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Alba Iulia
Sunday, November 29, 2020

Mines Contributed $1 billion to Government Revenue in 2016

Headlines Mines Contributed $1 billion to Government Revenue in 2016

Latest figures from the Extractive Industries Transparency Initiative (EITI) reveal the mining sector accounted for more than a quarter of the Zambia government’s income, contributing K10.72 billion-over US$1 billion-in 2016.

The country’s largest taxpayer, First Quantum Minerals (FQM), accounted for 41 percent of the industry’s tax payments through its subsidiaries Kansanshi Mining, Kalumbila Minerals and First Quantum Mining and Operations.

The Zambia Revenue Authority (ZRA) collection from the sector amounted to K10.28 billion,: K2.34 billion from Kansanshi Mining, K1.1 billion from Kalumbila Minerals and K751 million from First Quantum Mining and Operations, according to the just-published EITI’s ninth report on Zambia, covering 2016.

The Extractive Industries Transparency Initiative is a global coalition of governments, companies and civil society groups working together to improve transparency and accountability in the management of revenues from natural resources.

“EITI principles are based on the belief that prudent use of natural resources contributes to economic growth, sustainable development and reduction of poverty in resource-rich countries,” said the report, compiled by London-based accounting firm Moore Stephens acting as independent administrators.

Konkola Copper Mines (KCM) was the second highest taxpayer in the industry, paying K1.24 billion to ZRA in 2016, while Lumwana Mining Company paid K1.2 billion, and Mopani Copper Mines K1.1 billion.

When other government payments such as dividends, local council rates, social payments and Environmental Protection Fund contributions are included, the state received K10.72 billion in revenue from the mining sector during the year.

Minerals Royalty tax accounted for 29 percent of the total, import VAT for 21 percent, PAYE 16 percent, company income tax 13 percent, and VAT 6 percent.

Of the K96 million paid by the sector in local council rates, Solwezi Municipal Council received 30 percent, amounting to K28.8 million.

Social payments by the industry amounted to K287 million, of which K188 million – 41 percent – was contributed by FQM operations, and K151 million by Mopani Copper Mines.

The government revenue was generated largely by the production of more than 725,359 tonnes of copper, accordingly to industry figures in the report, of which FQM’s Kansanshi and Kalumbila mines accounted for 386,394 tonnes or 53 percent, KCM reported extraction of 174,985 tonnes, Lumwana 174,985 tonnes or 17 percent, and Mopani 41,109 tonnes of 5.67 percent.

The figure for Kalumbila Minerals has grown significantly since its Sentinel Mine went into commercial production at the end of 2016.

Mining companies directly employed about 58,007 individuals representing 2 percent of the country’s 2017 total employment of 2,791,170.
EITI used a Bank of Zambia average exchange rate of K10.29 per US dollar.

28 COMMENTS

  1. What a bunch of c.rap. !!

    VAT is claimed back by the mines since copper for export is exempt

    Therefore these fraudsters show us how much they pay in vat, but its all reclaimed from zra !!

    Secondly, paye is deducted from your workers salary and paid over to zra. The worker paid the paye. How does the mining company take credit for salary paye.

    Are they saying we have to thank them for creating the extractive employment that gives arise to paye ?

  2. Why are we recapping 2016 figures in 2019? ???? if information flows at such a snail’s pace then surely… by the time we make decisions as a nation the environment would have changed

  3. GRZ should be making no less than some $5bn from the vast wealth of Zambian mines.The country is being robbed by these multinational corporations.

    • We only get that because our silly politicians always go on the negotiation tables and sign development agreements to keep tax as it was 20 years ago…just look at First Quantum Minerals Ltd annual report 2017…remember FQM main production mineral is copper which accounts for 80% of revenue.

      //s1.q4cdn.com/857957299/files/doc_financials/2018/Annual-Meeting/2017-Annual-Report.pdf

    • And just how will the mining companies cover their costs since total revenues from the sector including sales of mining credits is under USD 5bn you *****.

