ZAMBIA Chamber of Mines (ZCM) says most mining firms are not likely to spend on capital projects in the medium term despite reclaiming value added tax (VAT) refunds from Zambia Revenue Authority (ZRA) due to low copper prices.
Since 2014, some mining companies decided to put projects on hold due to a dispute over VAT rule number 18 that requires the companies to show documentation from a country where goods are being exported to.
But last month, ZRA commissioner general Kingsley Chanda said K2.6 billion out of the K5 billion owed in VAT refund had been paid out.
Asked if stalled projects will take off, ZCM president Nathan Chishimba said ZRA is engaging affected mining companies over the matter.
“So far, there are no problems but individual companies can explain more on their suspended projects. However, most companies are now strict with capital expenditure allocations due to depressed copper prices and also the global economic environment is not yet stable.
“In the medium term, we don’t see any major investments taking place,” he said in a recent interview.
On the outlook for 2017, Mr Chishimba said the industry is cautious but optimistic.
“We are hopeful that the mining industry will overcome the global investment challenges and the ones relating to Zambia such as limited power supply and uncertainty in government regulations,” he said.
Recently, Mr Chanda said ZRA has been liquidating the arrears as long as the mining companies come with documents that show proof of exports.
“Only K2.4 billion has not been paid back due to lack of documentation and we have written to mining companies giving them a deadline to submit the documentation,” he said.
VAT rule 18 requires mining companies to obtain documents from the customs office in the country the copper is being exported to, but the commodity, usually, ends up in other countries due to the complexity of metal exports and numerous middlemen handling the exports, a move that has resulted in some companies failing to obtain documentation.