
Under this Item, Cabinet approved the proposed tax measures which are aimed at sustaining operations in the mining industry, securing jobs for the citizens as well as collecting more tax revenue in times of relatively high copper prices. The specific measures to be introduced are as follows:
(i) varied mineral royalty rate for copper based on the prevailing copper price;
Cabinet also approved the suspension of the ten (10) percent export duty on ores and concentrates for which there are no processing facilities in Zambia and to remove the variable profit tax on income from mining operations but maintain the corporate income tax at 30 percent.
This review in the taxation regime is deemed necessary to sustain continuous operation of existing mining companies and avert the continuation of suspension of mining operations and job losses.
Under this Item, Cabinet approved the establishment of a Leaders Contributory Pension Fund for the President and other Constitutional Office Holders and other leaders, with the following attributes:
The contributory fund will cover the President, Vice-President, Speaker of the National Assembly, Chief Justice, Judges, Ministers, Deputy Ministers, Members of Parliament, Secretary to the Cabinet, Deputy Secretary to the Cabinet, Attorney General, Auditor General, Solicitor General, Secretary to the Treasury, Special Assistants to the President, Investigator General, Director for Public Prosecution, Director General Anti-Corruption Commission, Commissioner Drug Enforcement Commission, Permanent Secretaries, Defence and Service Chiefs, Chief Executive Officers of Grant Aided Institutions and Directors on Contract, as indicated in the Report attached to the Memorandum.
Under this Item, Cabinet approved the contraction of a loan from the African Development Bank amounting to US$ 30,000,000 to support the implementation of the Skills Development and Entrepreneurship Project – Supporting Women and Youth.
The need for this loan arises from the fact that Government is unable to finance the Project from tax and non-tax sources. The loan is an Enhanced Variable Spread Loan (EVSL) which is highly concessional with an interest rate of approximately 1.02 percent (Floating Base Rate of 0.480 + Funding Margin Cost of (-0.06) + Applicable Lending Rate of 0.60), a repayment period of 15 years and a grace period of 5 years. Additionally, the loan has no charges.
Under this Item, Cabinet approved the contraction of a loan from the Export-Import Bank of United States of America amounting to US$ 73 million to support the implementation of the Design, Manufacturing and Supply of 144 Prefabricated Modular Steel Bridges Project which is intended to improve access countrywide, particularly in rural areas and spur development.
There is need to contract the loan in order to provide the resources required for the implementation of the project. The loan has an interest rate of six months LIBOR (85bps) plus Margin of 1.50 percent per annum, commitment fee of 0.125 percent, a repayment period of 8 years and a grace period of 2 years. These terms, particularly the interest rate and fees are favourable compared to the terms currently prevailing on the market. Further, the loan provides 100 percent financing with no strenuous advance payment commitments from the Treasury.
Under this Item, Cabinet approved the contraction of an additional loan from China Development Bank amounting to US$ 29.5 million to complete the Mansa-Luwingu Road Project as Government is unable to finance the project from tax and non – tax sources. There is need, therefore, to contract the additional loan in order to provide the resources required for the completion of the project. This is an additional loan with an interest rate of US$ 6 Months Libor Plus Margin of 4.5 % per annum, Commitment Fee of 0.5%, Front-End fee of 0.5, a repayment period of 10 years and a grace period of 3 years.
Under this Item, Cabinet approved the contraction of a loan from the African Development Bank amounting to US$ 50 million to support the implementation of the Lusaka Sanitation Programme – Climate Resilient Sustainable Infrastructure Project. The loan will help increase access to sustainable sanitation services to Lusaka’s residents and strengthen Lusaka Water and Sewerage Company’s capacity to manage sanitation services. Government is unable to finance the Project from tax and non – tax sources. Thus, there is need to contract the loan in order to provide the resources required for the implementation of the project.
The loan has an interest rate of approximately 1.02%, a repayment period of 15 years and a grace period of 5 years. This loan is highly concessional with favorable terms and provides 100 percent financing with no requirement for advance payment commitments from the Treasury.
Under this Item, Cabinet approved the contraction of a loan from the African Development Bank amounting to US$ 45 million to support the implementation of the Cashew Infrastructure Development Project (CIDP). The loan will contribute towards poverty reduction as well as improved household incomes.
