New report shows that Zambia collected over K23 million in 2013 from mines

A new report commissioned by the Chamber of Mines of Zambia has revealed that the Zambian Government collected K23, 126 million in 2013 from the four major mining companies.The four mining firms surveyed were Konkola Copper Mines, Mopani, Kansanshi and Lumwana Mines.

The study titled Enhancing mining contribution to the Zambian economy and society was undertaken by the International Council on Mining and Metals between March 2013 and November 2013.

The report also shows Zambia is now one of the countries with the highest contributions to tax revenue from mining which now stands at 32 percent of total tax revenue which has increased dramatically from 16 percent in 2008.
It shows that the mining sector also accounts for 86 percent of Foreign Direct Investment and 80 percent of exports.
The report however shows that there is uncertainty about the data on the total level of production in the country and the sector’s contributions to national income (GDP).

“Several international data sources suggest that the official Bank of Zambia figures overstate production levels. With regard to GDP contribution of the sector, the 2013 official data, which is in the process of being revised, understates the GDP contribution of mining. The unofficial estimate from the Zambian toolkit application that the sector contributes at least 12 percent it is less than 3 percent in constant prices and around 8 percent in the current prices,” the report read.

The report was launched in Lusaka Thursday by Vice President Guy Scott and attended by Mines, Energy and Water Development Minister Christopher Yaluma, ICMM Deputy President Aidan Davy and Chamber of Mines President Emmanuel Mutati.

Employment Contribution

On employment contribution, the report found that the four mining companies employed 56,300 people in 2012.
“Almost all of these workers (98-99 percent) were Zambian. Expatriate employment was lower than in other mineral producing countries except from Chile. For every job created directly by the mines, between two and four additional jobs are created in Zambia through indirect and induced employment linkages which amounts to an additional 110,000 to 220,000 jobs”

The report said mines also contribute towards human capital development through investments in skills training and support to trade schools.
It says in 2012, the four mines spent over US$ 5 million on training.
The report also highlighted the procurement challenges that face the Zambian mining sector.
It shows that the four mining companies spend US$ 3 billion on goods and services each year, of which US$ 1.6 billion is on services and US$ 1.4 billion on goods.

“While almost all services are procured from Zambian businesses and provided by Zambian nationals, very few of the goods procured are manufactured in Zambia. Procurement data shows that the majority of goods are procured from Zambian businesses but most are supplied by local agents or subsidiaries of foreign companies that import goods from elsewhere.”

Social Investment

On social investment, the report demonstrates that the four mining firms spent just under US$70 million in social investment in 2012.
“This is between 10 and 16 percent of pretax profits for Copperbelt mining companies, while North Western Province companies’ social investment is in line with other country case studies as a percentage of pretax profits,” it says.
The report also states that the competitive position of the Zambian mining industry is fragile with recent policy changes having put pressure on high cost, low productivity parts of the industry.

It says stability in policy environment and consistent application of a regulatory regime will improve the attraction of Zambia for investment.
“A systematic assessment of the adhoc policy measures that have been introduced in Zambia since 2008 could be a first step both in stabilizing and policy environment and in assessing which measures are damaging the competitiveness of the industry without degenerating significant benefits for government.