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Alba Iulia
Monday, February 6, 2023

Transparency in Zambia’s mining sector improves

Economy Transparency in Zambia's mining sector improves
A pupil from Luanshya Copper Mines on the business end of a rock ban and Maheu food drink after an energetic performance during the re-opening of Luanshya Copper mines. Zambia Dec 2009
A pupil from Luanshya Copper Mines on the business end of a rock ban and Maheu food drink after an energetic performance during the re-opening of Luanshya Copper mines. Zambia Dec 2009

Mining has for many years single handedly driven the Zambian economy with copper being the protagonist among the several metals in the country.

Up until 2008, there has been no examining eye which had been laid on the books of accounts to check mine companies’ income and taxes paid to or received by Government. The first Extractive Industry Transparency Initiative report for Zambia was targeted for 2008, a year that was one of the most challenging for both Government and the mining companies.

The reconciliation exercise was undertaken to help the Zambian Government identify the contribution that the extractive industry is making to the economic and social development of the country. In turn, this will help the Government to realize the potential the mineral resources have to the country through improved resource governance.

EITI is a global initiative that promotes better governance in countries rich in oil, gas and minerals and seeks to reduce the risk of diversion or misappropriation of funds generated by the development of a country’s extractive industry resources.

In 2008, the Government complained that mining companies were not paying enough taxes and then introduced a windfall tax but that was hit badly as the global financial recession battered the mining industry. This saw copper prices plummeting to one of the lowest points ever and subsequently saw several jobs being lost, investment in mining dwindling, while some mines were completely abandoned.

Performance of the sector was reflected in the first EITI Reconciliation Report based on 2008 audited accounts in February 2011.

The report revealed huge discrepancies in terms of how much the mines claimed to have paid to the Government and how much the Government’s receiving agencies confirmed to have received. With public attention focused heavily on the EITI, the 2009 report had to produce better results knowing all mines would have to be at their best as well as Government wings to avoid being exposed on the handling of public resources.

In Zambia, the mining industry has been the economic and social backbone of the economy and it is ranked as the world’s seventh largest producer of copper and the second largest producer of cobalt. Its contribution in terms of the total exports reached USD 822 million despite the country being heavily reliant on the mining of copper and cobalt but efforts now are being focused on diversifying the economy into an industrial and manufacturing base. In addition, the Zambian economy has been growing at an average rate of 6% in recent years with real Gross Domestic Product growth of about 6.6% in 2011.

Zambia published its second reconciliation report covering the 2009 financial accounts which disclosed the extractive industries’ contribution to the Zambian economy amounting to ZMK 2.6 trillion for the period under review. It is important to note that the Government reported receipts are K31.4 billion less than the extractive mining companies reportedly paid to Government in the 2009 as stated in the reconciliation report.

Mr Moore Stephens an independent reconciliator, Konkola Copper Mines Plc declared taxes amounting to ZMK 729.2 billion as compared to ZMK 726.5 billion in receipts with the Government resulting in a difference of ZMK 2.75 billion.

Mopani Copper Mine’s payment was less by ZMK 11.8 billion from what was receipted by Government and Lumwana Mining Company Limited paid a total of ZMK 229.2 billion and Government received ZMK 227.5 billion highlighting a discrepancy of ZMK 1.7 billion. NFC Africa Mining Plc paid a total of ZMK 105.8 billion to Government agencies on the other hand the Government receipted ZMK 107.9 billion with a difference of ZMK 3.8 billion.

The report observed that Zambia Consolidated Copper Mines-Investment Holdings paid ZMK 9, 1 55 million and Government received ZMK 9,188 million. Nevertheless, the number of extractive companies identified in the scoping study conducted was significantly higher than the number of extractive companies reconciled during the first EITI reconciliation exercise.

In the 2009 reconciliation report, a total of 28 extractive companies were covered as compared to 16 in the previous report, a sign that the code of secrecy’ had been decoded and laid done away with. The extractive companies selected amounted to approximately 99 per cent of the total mineral taxes received by the Zambia Revenue Authority in the 2009 report.

Kansanshi Mining Plc under reported a total of ZMK 639,792 million and Government reported to have received ZMK 641,396 million from Kansanshi Mine recording a discrepancy of ZMK 1,604 million.

As well, First Quantum Mining and Operations Limited under reported ZMK 226,039 million compared to 228,597 million received by ZRA with Chibuluma Mines under reporting ZMK 62,937 million and Government claiming to have received a higher figure of ZMK 63,559 million respectively.

[Allafrica.com]

21 COMMENTS

  1. Lets talk more of these issues and relevant developmental matters rather than the myopic Barotseland views. Lets see how we can use our resources to enrich all Zambians. The barotse issues is as backward as before 1964. Your friends elsewhere are thinking of how to reach the moon while you just dogged with barotseland witchcraft stuff! That cannot take Zambia nowhere. If there are diamonds and oil in the sands in which our brothers are now burying their heads let us exploit them for the benefit of our people, collectively just as we have exploited copper and other resources in various parts of the country. All we need is devise a way of developing the country in all corners. Forget the Barotseland wrangle, thats should be no more, be history and move on progressively as a Zambian people. 

  2. We now need to know how this money was used. Konkola Mine reports giving government K729.2 Billion in taxes and government is reporting only received K729.5. Therefore the Zambian government is reporting to have received K2.75 Billion less – Is this the money which was buried in Liato’s farm. That is number one.

  3. Out of K726.5 billion government is reporting to have received from Konkola, how much money was given to the town of Konkola for development or its all Lusaka money.

  4. Out of this report, the government is reporting to have received K31.4 Billion less than the mines said the gave government. What is the explanation for this discrepancy?

  5. Lumwana Mining Company Limited paid a total of ZMK 229.2 billion- How much did the people of North Western province get out this cut or like on no. 3 Lusaka knows better. But surely fellow Zambians how long shall we wait for Lusaka to continue robbing its own people , we need better answers. Someone will argue that this was before PF. But lets suppose the mines pay their taxes quarterly , PF government should have received taxes for 2 quarters since coming to power, how much money have they given back to Solwezi District?

  6. If you go to Konkola, Mufurila where this money come from,, you can’t believe.. please tell us, how much to you leave in those towns for development sure…

  7. 1+1=2, 1-1=0, 1*1=1; 1/1=1. This simple maths can be very daunting to many people when the basic numbers 0,1,2,3,4,5,6,7,8,9 are combined and computations are made out of them. Politicians, many times have problems with accounting for government revenues, donor funds, imprest, allowances and all that money matters in government, let alone in non-governmental organisations and what-have-you. Many people in these organisations would want to just use, eat, spend, apply, misapply, misappropriate money or you name it. They fear counting number, accounting those numbers and being responsible for results. Instead, they like deception, taking any deception tactics possible just to misrepresent the basic numbers 0,1,2,3,4,5,6,7,8,9.    

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