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Copper output in Zambia is expected to rise to 1.5 million tonnes in 2017 from 800,000 tonnes this year due to increased investment in the mining sector. The projection is due to new projects coming on stream and expansion of Lumwana Mine, First Quantum Mineral’s USD 2 billion Greenfield Trident project.

Other projects are China Nonferrous Mining Corporation’s USD 832 million copper projects and the Lubambe mine jointly owned by Brazil’s Vale, African Rainbow Minerals and state owned, ZCCM Investments Holdings. Copper output should rise from 800,000 tonnes this year to 1.5 million tonnes in 2017 as foreign companies invest in expanded capacity.

Foreign mining firms plan to invest another USD 3 billion in the sector in the next three years. The Patriotic Front government has doubled the rate of copper related royalties to six percent in the 2012 budget but many operators maintain their generous development agreements secured when they first invested.

Copper’s contribution to the overall tax take is minimal and only First Quantum owned Kansanshi Copper mine has paid a significant amount of corporate tax. To boost revenue collection, the government announced that from 2013 the capital expenditure deduction rate will be reduced to 25 percent from 100% and only from the year the capital asset is brought into use.

Mr Miles Sampa deputy Minister of Finance said that “The focus now is to boost the capacity of government institutions led by the Ministry of Mines so that we ensure total compliance of mining companies to the existing legislation.”

Mr Jeyakumar Janakar CEO of Konkola Copper Mines said that changes in the mining sector’s tax incentives negatively affect the performance of the expansion of the industry. According to the Chamber of Mines copper output is expected to hit 1.5 million tonnes in the next 5 years due to new projects in the mining sector and expansion of some mines.

THE World Bank says Zambia’s revenue from its vast mining sector will by 2015 increase by an additional US$100 million from the current US$300 million for every overall export earnings of about US$5.3 billion.

Country manager for Zambia Dr Kapil Kapoor in an interview said the World Bank had not yet projected the amount of copper that would be extracted from Zambia to generate revenues of about to US$500 million annually.

“Zambia will get tax revenues in excess of half a billion dollars a year in the next three to four years,” Dr Kapoor said in an interview.

“This year would expect the revenue to increase by about US $100 million.”

Zambia currently collects about 2 per cent of GDP in mining tax revenues.
The share of mining taxes in total tax revenues mobilised by the government is about 10 per cent.

Dr Kapoor said he expected a significant increase in revenues from the mining sector “over the next few years.”

He said although key donor support to boost Zambia Revenue Authority’s capacity to collect appropriate level of taxes from mining firms was expected to continue in the next three to four years, it was important to continue building capacity of the country’s revenue body.

“It is therefore very imperative that policies and institutions are put into place that will allow Zambia to manage those resources in the future,” he said.

Dr Kapoor said there was need to improve competitiveness of Zambia’s manufacturing industries to allow them provide inputs for the mining sector.

“Because the cost of doing business is very high, there are not able to support backward linkages with the mines,” said Dr Kapoor.

“What is imperative is the government to think very carefully at the entire value chain to make sure the resources are managed properly and invested in the development of skills, health and education, infrastructure so that the jobs that Zambia needs can be created.”/POST

Zambia is looking increasingly attractive to global mining investors, Zambian Development Agency director-general Andrew Chipwende said on Wednesday.

The global interest could be attributed to the country’s mining legislation, which he said was conducive to exploration and investment.

Speaking at the inaugural Zambian International Mining and Energy Conference in Lusaka, Chipwende pointed out that First Quantum had committed to invest over $1-billion in the Trident copper mine and smelter project and that Metorex, which operates the Chibuluma mine, had attracted a takeover from Brazilian major Vale.

According to the 2010/11 Fraser Institute Survey, Zambia ranks 57 out of 79 jurisdictions within the policy potential index, which serves as a scorecard to show how managers view a jurisdiction. This is ten positions above South Africa, which ranked 67.

Diversified resources group BHP Billiton sees Zambia as an important part of its global copper exploration programme, minerals exploration president Ian Maxwell told delegates at the conference.

He said BHP was “on a mission” to find giant projects worthy of billion-dollar investment, which would have a life-of-mine of between 20 and 30 years.

“What BHP is looking for is large, long-life, low-cost assets, which exist in transparent markets in order to continue the growth of its resource base,” said Maxwell.

The company has been involved in the development of the Mumbwa iron-oxide, copper and gold project through a joint venture with Australian junior Blackthorn Resources. BHP withdrew from the project last month, as it did not fit its profile, but has retained a 2% royalty share in Mumbwa.

