Oliver Saasa
Oliver Saasa

FIRST Quantum Minerals (FQM) Sentinel mine is estimated to contribute US$441 million to the country’s treasury in 2019, economist, Oliver Saasa has said.

Professor Saasa in a case study titled ‘Economic Impact of the Trident Project’, said it was additionally estimated that, in 2015, Sentinel would pay US$69 million in mineral royalty tax, rising to US$97 million and US$107 million in 2016 and 2017, respectively.

“Sentinel is projected to reach its peak in tax payments (royalty, corporate tax and variable profit tax) in 2019 when it will contribute to the national Treasury an estimatedUS$441 million in corporate tax alone,” Prof Saasa said.

Prof Saasa said although the level would subsequently taper down, the mine would continue to pay over the 2020-2027 period an average of US$272 million per annum in corporate tax.

He said Sentinel would also be paying an average of US$106 million annually in royalty tax, if it remained at six percent and an average variable profit tax of US$115 million over the same period.

On employment creation, Prof Saasa said the mining sector in North Western Province was the largest formal sector employer and it was the expectation that the Trident Project would significantly contribute to this.

“A total of 10,000 people are expected to benefit from the Project through employment, that is through direct, indirect and multiplier jobs. As of September 2013, more than 2,000 Zambians of which more than 1,400 from North West Province, were employed at the on-going construction of Sentinel,” he said.

He observed that there existed, in the Trident Project area, very low levels of formal education and inadequate employable skills amongst the people that reside around the Kalumbila mine project.

He said this made it difficult for the local population to be employed by the project and explained why it had remained a challenge for local people around Kalumbila to establish meaningful business activities that could improve people’s livelihoods.

“It is, nevertheless, the plan that the initial years of construction and production at Trident would help upscale the skills base among the immediate local population in Kalumbila. On-the-job training, for example, is one if the priority areas of the project,” he said.

He said the mining sector accounts for the largest share of Community Social Responsibility (CSR) compared to all the other sectors in Zambia, with over the 2010-2011 period, US$31.4 million was spent on CSR, followed with a huge gap by companies in real estate at US$1.2 million, those in professional, scientific and technical fields contributed US$1.1 million while deposit-taking firms such as banks contributed US$1.1 million.

He said FQM had already committed more than K128 million to CSR projects and entitlements at the Trident Project.

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19 COMMENTS

  1. how can we boast of $441 peanuts injected over a period of 5 years ,wind fall,corporate tax must be paid wake up Zambia! we don’t need foreign debt the money is here!

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    • If you were economically literate you would have understood what is been talked about here. Nowhere in this article is what you’ve written suggested. The article is talking about the progressive increase in taxes over a period of 5 years from $69m in the first year of production to S441 million in the 5th year of production. $441m is the total amount of tax that will be paid in a single year in 2019. This is the year kalumbila or Trident will have reached maximum production capacity of 300 000 plus tonnes and 60 000 tonnes of Nickel. Production in a new mine does not start with a bang. Production always starts at a low rate and then progressively increases upwards until its capacity is achieved. Taxes paid will also reflect this.

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    • Goncalves,

      ” the progressive increase in taxes over a period of 5 years from $69m in the first year of production to S441 million in the 5th year of production. ”

      Why $441 million, and not $440 million or $442 million?

      If you or professor Saasa can be that precise about predicting copper prices and therefore profits, and therefore taxes paid on profits, you are in the wrong profession.

      You should get every cent you have and buy copper futures, so you, your children and grandchildren would not have to work another day in their lives.

      The same with the IMF individual who claimed that copper prices would not rise in Edith Nawakwi’s lifetime, when they were still $2000 per pound. Any way of getting our money back – I don’t think so.

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    • Please look at the headline of this article again. It says ….COULD contribute $441 million. It doesn’t say …..WILL contribute….
      This is an estimate or a projection. This how budgets are drawn. How economic growth forecasts are made. How investment decisions are made. In short you make estimates or projections.
      Why don’t you tell us your own projections?
      Why $441 m and not $440 million? For the same reason why certain things cost K6.50 and not K6.40

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  2. Over inflated projections of tax contributions without stating how much income is expected is not a balanced presentation of issues with all due respect . It’s mostly meant to fool Zambians and entice them into accepting the foolishness going on in the mines and they always chose some selfish zambian to sing the song for them. We know and have seen how much the mines are making from our minerals and how miserable their contribution to the national economy, besides them also destroying our roads. The message is simple, pay up or get out! You have been warned.

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    • Is the income you are talking about the mine turnover or profits before or after tax? It seems Zambians’ business acumen was irreparably damaged by KK. People are reduced to ranting rubbish! So it is now a crime to carry out a cost and benefit analysis of any project lest the sensibilities of the maladjusted Zambian is injured! And by the way the Trident Project is a FQM project. And FQM has no tax issues with the government. For someone who is mourning about mining companies not paying tax, one would have thought that you would welcome a calculation of the projected tax returns so that the country is not cheated again. But again you are a Zambian and a lot of Zambians are not strong on logic!

