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Zambia constitutes commission to devise policies for copper
Friday, 21 Oct 2011
Zambia constituted a commission to devise policies and ensure all copper related sales are receipted and accounted for through the Lusaka based Bank of Zambia and foster dialogue with mining companies over windfall taxes.
Recently, Mr Michael Sata president of Zambia complained at the receipt imbalances by some foreign mining companies prompting a temporal ban on export permits to investigate the anomalies. The ban lasted until October 16th 2011.
Mr Wilbur Simuusa mines minister of Zambia said that the committee will among other tasks, devise ways re introducing windfall tax in the mining sector to ensure Zambia benefits from its mineral wealth. The committee will be supervised by the Zambia’s Central Bank and ensure that all companies seeking to export their copper and other minerals paid part of the revenue to the Lusaka based Bank of Zambia.
Mr Simuusa said that “We are working on a systematic plan that will ensure that all mining companies pay what is due to government and we are not expecting any bureaucracy in the process. It was prudent for Zambia to benefit from the mining sector.”
Zambia’s mining and copper sector pay a paltry two percent of the Gross Domestic Product despite the huge investment by various globally renowned mining companies that include Vedanta Resources, Glencore International AG, China Non Ferrous and First Quantum Minerals. The private sector, including Zambia Chamber of Commerce and Industry supported government’s intentions adding that invoicing of copper in Zambia will enhance liquidity and foreign exchange rate and ultimately push down the interest rates in commercial banks.
Mr Geoffrey Sakulanda leader said that most of the invoices from the mining companies were generated abroad which made it difficult for Zambia to benefit from the proceedings. We welcome the decision for the mining firms to issue invoices in Zambia so that the money can remain in commercial banks for entrepreneurs to borrow instead of remitting abroad. It is envisaged that money from the mining companies if it remained in the country, the financial institutions would be more innovative and flexible and reduce interest rates and ultimately reduce the cost of doing business.
Mr Simuusa said that and Zambia may probably and before the end of the year raise its stake in the mining industry to about 35 percent from an average 15% to 20% to ensure real returns on its mineral resources and ensure security in the event of closure.
The raising of equity in mining companies to 35% would be for selected companies with large operational capacity including Maamba Collieries Mine where government has retained 35%. The remaining 65 equity is owned by Singapore’s Nava Bharat which paid USD 26 million for the country’s largest coal producer with 70 million tones of reserves.
Our intention to raise stakes in some of the major mining companies is purely to ensure that we sustain the mines in the event of closure but this in itself does not amount to nationalization and we hope to achieve a win-win situation.
Under the current arrangement, the country, through Zambia Consolidated Copper Mine Investment Holdings has 100% stake in Ndola Lime Company, 35% in Maamba Collieries Limited, Konkola Copper Mines Plc, 20.6% and Kansanshi Copper Mines Plc 20.0%.
ZCCM IH has 20% equity in Copperbelt Energy Corporation Plc, 20.0% in Konkola Copper Mines known as Konnocco. It has 20% in Copper Luanshya Mine Plc, 15% in Chambishi Non Ferrous Chine Africa Mining Plc, 15.0% and it previously had 15% in Chibuluma Mines Plc before it was sold off 100% to Jinchuan Mining.
Additionally, ZCCM IH has 15.0% in Chambishi Metals Plc, 10.0% in Mopani Copper Mines Plc 10.0% it had previously owned 2.3% in Equinox Minerals Limited before Equinox Minerals disposed off 100 percent to Barrick Gold. ZCCM IH has 1.0% in Albidon nickel miner as at end of February this year.
Some analysts are opposed to the ‘unequaled’ share ownership and seek either equalize or standardize all equity in mining companies equity at of 25% to ensure fair remittance by all mines and foster competition in the sector. However, Chamber of mines general manager Frederick Bantubonse expressed ignorance on the pronouncement by government and other economic players describing it hearsay.
The Chamber of mines expressed willingness to dialogue with government to sustain the future of the mining and copper sector. The windfall tax and electricity tariffs, among other issues have had effect on the tenure of investment by most foreign mining companies and dialogue would ensure both parties benefit from the impending policy decisions.
That is all hearsay, because we have not been approached officially by government and until we discuss, we are waiting for the opportune time. Zambia had in 2008 introduced the windfall tax which it sought to generate USD 415 million revenue annually which it sought to plough into the social sector and improve the livelihood of people in areas where mining is undertaken.
The decision was however, waived under the Rupiah Banda administration a year later in which government sought to protect the mining sector from collapse, a move that raised concern among key economic players.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)