Maxwell reported that BHP was involved in a number of other exploration projects in Zambia.

“Future expansion programmes of BHP will be greenfield geared and copper specific with the intention of capitalising on the current shifting of the world’s macro-economical and geopolitical focus towards Asia,” he stated.

By CHRISTINE CHISHA

THE United States government yesterday announced an additional K72 billion (about US$15 million dollars) to the Presidents Emergency Plan for Aids Relief (PEPFAR) in Zambia that would go towards the fight against HIV and AIDS.

US Secretary of State Hillary Clinton announced the additional fund when she handed over the K17.7 billion Paediatric HIV Centre for Excellence built by the US government to the Zambian government.

“The US government is impressed with the Zambian government’s commitment to tackling the challenges in the health sector hence the additional fund that would help eliminate HIV and improve health facilities and maternity units. Zambia is ahead of so many countries and their dedication to the prevention of mother to child transmission (PMTCT) is overwhelming,” she said.

The paediatriccentre for excellence is housed at the University Teaching Hospital in Lusaka.

Mrs Clinton said the building of the centre showed the partnership between America and Zambia in helping the country overcome some of the health challenges such as gender-based violence against women and girls, which is related to HIV.

She said each year, PEPFAR gives US$3 million for PMTCT and the global PEPFAR fund has increased to US$75 million to countries in Africa.

Mrs Clinton said Zambia has made tremendous progress in PMTCT with 87 percent women undergoing HIV testing, which is very crucial in ensuring that children are born HIV-free.

And President Banda has warned that Government workers found guilty of gender-based violence against women and girls risk losing their jobs.

“I am urging Zambian men to refrain from the primitive and horrible behaviour of gender-based violence against women and girls. Any Government official or worker found wanting will lose their jobs,” he said.

Mr Banda said he is confident that the centre will contribute significantly to child and maternal care in the country.

He said over the years, the US government has supported Zambia in implementing various programmes, including on population, health and nutrition.

The President thanked the US government for its invaluable support to the health sector, especially the fight against malaria, tuberculosis and HIV and AIDS.

Mr Banda said US government’s assistance was bearing fruit as manifested through the remarkable improvement made in maternal and child health, TB, malaria and HIV and AIDS indicators.

And Sister-in-charge of the centreFebbyKawamya said the centre is in operation and it is helping in caring for children with HIV grow into healthy adults.

By ANGELA CHISHIMBA

PRESIDENT Banda says he is happy with the International Monetary Fund (IMF) ‘s announcement that Zambia has been rated among the top four high-performing African countries.

President Banda’s special assistant for press and public relations Dickson Jere said this in a statement issued in Lusaka yesterday.

He said under the President’s guidance, Zambia has taken major strides to encourage foreign direct investment, with a projected influx of over US$10 billion from exports, compared to the US$900 million it earned 10 years ago.

“As a result of the improved economic climate in Zambia, there has been considerable investment in providing better schools, hospitals and access to basic facilities,” the statement reads.

Mr Jere said since President Banda’s assumption of office 31 months ago, over 300 new health centres have been commissioned and 3,600 health workers have been recruited.

He said the academic performance of young people under the guidance provided by more teachers and education facilities has greatly improved.

Mr Jere said Zambia’s economy is expected to continue growing at around seven percent this year, with the expected revenue being put back into infrastructure development, to encourage a continued cycle of growth and development.

On the IMF rating, President Banda says: “The IMF’s announcement underlines my government’s commitment to driving steady growth by creating jobs and opportunities for all Zambians. But there is still more to do. We will continue to work tirelessly to build on this accolade and achieve an even better place for Zambia in the world; above all, establishing security, stability and prosperity for all Zambians.”

MrJere said Government is also in the process of establishing multi-facility economic zones (MFEZs) and industrial parks to promote the manufacturing industry and create more jobs for Zambians.

Zambia has been rated number four after Angola, Nigeria and Sudan.

By CHARLES MUSONDA

PRESIDENT Banda’s son James has sued Kafulafuta member of Parliament George Mpombo for libel over the latter’s allegations that he was involved in the procurement of arms worth US$100 million from South Africa.

Mr Banda says Mr Mpombo’s allegation has injured his credibility and reputation and brought him into public scandal, ridicule, odium and contempt.

“The said words in their natural and ordinary meaning meant and were intended to mean by innuendo that the plaintiff is acquiring wealth corruptly, illegally and by abuse of Government. The words further meant that the plaintiff is dishonest, a thief and has illegally attained his wealth through undue influence as he is the son of the President,” Mr Banda said in his statement of claim filed in the Lusaka High Court.