The loan has an interest rate of approximately 1.020%, a repayment period of 15 years and a grace period of 5 years. It is highly concessional with favorable terms and provides 100 percent financing with no requirement for advance payment commitments from the Treasury.
National Road Fund Agency.
Under this Item, Cabinet approved the appointment of members to serve on the National Road Fund Agency Board. The appointment is in accordance with the National Road Fund Agency Act No. 13 of 2002.
You may wish to note that the National Road Fund Agency has operated without a Board since the expiry of the tenure of office of the last Board in June 2013. It is therefore, necessary to make this appointment to ensure that there is provision of oversight and policy guidance to the Agency management.
Under this Item, Cabinet approved in principle to introduce Bills in Parliament in order to give effect to provisions of the Constitution of Zambia Act, 2015, and the Constitution (Amendment) Act, 2015 which require the enactment of legislation.
Under this Item, Cabinet approved the appointment members to serve on the Mining Licensing Committee in accordance with the provisions of the Mines and Minerals Development Act of 2015.
The Mines and Minerals Development Act of 2008 was repealed and replaced with the Mines and Minerals Development Act of 2015. The 2015 Act provides for the establishment of the Mining Licensing Committee to be responsible for various functions. It is hoped that the aappointment of the Committee will lead to expeditious granting of mining rights and non-mining rights in a transparent and inclusive manner to ensure benefits from the exploitation of mineral resources. The tenure of office for the nominees is for a period of three (3) years.
Amounts) (Amendments) Orders, 2014 and 2015
Under this Item, Cabinet approved in principle the amending of the Loans and Guarantees (Maximum Amounts) (Amendments) Orders, 2014 and 2015 in order to increase the:
It is necessary to increase the maximum amounts of both external and domestic loans that can be raised under the Act in order to allow the Minister of Finance to access both external and domestic loans amounting to K10.5 billion to bridge the financing gap in 2016 Budget and to provide development resources in the medium term. There is also need to bring the outstanding amount into conformity with the legal thresholds following the increase in the debt as a result of depreciation of the Kwacha by more than 40 percent since the beginning of 2015.
Cabinet also took note of the following:
Under this Item, Cabinet took note of the information that at the invitation of the Zambian Government, a team from the International Monetary Fund (IMF) visited Zambia from 11th to 20th November 2015. The team discussed recent macroeconomic developments which all seem to have deteriorated as well as the outlook for the Zambian economy in the medium term. The IMF team indicated that they stand ready to assist the Zambian Government in any way they can and are due to come to Zambia in March for a further review. It should be noted that the discussions were held in a cordial and frank manner, reflecting the change in the tendency by the IMF to prescribe policy to member countries, as well as the improvement in the analytical skills within the Government system.
Under this Item, Cabinet took note of the information that a total of 15,000 hectares of land in the Luswishi Farm Block in Lufwanyama District has been allocated to three prospective investors, namely Xantium Dairies Zambia Limited, Luswishi Investment Zambia Limited and Hybrid Poultry Farms Zambia Limited, who have been allocated 5,000 hectares each.
Xantium Dairies Zambia Limited will invest a total of US$ 18.9 million over 5 years in a dairy farm with 11,000 dairy cattle and a UHT milk processing plant. The Company will create 700 jobs and will operate an out grower scheme of not less than 250 smallholder farmers.
Luswishi Investments Zambia Limited will invest a total of US$ 20 million over 5 years with the capacity to produce 30,000 metric tonnes of wheat per annum and create 500 jobs. The investor will be engaged in mixed farming of a soya/wheat rotation, livestock production, fruit tree and vegetable growing and a milling plant.
Hybrid Poultry Farms (Zambia) Limited will invest a total of US$ 42 million in developing 6 breeding farms over 5 years, produce 21,840,000 eggs and 16,380,000 day old chicks annually and grow cereals for production of stock feed. The Company will create 350 jobs and will operate an out grower scheme. Currently, there is an investor called Global Plantations Limited (GPL), which was allocated 5,000 hectares of land in 2013, and most of it is cleared. The Company is producing sunflower, soya beans and irrigated wheat and have installed a 200,000 metric tonnes capacity oil processing facility in Ndola.
