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.