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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.



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.



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.

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