ZAMBIA Chamber of Mines president Nathan Chishimba says electricity tariffs for the mines are not subsidised as perceived by many people, but Zesco Limited finds it cheaper to supply power to those buying the commodity in raw form direct from the transmission network.
Mr Chishimba said there has been greater minerals’ policy stability in the last 18 months that resulted in improved copper production.
“This positive development is also supported by the improved external environment but we need to address certain issues such as power, adequate mining skills and minerals policy environment that investors are thinking about to ensure financial inflows into Zambia.
“We need reliable power supply and long-term reforms in the energy sector, but there is a myth that mining tariffs are subsidised by other users. This is technically incorrect, since it is cheaper for an electricity company to supply power to a mine than a residential home,” he said in an interview on the sidelines of the just ended Zambia International Mining and Energy Conference.
Mr Chishimba said Zambia’s large mining operations draw their power in raw form direct from the transmission network.
“The mines build and maintain their own sub-stations, transformers and their own distribution network. They take responsibility for distributing electricity to their own operations and often to surrounding communities, whereas Zesco is responsible for all these additional steps for all other users, whether residential or commercial,” he said.
In a separate interview, Minister of Mines Christopher Yaluma said the performance of the mining industry depends on joint collaboration between Government and the mines.
“We have had rough times before but dialogue is the solution to ensure progress. When the country experienced power deficits, interventions were made to ensure the survival of the mines through importation of power.
“Government will maintain an open-door policy and the industry will always have an opportunity to influence policies, and Government will not do something to surprise investors,” he said.
Meanwhile, the Centre for Trade Policy and Development (CTPD) has urged Government to reinstate the clause on mineral revenue sharing mechanism (MRSM) in the Mines and Minerals Act to realise the aspirations of the Seventh National Development Plan (7NDP).
CTPD acting executive director Isaac Mwaipopo said the 7NDP seeks to improve the quality of Zambian life as proposed in key continental initiatives such as the Africa Mining Vision (AMV).
Mr Mwaipopo said amendment of 2015 Mines and Minerals Development Act will help Government and local communities benefit from the country’s natural resources.
The Mines and Minerals Act of 2015 provides for the revising of the law relating to the exploration for, mining and processing of minerals; provide for safety, health and environmental protection in mining operations.
And also to provide for the establishment of the Mining Appeals Tribunal; repeal and replace the Mines and Minerals Development Act, 2008; and provide for matters connected with, or incidental to, the foregoing.
“It is discouraging to note that at the mention of mining in Zambia, the focus and conversation among policy makers is narrowed down on how to create an enabling environment for investors with little or no attention paid to how communities that host mining investments can benefit from the country’s mineral wealth and live in a conducive environment.
“Too often, these communities are displaced and their sources of livelihoods destroyed by mining operations and left with no alternative sources of income,” he said in a statement recently.
Mr Mwaipopo said the absence of clear policies and systems to curb mining companies’ practice of declaring the bulk of their investments as debt and not equity is eroding the country’s tax base.
He said the purpose of such measures is to minimise taxes payable by mining companies to Government.