Under this Item, Cabinet took note of the information from the Ministers of Energy and Water Development, Labour and Social Security, Local Government and Housing, Home Affairs and Lands, Natural Resources and Environmental Protection on the issues that came out of the consultative meetings held with the Tanker Drivers’ Union and Petroleum Transporters Association of Zambia. The meetings were aimed at finding solutions to the Tanker Drivers demands.
Hon. Chishimba Kambwili, MP
Minister of Information and Broadcasting Services
(Chief Government Spokesperson)
Reeling from the worst crisis it has faced this century, and losing millions of dollars a month in a depressed copper-price environment, the Zambian mining industry is to push for a long-term strategic consensus to promote the growth not just of the mining industry, but of the entire country.
“As an industry, we carry the weight of an entire nation on our shoulders in terms of investment, jobs and foreign exchange earnings,” said Chamber of Mines President, Mr Nathan Chishimba, speaking at a media conference in Lusaka on Wednesday 16th December.
Since 2000, on the back of rising copper demand from China, the Zambian copper mining industry has led the nation’s development, spurring GDP growth and helping to achieve annual growth rates of 7% to 10%. The industry has ploughed more than US $10 billion into new mining ventures, trebled the country’s annual mining output to around 800 000 tonnes and increased employment fourfold to more than 80 000. This mining growth has been key in taking government tax revenue from less than half a billion Kwacha in 2000 to a peak of K8 billion ten years later.
“We are the basket which holds all the proverbial eggs. Working together we have to create a high-growth, diversified economy which spreads risk and opportunities across the economy, creates more jobs and widens the tax base,” said Chishimba. “As we are seeing in the current crisis, Zambia should not be relying only on mining for its future.”
As a measure of the industry’s unity of purpose, the Zambian Chamber of Mines media conference was attended by senior executives of First Quantum Minerals (FQM), Konkola Copper Mines (KCM), Mopani and Barrick Lumwana and other senior industry figures. These are Zambia’s four largest copper mining companies, accounting for around 70% of the country’s annual output.
The objective, according to Chishimba, was to provide context and understanding for the slump facing Zambian and global copper miners after a reduction in demand in the past five years from China, the world’s largest consumer of copper (45% of world production). It has led to a five-year slide in the copper price, which is around 60% off its 2011 peak – triggering production cutbacks and layoffs in all of the world’s major copper-mining nations, from Zambia, Congo and Chile to Australia, Canada and the United States.
The conference also heard that the Zambian mining industry faced specific local constraints such as a debilitating power shortage that has reduced production capacity, increased costs and, in certain cases, forced the closure of operations, with the loss of many jobs.
“We suffer from both production challenges, such as old mines, deep ore bodies, low grades, low productivity, and regulatory challenges – for example, a constantly changing policy and tax environment. The effect is twofold: our copper is expensive to produce, and investors are reluctant to start new mines or expand existing ones.”
On the long-term prospects for the global mining industry, Chishimba said there had always been demand for copper on the back of industrialisation and modernisation of the world economy, and nothing suggests that this is about to change. However, for Zambia to benefit from that continued demand, the Zambian mining industry needs to become more competitive.
“There are new, low cost mines coming on stream in other countries that can thrive in this low price environment. Unless Zambia takes action now to address our challenges, so that we can compete with these other countries, our future as a copper producing nation is in peril,” he said.
Chishimba said the challenge is for both the industry and the country to learn the lessons of the past and present.
“This national crisis poses long-term questions over Zambia’s economic development, which cannot be avoided. We all need to come together and agree the conditions which best promote the growth both of the mines and the broader economy. As an industry, we are ready to create dialogue on this vital strategic issue on which the future of our nation depends.”
Mr Chishimba concluded by saying that the Chamber of Mines, with the full weight of support of its members, would engage with stakeholders on this topic in the coming year. It is the industry’s intention to host an ‘All Zambia’ conference next year, as part of the drive to reach long-term consensus on economic diversification.
14th October 2015-The Zambia Chamber of Mines welcomes recent efforts by the government to work collaboratively with the mining industry in addressing the current challenges revolving around recent events in the industry, namely suspension of operations, job losses and the energy deficit. The Chamber acknowledges the importance of jointly owning all efforts with government to ensure that current challenges are overcome, if not eliminated in the not too distant future. It is very clear that without such joint ownership, the task of redressing these challenges will be made even more difficult.
