Zambia’s largest taxpayer, First Quantum Minerals (FQM), was responsible for more than a third of government income from the mining sector in 2015, accounting for K3.3 billion of revenue to the State.
The company’s contribution to the nation’s coffers is expected to have risen further in 2016 with the increased copper production from its Sentinel Mine in Kalumbila.
According to analysis by the Extractive Industries Transparency Initiative (EITI) ten companies contributed approximately 88 percent of total government revenues from the extractive industries sector in 2015, with FQM’s Kansanshi Mining accounting for almost 23.60 percent of the total extractive revenues for the year from mineral royalties, income tax, pay-as-you earn (PAYE), VAT, customs duties and other taxes and fees.
“These figures demonstrate the importance of the mining sector as a whole, and First Quantum in particular, to the nation’s economy. They also emphasise how vital it is to ensure that the sector and the companies within it remain robust and profitable,” said First Quantum Country Manager General Kingsley Chinkuli.
“What’s good for First Quantum is good for Zambia,” he added.
In addition to being Zambia’s largest taxpayer, First Quantum produces around half of the nation’s copper. The red metal accounts for 60 percent of Zambia’s exports.
“The four largest mining companies in Zambia, Konkola Copper Mines and Mopani Copper Mines from the Copperbelt province and Kansanshi and Lumwana from North-Western province, account for over 80 percent of copper production in Zambia. Copper production increased marginally by 0.3 percent from 708,254 to 710,860 Mt in 2015. The marginal increase was aided by the commencement of production at Sentinel Mine which contributed 32,951Mt,” said the eighth EITI report.
The EITI has however observed that notwithstanding the increase in production, the copper industry faced challenges of low ore grade, low copper prices on the international market and constrained electricity supply in the first quarter of 2015.
“During 2015, the mining sector remained the country’s major productive industry with very high contribution in exports and government revenue but progressively lower contribution in investment, GDP and employments,” said the report.
The extractive industry contributed 78 percent of the country’s exports in 2014, but that fell dramatically to 47 percent in 2015 due to lower copper prices on the world market. As a result, the sector’s contribution to government revenue fell from 32 percent to 18 percent.
First Quantum has invested in excess of US$5.7 billion in its Sentinel and Kansanshi Mines and the Kansanshi Smelter, and has paid more than US$3 billion in taxes in the last eleven years, transforming the economy of North-Western Province and creating employment for more than 8,500 people.
Chile was the largest producer of mined copper in the world in 2015, producing almost 5.8 million tonnes. Zambia was ranked second in Africa, with the Democratic Republic of Congo taking first position, and eighth in the World. Kansanshi Mine, the largest copper mine in Zambia, was ranked 13th amongst the World’s biggest copper producing mines by capacity in 2015.