Sunday, May 19, 2024

EAZ urges mining companies to refrain from arm twisting government

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Lubinda Habazoka
Lubinda Habazoka

The Economics Association has urged mining companies to refrain from arm twisting government using lay offs to counter the proposed 2019 tax regime proposal.

EAZ President Lubinda Habazoka was responding to the Chamber of Mines statement that the new mining tax regime for 2019 could lead to 21,000 layoffs and $500 million decrease in investment spending over the next three (3) years.

Dr. Habazoka said the mining industry remains the most important industry in Zambia and a significant contributor to 75% of foreign exchange earnings.

He said the mining industry unlike other industries is very strategic and produces goods that are non-renewable and it is very important that the sector contributes significantly to Zambia’s economic development through job creation, tax revenue and linkages with other sectors.

“Zambia has one of the most favorable investment conditions in the world for the mining sector. The number of incentives such as electricity and fuel subsidies, tax and non-tax incentives have come at a great cost to the nation. It is therefore unfortunate that the mines remain uncooperative each time a new tax regime is proposed to enhance revenue collection from the sector.” Mr. Habazoka added.

He said employees should not be used as a tool for arm-twisting Government adding that the current mine tax regime is not progressive as it allows for exploitation Zambia’s mineral resources.

Dr. Habazoka said it is also unfair to reduce mining activities and capital injections into the sector at a time when metal prices are favorable.

He said halting mining operations in Zambia is equivalent to economic sabotage and it should not be tolerated especially that over 75% of foreign exchange inflows come from the mining industry.

Dr. Habazoka stated that Zambia is not the only country in Africa to tighten its mine tax regime so as to plug any revenue leakages as other nations such as Botswana, Tanzania and recently DRC enhanced their tax regimes significantly.

He said the EAZ is currently preparing an advisory note to the state to ensure that marketing and sales of part of Zambia’s mineral resources is done locally to ensure that a substantial amount of foreign exchange flows through the Zambian financial system.

21 COMMENTS

    • This man is very intelligent. I have said it before and I will say t, MOPANI needs to be given a boot. It is long overdue. Zambia must not bend to the demands of these guys who have profited a lot of the wasting asset we have. In Nigeria or Botswana they cannot do what they have been doing. Well done Dr. Habazoka.

    • Great job Dr. Habazoka … like I have always said copper prices have to quoted CIF or FOB Lusaka to stop the nonsense of transfer pricing thereby leading to tax evasion by under reporting actual sales.

      Once you prepare the document publish it here so that we can add more skin to it before the final draft goes to GRZ.

      Zambia Is Greater Than Any Single One Of Us ~ B R Mumba, Sr.

      Original Content; No Copyrights Reserved

  1. I agree. Zambians seem to have no idea that if mining companies paid their taxes and did not use transfer pricing and asset base erosion, Zambia would cover its deficit and repay its debts by 2025. No large copper mine in Zambia makes less than $100m in actual profits. No president has won this battle because the mines are controlled by brilliant minds from Canada, Australia and the UK who know that they control over 70% of Forex reserves and can mess a president up by making the ZMW a vapor- currency.

  2. The Mining Goose is really under pressure to lay the Golden eggs!
    A layer can only lay one egg in a day. Habazooka wants the layers to give two eggs per day, Eish. No wonder some investors are calling time on their Zambian investments – too much of politics in business affairs! Why don’t the real technocrats hold an indaba with the mining firms and do a Forensic Audit to check the facts? This is what should have been done before the budget presentation! Royalty tax is like Rent. It only increases cost of production and must be paid even when losses are made!

    • Examples are abound on what GRZ should do. In the DRC, the mining code has been revised only three times in the last threes decades. in Chile, the world’s biggest copper producer, CODELCO is a government parastatal. The DRC government has a reasonable stake in all mine operations (minimum35%) and comes at no cost. In our country, there have been numerous attempts to come up with a “win-win” mineral tax regime which has evidently yielded very little benefits and almost every time it is decidedly in favor of the miners.
      If copper accounts for over 70% of GRZ revenue, surely shouldn’t our leaders treat this as sacred and get involved in the running of these mines? By increasing their stake in these mines and taking deliberate measures to retrain personnel to stem capital flight through…

    • …overstated cost transfers. Currently the DRC is increasing its stake in most mines by going into JV arrangement and ensuring that government stake is no less than 49%! Eventually there will come a time when these mines will be wholly owned by Gecamines (the equivalent of ZCCM-IH). Chile is reinvesting billions of dollars in the industry to prolong mining life and mitigate dwindling grades and upgrade technology.
      Here the monitoring of the mines is under the charge of ill trained professionals and at best only have an idea about mining. THERE SHOULD BE POLITICAL WILLPOWER to ensure that Zambians get the full benefits from their prized resource. GRZ should consider increasing the stake in these mines with a view to take over. All the big mines are listed on major stock markets and there…

    • …is the LME which would do everything to counter what our learned Economist is proposing. Remember, the copper no longer belongs to GRZ but the mine owners! GRZ should retrain miners and ZRA personnel on how to carry out forensic audits to ensure cost reflective performance of these mines. Meanwhile GRZ should not relent but clearly state the current arrangement is non negotiable. Maybe we may suffer grave consequences but it will be an opportunity to diversify and channel our energies into the next viable venture – agriculture!

  3. EAZ is now a parrot for the government. Did they even get the mine chamber side of the story? Instead of sitting together working things out on how to move forward without losing jobs they are busy behaving like a government official commenting and threatening everyone who is trying to point out the wrongs in the country.

  4. Honorable Finance Minister Mrs Mwanakatwe , please revoke subsidies on electricity and fuel to the Mines, in addition to sticking to your proposed Taxes on them. They are huge profit making entities, why on earth should a poor nation still subsidize a mega multinational firm? There are enough people lining up to take over the mines if they want to leave, Copper is a depreciating resource, let’s maximize income from it while we can like Tanzania has done. let’s not be held to ransom by their threats of worker retrenchment. We need the money to pay down debts and repair our international reputation financially.

  5. Do we even know the total number of Chinese Nationals in our country to date? The numbers we see at the airports are quite alarming! They are even using the diplomatic counter! We may wake up one day and find we are outnumbered! With the many illegal mines and smelters mushrooming, revenue is not collected! Let’s not just think within the RT box. We need to get involved by having s stake in all mines but also casting the net wider!

  6. I cant distinguish between the argument coming from an economist from that of a union shop steward let alone from a party cadre. Am I the only one?

  7. There you go Zambians with the famous presumption that they are educated. Writing a few sentences here and there does not implies you understand the issue at hand. Sober up and invest time in comprehending the all issue of mining and what is involved. It’s a a very complex issue that requires a some level of intellectual intuition for anyone to decipher what is going on.

  8. Dr Lubinda Habazooka, uuhhmmm, sometimes murmurs something sensible but most of time says things that he does not understand – just for the gallery – and can be harmful to the country.
    I hope Hon Margaret Mwanakatwe will do the right thing without listening to this clown.

  9. ‘He said the EAZ is currently preparing an advisory note to the state to ensure that marketing and sales of part of Zambia’s mineral resources is done locally to ensure that a substantial amount of foreign exchange flows through the Zambian financial system.’

    Exactly because copper undoubtedly is the underlyin value(asset) that can effectively back our Kwacha and not allowing the Dollar(a local US currency) to buy our copper.

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