The current state of the mining sector in Zambia is grave, if not perilous, and it calls for urgent attention in order to sustain existing operations and avert continuation of the current spate of suspensions and loss of jobs. In this context, the Chamber views the focus on mining in the recently announced 2016 national budget as generally inadequate and at odds with the need to apply urgent and decisive restorative measures to the industry.
In the current environment, the mining industry is faced with a global downturn that draws ominous parallels with the trend last seen in 2008, when prices of commodities on the international markets experienced a severe downturn. In the last few years, the industry has faced a general upward creep in the cost of operating in Zambia due to escalating costs of inputs, labour and various taxation measures, among other things. In the normal course of business, this has represented a challenge. In a period of declining commodity prices, this challenge represents a considerable obstacle to the viability of several operations in the country, as is currently being experienced.
The Chamber reiterates its support for constructive, effective and urgent dialogue with the government and other partners to resolve the current state of the industry in Zambia. We fully support the ongoing effort by the government of Zambia to engage with the mining operations in Zambia to achieve this, and we remain committed to the process started by government to discuss urgent solutions to avert the ongoing crisis, which if not managed resolutely and urgently will result in continued job losses and loss of business within the mining sector and related industries.
The Chamber looks forward to working with the government of Zambia and ministries that have been tasked to address the various challenges facing the industry in a decisive and inclusive manner.
Mobile : +260 977381309
The Zambia Chamber of Mines, a body representing mining and allied industries in Zambia welcomes the efforts to date of the Republican President, His Excellency, Mr Edgar Chagwa Lungu and members of the Government to work with the mining industry to effect changes to the 2015 Mining Tax Regime.
The Zambia Chamber of Mines and its members are committed to working with the Government to achieving a win/win situation that will allow them to sustain operations, earn a return on their capital and encourage future investment in the industry while benefiting Zambia through protecting jobs, supporting local communities, and contributing to Government revenue.
The Zambia Chamber of Mines and its members believe that a key ingredient to achieving a sustainable win/win solution is for Zambia to have in place a fiscal regime that is able to attract investment in an increasingly competitive global environment. In relation to the Mineral Royalty Regime, the Chamber wishes to reiterate its support for the application of one mineral royalty tax rate for all mining operations. A two-tiered rate, differentiated by mining method, is not conducive to the long term health of the industry and government revenues. It does not address the need for continued investment in the country’s mines, nor does it address the fact that there are some opencast mines with higher operating costs than underground mines and vice versa. Zambia would be the only country in the world to enforce different royalty rates based on mining method.
The Chamber maintains their recommendation that the 2014 fiscal regime is reinstated for all operations whilst consultation takes place for a more amicable regime with all relevant stakeholders.
Maureen Jangulo Dlamini (Mrs.)
CHIEF EXECUTIVE OFFICER
ZAMBIA CHAMBER OF MINES
Following the successful, Zambia Chamber of Mines Inaugural Mining Awards Gala Dinner held in 2014, the Chamber is back with yet another exciting event this year to recognize and promote service and excellence in the mining industry in Zambia.
The hosting of the 2015 Gala Dinner will provide an opportune event for key players in the industry to showcase their achievements, create business linkages and share experiences.
About 350 Mining Executives, Senior Government officials, Suppliers, Cooperating Partners, Civil Society and members of the Media are expected to attend the Gala to be held on 26th June, 2015 at Radisson Blu Hotel, in Lusaka, starting at 18:30 hours.
The Chamber, has since constituted a panel of adjudicators comprising experts and distinguished persons with experience in the mining industry, which include the Ministry of Mines, Energy and Water Development, Zambia Environmental Management Agency, ZEMA, Civil society organization, Diakonia and the University of Zambia-School of Mines.
Zambia Chamber of Mines President, Jackson Sikamo observes that the Zambian Mining industry is faced with major challenges in relation to both safe production and profitability. Safe production is affected by the hazardous nature of the industry and profitability by the high cost profile of the industry and the technical complexity of mining lower grade ores which are also more complex from a mineralogical point of view. It is therefore important that the industry develops strategies which will promote continuous improvement in safe production and profitability.
“To encourage this, the Zambia Chamber of Mines came up with a mechanism to recognize members who were excelling in putting measures in place to guarantee all round continuous improvement in their operations,”Mr Sikamo said.