He is claiming damages for libel contained in The Post newspaper edition of April 19, 2011 where the outspoken former Minister of Defence claimed that he left Government because he did not agree with President Banda’s decision to award an arms supply deal to James Banda’s allies based in South Africa.

He is also seeking an injunction to restrain Mr Mpombo, his servants or agents from publishing the said words or other similar words.

He is further claiming damages or footing of aggravated or exemplary damages and any other relief the court may deem fit.

Mr Banda said he is a prominent businessman with various business dealings with local, regional and overseas organisations through various companies which are duly incorporated pursuant to provisions of the Companies Act Chapter 388 of the Laws of Zambia.

He said he is neither a civil servant nor a politician but the President’s son.

Mr Banda said on April 17, 2011 Mr Mpombo appeared on Muvi Television and gave an interview where he maliciously issued a false, disparaging, and defamatory statement concerning his reputation and business.

He said on April 19, 2011 Mr Mpombo again falsely and maliciously uttered the same words in The Post, alleging that had the arms deal gone through, Mr Banda would have received 10 percent of the total transaction value as a kickback.

While spending K1.3 trillion (approximately 6% of 2011 budget) on road works for Kitwe and Lusaka as was recently announced by the President is a welcome move, the mode of financing these works is of great concern, says JCTR.

Since the K3.1 trillion road allocations in the 2011 national budget did not initially include these new road projects but others such as Mongu-Kalabo road, Siavonga – Sinazongwe road etc; government will have to borrow or reallocate resources from other priority arrears to complete these new projects. Even though government is saying these projects will be financed by mining tax arrears and loans, the K555 billion tax arrears and the foreign and domestic loans of 2% and 1.4% of GDP respectively, provided for in the 2011 budget are not sufficient to pay for these mega trillion projects. Government will therefore have to borrow beyond the budgetary ceilings which will certainly exacerbate the Country’s debt burden that lately has been on the increase.

Maintaining fiscal prudence as elaborated in the 2011 budget and Sixth National Development Plan is essential for continued stable macroeconomic environment and translation of macroeconomic gains achieved so far into tangible benefits, says Sydney Mwansa (Programme Officer – Economic Equity and development). However, recent developments don’t guarantee this process. More so, government’s promise to buy all the bumper maize this year entails additional borrowing. The 2011 budget has provided only K1.3 trillion for this exercise and yet according to media reports, government will need to spend not less than K2 trillion to buy all the maize. Government has already borrowed huge loans for contentious projects like mobile clinics and hearses and any further loan contraction will just destabilize the economy.  It will certainly crowd out the private sector (domestic borrowing) as it exerts upward pressure on the bank lending interest rates and creates inflationary pressures.

Within the last five years following debt cancellation in 2006, the country’s external debt stock has more than doubled; rising from US1.5 billion to US $3.4 billion (2009) out of which public debt has risen from US $700 million to US $1.5 billion during the same period. At this rate, it will not be long before the country returns to the unsustainable debt levels of the pre- debt cancellation period. It should be noted that debts are public resources as they are contracted on behalf of the Zambian people and therefore people should be consulted through their representatives who are the members of parliament. Government should be more transparent in the way it contracts loans to avoid another debt crisis. For example loan amounts, conditionalities attached to the loan, loan repayment period and the interest payable on the loan must all be publicly disclosed. This is the only way to promote transparent and hold government accountable.
Zambia has experienced debt crisis before and its economic and social scars are still visible all around us. Debt has serious implications on poverty and sustainable development of the country. With the debt reaching as high as US$7.1 billion prior to its cancellation in 2006, government could hardly provide social services as resources were diverted to debt servicing.

This experience should be a constant reminder to government and all of us to ensure that the country does not fall back into another debt trap. We therefore call for restraint in the way government contracts loans and also reiterate our call for the enactment of a debt management bill that will curtail the excessive loan contraction powers that govern currently enjoys, added Sydney.

LUSAKA (Reuters) – Zambia will buy 1.3 million tonnes of maize from its farmers after a bumper harvest left it with a surplus of 1.6 million tonnes, the Food Reserve Agency (FRA) said on Tuesday.

The state-run FRA said in a statement that the maize purchase price would be maintained at last year’s $273 per tonne to keep farmers in business despite the huge surplus.

“The export price has dropped to $180 per tonne and ideally if it was left to the market forces, the price of maize would have gone down,” FRA marketing manager Lazarous Mawele said.

