16 October, 2018
Implications of the 2019 National budget for the Mineral Exploration sector
The Association of Zambian Mineral Exploration Companies (AZMEC) says measures being proposed in the 2019 National Budget are expected to have negative consequences for the mineral exploration sector and hence run contrary to stated Government policy of increased mineral exploration and growth of the mining sector.
AZMEC President, Geoffrey Mulenga said that mineral exploration is an inherently high cost, high risk activity and noted that no new viable copper discoveries had been made over the past 10 years.
“Since Zambia’s independence, only two discoveries have been made. Dramatically increased exploration activities are now required, more than ever, if Zambia is to remain a leading copper producing nation.” He said.
Exploration expenditure in the Democratic Republic of Congo has recently been estimated at over 10 times that of Zambia. This exploration vitality has translated into increased production, employment and tax revenue on the Congolese Copperbelt where copper production has increased from 343,000 tonnes in 2010 to just over 1 million tonnes in 2014. In contrast Zambian copper production has stagnated at 700-800,000 tonnes since the late 2000’s.
Unless new deposits are discovered and developed the mining industry in Zambia will continue to stagnate and ultimately contract with negative consequences for the nation as tax collection, employment, suppliers and export revenue all contract.
As illustrated by His Excellency Mr. Edgar Chagwa Lungu’s keynote speech at an International conference on geology and mining in Livingstone in July 2017, our leaders recognise the importance of mineral exploration to the future of the mining industry, and to the nation as a whole.
At this event the President further acknowledged that “The mining sector in the region is currently challenged with high exploration costs” and he further directed the Ministry of Mines to intensify exploration of the country’s mineral resources.
Mr Mulenga urged dialogue between stakeholders and stated that AZMEC had recently engaged with the Ministry of Finance to address issues of royalties, sales tax, withholding taxes and property transfer tax in the 2019 budget which AZMEC felt to be contrary to the long term health of the industry and nation as a whole.