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    • Goncalves,

      ” Is the income you are talking about the mine turnover or profits before or after tax? ”

      You should ask Anil Agarwal. When he says that KCM is showing him a profit of $500,000,000 per year, every year, he means not ‘after taxes’, he means ‘without taxes’ – which he won’t pay, because ‘he’s making a loss’, and KCM is ‘deeply in debt’.

      Remember?

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  3. Here we go again with estimates based on nothing. The truth is that this book keeper has been hired and paid by the mine to tell lies to the nation, exactly what he said on KCM. Later on he changed the story and said KCM was making huge loses. He fought hard to prevent the reintroduction of windfall tax to please his masters. This chap smells of corruption everywhere. We can’t forget the ZRL issue with his desire to claim dotting slli

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    • When was Saasa ever employed by KCM to do projections? And when did he change stories as you claim? Please link us to your sources. I am sure there’s something on the internet.

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    • @Abena Zambia, stop creating your own stories. Saasa was never connected with KCM in any shape or form. If Saasa is a corrupt can you tell us why he has not been charged? The only one who is in court over ZRL corruption is Chirwa. Stop venting bile over your own lies…..it is not healthy!

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  4. Educated f**ls working from projection which are also peanuts….nothing to sing about. If you take into account how much this multi-national will be grossing in profit.
    How can you honestly boast about corporation tax when its very easy for a corporation to reduce it. These are people like the professor here who have not had any managerial experience are appointed to run our companies.

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    • But how can you collect taxes if you don’t even have a rough estimate of what to expect?. Stop ranting and use your brain. You must know the worth of something in any exchange. For you to get the required taxes you must always have a rough estimate of what to collect. The only 1diot is YOU! Please Saasa has never been appointed to run YOUR company. Saasa runs his OWN Consultancy firm!

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  5. ” 2019 when it will contribute to the national Treasury an estimatedUS $441 million ”

    So professor Saasa is on the take too?

    First of all, they are making profit NOW, just like KCM. It was the highly corrupt minister Situmbeko Musokotwane who also said that years from now, the mines would be making a profit, all the while Anil Agarwal was pulling half a billion out of the economy every year, and still is.

    Prof. Saasa has no clue what copper prices are going to be 5 years from now, therefore, he cannot possibly predict what their profits are going to be in the future.

    Sorry professor, but you have no more credibility than the IMF analysts who said to Edith Nawakwi that ‘copper prices would not rise in her lifetime’.

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    • Oh please how can they be making profit from a mine that has not yet started producing! Too much 1diocy in Zambia. I don’t even know how to make sense out of this diatribe against Saasa. Is it his name?

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  6. ” On employment creation, Prof Saasa said the mining sector in North Western Province was the largest formal sector employer ”

    That’s because all the other sectors are being starved of money. ‘They will bring jobs’ – and take many more jobs by externalising their profits, preventing the expansion of manufacturing, agriculuture and infrastructure. Where the real job creation is.

    Prof. Saasa needs to remember one thing – this is all OUR MONEY.

    The minerals of Zambia already belong to the Zambian people. That is where the money is coming from.

    I want to know how much money it takes to buy a professor, or a finance minister. $1 million? $5 million. Someone should double that and watch them change their minds.

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    • Please stop ranting. You’re not making sense. You’re very selective in who you rant at where it concerns the mines. When are we ever going to hear speak against Chikwanda and the PF government over windfall tax. This was your speciality when Musokotwane was Finance Minister. You made him into a villain and incompetent person on this site and your blog? Why are you so quiet on PF and Chikwanda?

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  7. @ Goncalves – Your vicious protection of Saasa your relative is misleading Zambians. We all know you are doing this on purpose to save your friend/relative, but remember we are not fools. We have traveled this route before and spectacularly failed as a nation. We can’t take any risk of trusting Saasa again full final stop. The problem i have is that foools like Yaluma and company including yourself will buy this crap from Prof Saasa. This mans integrity is shattered and as an economist he should have been heard talking about the revelations of KCM CEO and assist the country but to my knowledge he has been mute on the issue. This research is useless and must be thrown away in the incinerator.

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  8. They have failed collect the minimum royalty from KCM. This is just a justification for allowing foreign investors. If we had responsible and proactive governments, Zambia would have not been shackled to these huge foreign debt. Zambia has no politicians with political will to develop this country. The development you see that they have done are positive but they use them to cover up their misdeed and use to “con” voters.

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  9. Oh dear, oh dear, oh dear. Here we have a mine in one of the most undeveloped regions of Zambia that, working on ZEITI’s independent assessment of FQM’s propensity to pay taxes, will be like an ATM for ZRA. It will dispense cash (and provide jobs) for the next 20 years and all some commentators see fit to do is complain about it being some underhand conspiracy by ‘foreigners’. Instead: rejoice why don’t you – FQM pays its taxes – fact. The liklihood is, and what Prof Saasa is articulating, is that the chances are Sentinel will also pay its taxes.

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