The mining firms last week threatened to pull out of the country if government implemented the proposed importation duty on copper concentrates.
A source close to the mines last week said that mine owners had said that the 7.5% import duty was going to be too high and that it would increase operating costs.
The source said the mines feel the increase in cost of doing business will threaten the viability of their firms and that the mine owners were considering taking their smelters to the Democratic Republic of Congo were production costs are cheaper.
But the Ministry of Finance has explained that Parliament has removed the proposed 7.5% importation duty on copper concentrates.
In a statement, the Ministry explains that the removal has been necessitated after an elaborate consultative process with the Parliamentary Estimates Committee and Stakeholders, is consistent with the government’s diversification drive, and a decision in the right direction.
Below is a statement as issued by the Ministry
DIVERSIFICATION DRIVE BOOSTED
Lusaka, Wednesday, 21st December, 2016. The action today by Parliament to remove the 7.5% budget proposal on importation of copper concentrates, necessitated after an elaborate consultative process with the Parliamentary Estimates Committee and Stakeholders, is consistent with the government’s diversification drive, and a decision in the right direction.
The action also exemplifies harmony with government’s commitment to diversify the economy through enhanced investment in agriculture, tourism and manufacturing – while stabilizing the mining sector and enabling effective smelter capacity utilisation, quality value addition, enriched exploration, and creation of permanent jobs.
The removal of the 7.5% proposal on importation of copper concentrates from the 2017 budget is a clear sign that the government is dedicated to managing the economy on a platform of respectable partnerships and stability of private sector investment. The measure by the government through Parliament, first and foremost, warrants the protection of jobs and, secondly, strengthens the diversification drive by instituting safeguard measures aimed at improving and sustaining the competitiveness of the local industry in the global economy. Zambia has an excess smelting capacity of over 1.2 million metric tons per annum.
The estimated K500 million, which was expected to be raised from the imposition of a 7.5% duty on importation of copper concentrates in 2017, will be compensated, recovered and possibly surpassed through the dividends which government is expected to receive from the industry.
As a Ministry, we are pleased that several mining houses have made commitments to undertake more exploration and development activities. It is our hope that their commitment will be operationalised soon, consistent with the expectations of our mutually beneficial development partnership.
Meanwhile, the Ministry of Finance expresses gratitude for the USD 300 million planned injection by private investors for manufacturing of copper wires in the Chambishi MFEZ on the Copperbelt Province. We now hope to see its timely realization so that our diversification trajectory is sustained in line with our goal of remaining focused on attaining broad development objectives of wealth creation, employment generation, and poverty reduction.
Head – Media & Public Relations
For/MINISTRY OF FINANCE