Wednesday, July 24, 2024

Chamber of Mines welcome the waiver of duty on imported copper concentrates

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A new smelter unit under construction
A new smelter unit under construction

The Zambia Chamber of Mines has welcomed the removal of 7.5 per cent import duty on copper concentrates following a statement by Finance Minister Felix Mutati.

Chamber of Mines Acting Chief Executive Officer Talent Ngandwe said the Chamber and its Members are committed to working with the Government to finding solutions that will allow the mining industry in Zambia to sustain operations, protect jobs, support local communities and contribute to Government revenue.

“We note from inception that the Ministry of Finance and the Government at large are committed to fostering the sustainable operations of mining companies, as seen through its resolve to guide the line ministries, including the Zambia Revenue Authority on other issues such as Value Added Tax. This will surely help to continue contributing to job creation and poverty alleviation,” Mr Ngandwe said.

He said the Zambia Chamber of Mines is committed to working with all stakeholders to put in place a tax system that will increase revenue to the Government coffers for social and economic development on a sustainable basis and encourage investment in the Mining sector for sustainability of the industry and security of direct, indirect and induced jobs.

Mr Ngandwe said the Chamber wants a tax system that will be predictable and stable to enable long term planning by the mine operators and potential new entrants into the industry and encourage efficiency in the Mines by optimising cost profiles.

“It must be emphasised that the year 2016 has not been a good year for the mining sector and Government must be commended for striving to make the mining sector stay afloat,” he said.

He added, “The mining sector in 2015 and 2016 faced challenges that were beyond the control of all stakeholders, including the low copper price and nationwide power deficit. It is our sincere hope that the Zambian Government and the mining industry can continue to have open and fruitful discussions going forward.”

Mr Ngandwe said the removal of import duty on copper concentrates will help in stabilizing independent smelters, and finished copper output, in addition to employment and contributions to government revenue.

“The Zambia Chamber of Mines requested for a waiver before the Parliamentary Estimates Committee based on the fact that Mining companies with excess processing capacity procure copper concentrates from DR Congo with the aim of utilizing capacity of their respective smelters. However, Zambia’s own concentrate production does not meet processing capacity. Some smelters are in ramp up mode and are yet to reach design capacity.”

He added, “Smelter operations need to have a minimum feed or material treatment rate at about 80 tonnes per hour. If this is not achieved, smelter wear and tear will increase and this will eventuate into frequent shut downs as opposed to the current maintenance shut downs which occur after every two years. The normal costs of such shut downs are estimated at US$10 million for legacy operations. Ideally such costs should only be incurred after 10 years. To operate at this minimum capacity, smelter needs steady rate of feed and currently Zambia does not have sufficient mining capacity to meet all the smelters capacity.”

“To make a blend which optimizes smelting operations, Zambia needs a combination of chalcopyrite and chalcocite. However, availability of chalcocite in Zambia is limited. Only Konkola Copper Mines and Lubambe Copper Mines have high grade material suitable for optimal smelting. The deficit of such material necessitates outsourcing from Congo DR.”

He added, “Therefore, since there is a deficit in the total required Concentrates chemical composition of Chalcocite and Chalcopyrite, procurement of such material from outside Zambia is highly necessitated. If copper concentrates with less chacopyriote are used in the blend plan, operating costs will increase. This is so because Heavy Fuel Oil (HFO) consumption increases.”

He said the required design copper grade of 38 per cent cannot be sufficiently maintained with local copper concentrate material.
“To achieve or get closer to required copper grade, copper concentrates from Congo will have to be procured, whose grade ranges above 40 per cent. This pushes weighted average grade of copper closer to the required grade. This emphasizes the necessity of Congo concentrates. The proposed move will greatly diminish the amount of copper concentrates imported into Zambia. Consequently, this will hinder the operations of smelters in the country, especially for independent smelters that solely rely on acquiring concentrates. This will severely decelerate economic growth.”

Mr Ngandwe said, “Currently, Zambia has an immense deficit in terms of concentrates produced locally compared to the existing capacity to process. The present national processing capacity stands at being more than 3.6 million metric tons of concentrate per year and the output of concentrates in Zambia is around 2.9 million metric tons per year. This compels Zambian smelters to import concentrates from DRC.”

“Stakeholders and the public may wish to know that some companies have already signed long term contracts with mines in the DRC, with fixed terms. If the duty was implemented, the companies would have not been able to execute these contracts because mines in DRC will not be able to afford the duty cost as well. This will have forced the producers of concentrated in the DRC to resort to selling their products to the Far East.”

He said the introduction of this duty coupled with the imminent increase in the cost of electricity due to the migration to cost reflective tariffs, would have left mines and smelters with tough decisions to make.

“If there is insufficient supply of concentrates, finished copper output will be affected, in addition to employment and contributions to government revenue.”

4 COMMENTS

  1. Who cares what the Chamber of Mines has to say since its funded by its members the Mining companies…it would be happy if the mines paid zero tax!

  2. Chembalapoto ya mikoti nayo ukutumpa. Sell outs. Zambians need to get as much as possible from the exploitation of our mineral resources

  3. Mr Ngandwe bears our name as a Zambian but because of greedy he no longer represents the interest of our people but his pocket. Zambia has very good grades of copper concentrate but he wants to promote cheap ones and free of charge. This is the man key in miss leading the nation and government on matters key to help the nation get what is due from the mines. Sure if by just going to get my car in TZ I ‘ve to pay tax among other costs how much more bringing concentr.sws

  4. Talent Ngandwe , clearly you are unTalented, zambia does not need to import copper concentrates, we have plenty of ore, and concetrators in the country, you are the people who promoting job loses and shortcuts, what will happen to the mining?? look at the ban on cooking oil, Given Lubinda banned oil imports, already the soya and sunflower and oil processing is flourishing, we can do the same with the mines with the right policies, but Mutati behaves like he is not schooled and the so called Talent Ngandwe, is supporting things he does not understand, shame.

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