Zambia’s maize production in the 2010/2011 season will rise to over 3 million tonnes from the 2.8 million tonnes produced last year, a crop forecast showed this month.

The FRA said Zambia had exported 290,000 tonnes of maize from its surplus of over 1 million tonnes last year and the bulk of the maize was sold to Zimbabwe.

“We have several countries including Kenya in East Africa asking about our maize but we are struggling to sell because we cannot find a higher price,” Mawele said.

The local maize purchases would be financed from government grants, proceeds from maize sales and commercial borrowing from banks, Mawele said.

By CHRISTINE CHISHA

GOVERNMENT has disclosed that the K1 trillion to be used on an urban roads rehabilitation programme will be paid by mining companies.

Minister of Finance and National Planning Situmbeko Musokotwane said this is money that the mining companies owe the government in taxes.

He said in 2008, mining companies had a dispute with Government over corporate taxes, variable income taxes and mineral royalties but the matter was resolved after meeting, and the mining companies are now paying arrears.

“The arrears that the mining companies are paying have created extra revenue that has been channelled to infrastructure development and rehabilitation of urban roads,” he said.

Dr Musokotwane said another potential source of the money will be the selling of bonds on the international market at US$500 million. Part of this money will be used for the urban road rehabilitation programme.

He said this in Lusaka yesterday during the recording of the Ministry of Finance and National Planning television programme, Culture Remodelling.
The programme also featured Minister of Works and Supply Gabriel Namulambe.

The theme of the programme was infrastructure development, progress and financing arrangements.

Dr Musokotwane said most roads in urban areas have had their useful life, hence the need to rehabilitate them.
He said there is nothing political about infrastructure development, rehabilitation and construction of roads.

He said when an economy is growing, there is always need to grow infrastructure to match the expansion of the economy.

Dr Musokotwane said if it was political, the private sector would not have joined in infrastructure development but they foresee more growth of the economy, which will result in high demand for more and better infrastructure.

He said more investment is coming despite this being an election year because investors have confidence in the government.

Dr Musokotwane said a review of the growth of the economy will be madebetween July and August.

He said the economy is no longer stagnant but is growing and it is only right to improve the infrastructure.

And Mr Namulambe said works on major roads are progressing well because most contractors are on site or just waiting to sign contracts.

He said some of the major road projects are the Chipata-Mfuwe, Sesheke-Senanga, Isoka-Muyombe and for the Kalabo-Sikongo roads.

Mr Namulambe expressed disappointment that some Kitwe residents were stoning the machinery moved to the site to start the road rehabilitation.

He said that the MMD government wants to ensure that more roads are constructed to ease movement of goods and people.

Mr Namulambe said it is a pity that his predecessor, Mr Mike Mulongoti is condemning the construction and rehabilitation of roads on the Copperbelt when he is the one who promised that township roads would be worked on.

He said K19 billion has been allocated for feeder roads on the Copperbelt in this year’s budget and K6 billion has already been released.

Mr Namulambe commended mining companies such as Mopani Copper Mines and Konkola Copper Mines for supplementing Government’s efforts by rehabilitating some township roads on the Copperbelt.

He said President Banda should be commended for initiating and completing development projects started by President Mwanawasa.

He said Mr Banda has shown that he is a responsible leader who wants to improve the lives of all Zambians.

LUSAKA, May 21 (Reuters) – Zambia’s economy is likely to grow beyond 7.0 percent in 2011 largely driven by investments in mining and infrastructure, Finance Minister Situmbeko Musokotwane said on Saturday.

“We are set to have very good growth in 2011. The numbers will be revised around July-August and I expect a very good number, even above 7 percent,” Musokotwane said at a media briefing.

He added: “Infrastructure development is going to be part of the growth process for Zambia.”

Zambia planned to invest 1 trillion kwacha ($216.7 million) in the rehabilitation of urban roads and the money would come from a $500 million international bond and additional tax revenue from the mines, Musokotwane said.

The International Monetary Fund in March projected Zambia 2011 growth at 6.8 percent.

Zambia’s economy grew 7.1 percent in 2010.

Musokotwane also said that inflation was not likely to exceed the 8 percent end-year target following Zambia’s bumper maize harvest of over 3 million tonnes.

Zambia’s headline consumer inflation slowed to 8.8 percent year-on-year in April, a rare example of easing price pressures in Africa caused in part by a drop in the cost of basic food.

(Reporting By Chris Mfula, Editing by Olivia Kumwenda)

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