He said improvements to safe production and industry profitability will ensure that the industry continues on a path of responsible and sustainable mining and this will guarantee a viable mining industry which will satisfy all the stakeholders including shareholders, employees, Government, and communities in the areas where mining takes place.
Mining companies participating in this event are:
The winners will be announced and presented with appropriate awards at the Gala Dinner in various categories namely:
“As some members get recognized, other members will be encouraged to emulate them and to strive to do better. At the same time innovations which will come out of the continuous improvement efforts being made by the various companies will be shared and the industry as a whole will benefit immensely,”Mr Sikamo further said.
The Chamber President adds that apart from the recognition aspect of the annual gala awards dinner/night, this gathering affords the captains of the mining industry and their teams to meet and socialize with senior Government officials, leaders from industry which supplies goods and services to the mining industry and to network generally. This networking is critical to the sharing of industry happenings, latest issues affecting industry and the sharing of ideas on best practices.
Sponsorship opportunities towards the 2015 awards are still open for Platinum Award, Gold Award, Silver Award, Bronze Award and Copper Award.
ZAMBIA CHAMBER OF MINES
Phone : +260 211 258383
Mobile : +260 977381309
The Zambia Chamber of Mines, a body representing mining and allied industries in Zambia has welcomed the directive by the Republican President, His Excellency, Mr Edgar Chagwa Lungu to the Ministers of Finance and Mines, Energy and Water Development to effect changes to the 2015 Mining Tax Regime by 8th April 2015.
The Zambia Chamber of Mines and its members are committed to working with the Government to finding solutions that will allow them to sustain operations, protect jobs, support local communities and contribute to Government revenue.
We note that from inception the Republican President has been committed to fostering the sustainable operations of the mining companies, as seen through his resolve to guide the line ministries, including the Zambia Revenue Authority on the issue of Value Added Tax Rule 18(b).This will surely help to continue contributing to job creation and poverty alleviation.
The mining industry represents more than 86 per cent of Zambia’s Foreign Direct Investment. This investment is critical for increased capacity and production levels in the mining industry, and is fundamental to the development of growing economies such as Zambia.
It must be emphasised that the Zambia Chamber of Mines has met with Ministry of Mines, Ministry of Finance and Zambia Revenue Authority on a number of occasions both this year and last year.
These positive meetings have served to produce a useful dataset which allows both industry participants and Government to benchmark the current state of the Zambian mining sector.
The Zambia Chamber of Mines is committed to working with all stakeholders to put in place a tax system that will:
To this effect The Zambia Chamber of Mines and its members maintain their recommendation that the 2015 fiscal regime is deferred and the 2014 fiscal regime is reinstated whilst a more amicable regime is negotiated with all relevant stakeholders.
Issued by: Zambia Chamber of Mines
Lusaka (WEDNESDAY, 25th March 2015) – His Excellency Mr. Edgar Chagwa Lungu, President of the Republic of Zambia has directed the Minister of Finance and Minister of Mines and Minerals Development to effect changes to the 2015 Mineral Royalty Tax by 8th April 2015.
In letters to the two ministers today, President Lungu stated that after receiving submissions from individual mining companies and the Chamber of Mines, he has noted that the new tax regime poses a challenge to some mining houses. The President also noted that some mines are high-cost while others are low-cost operations.
“Obviously the mining industry has been affected by copper prices on the international market. It is clear that this unfavourable economic trend globally has been mainly on account of weak global demand for copper,” the Head of State said.
“I wish to take this opportunity to reiterate my government’s resolve to continue putting dialogue at the centre of our governance systems. Dialogue between my government and the mines shall continue.”
The President emphasized that government will always be amenable to progressive ideas that will assist in addressing challenges in the mining sector. The President notes that these challenges cannot be resolved overnight but he is confident that these matters are not insurmountable.
“I have therefore directed the Minister of Finance and the Minister of Mines, Energy and Water Development to review the mining tax regime and make recommendations to Cabinet by 8th April 2015,” the President directed.
Among the options the President has asked the ministers to consider, are the following:
The President also directed that the ministers should also use the current legislation and administrative procedures to ensure that mines that are facing severe challenges are assisted.
The Head of State has meanwhile called on all individuals and corporate citizens to comply with the existing tax laws.
Special Assistant to the President (Press & Public Relations)
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