Message Mar 19 Jan 2016 15:22

ZCCM-IH forecasts decline in 2016 mining tax revenue - See m

ZCCM-IH chief executive officer Dr Pius Kasolo says Zambia’s mining tax revenue will drop this year on account of the low copper prices and huge job losses that occurred in the sector. More than 9,000 miners lost their jobs on the Copperbelt in 2015, and more are due to go this year, with Chibuluma Mine Plc and Kalumbila Minerals Limited being the latest to lay-off workers. Mining companies are also struggling to keep their operations afloat amid rising production costs and dwindling copper prices on the international market, which have now dipped to US$4,310.50 per tonne. Giving a 2016 operational outlook, Dr Kasolo said mining tax revenue remitted to the government is likely to drop this year on account of the huge job losses incurred in the sector. “Of course, if you think about it, PAYE is one of the biggest collection of money by ZRA. And if you lose 6,000-8,000 people, the amount of money they lose from PAYE is already huge. Then you look at the revenue from copper, most of the mining companies don’t make profit so they don’t pay taxes on the profits. And also the amount which is being exported, I reckon it will go down by about 30 per cent this year,” Dr Kasolo told journalists in Lusaka. “So the revenue to the Zambian government will go down and that is worrying for the Treasury.” He said while the fall in metal prices was worrying, there was, however likely to be an upswing and turnaround in the prices. “I am very worried. Not only copper, all the metal prices; platinum in South Africa has more than halved, gold has more than halved, copper has more than halved. Then iron is even worse! However, there is always an upswing and I reckon in two years’ time the prices will go up,” he added. And Dr Kasolo said ZCCM-IH was also affected with the fall in metal prices, but added that diversification in several sectors would help absorb some of the retrenched miners that are being laid off. “Even ZCCM is affected; we are not getting any money from the companies we have invested in. This year, we basically got zero from the investments we made from dividends so we don’t have a big chest. But what we are doing is that we are diversifying,” said Dr Kasolo. “We have diversified a lot. We are on a plan to set up a cement factory in Ndola and that will create quite a number of jobs and help to have those miners who lost their jobs to seek employment with us. With the agriculture investment, we are also looking at absorbing, because we have got 2,000 hectares in Lufwanyama area.” According to the 2015 half-year financial results, ZCCM-IH achieved a turnover of K223.1 million during the six month period ended March 31, 2015, a 75 per cent reduction, largely driven by increasing operating costs at associated companies and declining copper prices on the international market. This was down from K887 million recorded mid-year 2014 when copper prices were over US$6,800 per tonne. Foreign direct investment into the mining sector has also sharply declined from 61.7 per cent in 2012 to a paltry 1.6 per cent in 2014, according to the seventh Zambia EITI report published last month. FDI declined to US$78 million in 2014 from US$4.3. billion recorded in 2012. - See more at: http://www.postzambia.com/news.php?id=1 ... Eld6z.dpuf