    • Now you have finished all the loans on overpriced construction projects …you realise that $1billion is small in 2016 you were busy dancing sonta and dunna reverse….silly foooools

  4. You are even lucky to get a billion otherwise you deserve nothing. You sold the mines and you own nothing as Zambians. If owners say we cut jobs by over 50% you cannot cry because the mines are theirs. And even if you frustrate them they will go with their machinery but you will have no right to mine anything there because the mines are not yours not even the ore that is beneath them. Ask Chiluba (MHSRIP) he ate with them and there are some guys who are eating with them even now big time. Look out for toll gates cash its not your cash also. There is a cartel behind the toll gates and speed cameras. Government workers – its just piece work and ranting with no teeth.
    Disaster!!!!!

    • All this damage to our environment and daylight robbery of our minerals by the imperialists and you can even have the guts to brag that you contributed ONLY $1Billion to the treasury? You kidding, lets be serious! In any given year, Government is expected to get not anything less than $10 Billion from our rich mineral resources many which are never declared. The so called rich countries need and survive on Africa’s wealth, and this we can prove.

  5. And what has the government done with the money? Has any money been used to create other industries or starting a government mine so that we can know in future which international mine is telling the truth or bluffing. Unfortunately, it is sad that the Zambian government is behind with Data to make a dependable decision.

  6. This is either useless reporting or useless report. It doesn’t give a bench mark to other years. More questions than answers. What was the tonnage in 2015, average market prices in 2015 as compared to 2016. This is incomplete report or news. Please improve.

  7. This is either useless reporting or useless report. It doesn’t give a bench mark to other years. More questions than answers. What was the tonnage in 2015, average market prices in 2015 as compared to 2016. This is incomplete report or news. Please improve.

  8. The message is clear, this government is irresponsible regardless of how much money it can raise. They are trying to portion the blame on the mines. Yes, there is need for a fair deal in taxation but as long as we have this government, the blues will continue and so is the increase of the debt burden.

  9. The new mining tax regime is now law and the mines should adhere to it. This nosense of arm twisting Government by retrenchment threats cannot be tolerated anymore. We better have our share of the God given resources and lose the poorly paying jobs. Enough is enough.

    • How much of the money collected improves the lives of most Zambians. GRZ had to get money from NAPSA to tar a road that leads to highest tax payer in the country. I would rather have more employed in the mines than demand more taxes which go into a few people’s pockets. Not until authorities become more responsible with little resources, no more should be entrusted into their hands.

  10. Yes they can pay more than the USD 1 Billion to GRZ revenues The Good thing is they have Reports the same should be demanded from others players as part of licence obligation not simply reports but reports than are quality MAY be you can copy from the Minning Taxation in Canada itself

    In-fact better capitalism and the worthy of a mining company should be measured on how it contributes to the Environment or Society It operates in That is the ESGs that is Gov and its Environment

    They can do more as a long-term quality mining partner in Zambia //

  11. Do I read something that is not written in this article?Do I read into this a back track by the goverment to enforce the mines with the new taxes. If I am wrong can someone explain to me why on earth are the 2016 taxes paid by the mines published? what of 2017 2018

    • 2016 used as benchmark because of the low copper prices at that time averaging $4500/ton. Average in 2017/2018 is $6000/ton and simple logic tells me GRZ collected more than $1 bn or about 20% of the gross earnings from the sector. Production has since increased with the coming of Kalumbila stabilizing to near full capacity. how much more would one ask for?

  12. Infact the Taxation should be reviewed on both INFERRED Resources and INDICATED Resources to ensure its up to date with global taxation of Extractive resources

    The global EITI to whcih the Zambian EITI for those people has a rich reviews of practices on these mines like FQM Sometime no need to reinvert the wheel infact just copy the Canadian system and adapt to insulate those revenues on these mines

    Gone//

  13. That is within their control and particular to each mine but costs have fallen in mega or utra mega mining operations and projects

    Operational and Financial leverage can be levered by increasing mining output and efficiency given the upside trend in copper prices and others like cobalt on the international future markets In-fact at their level near optimal they re more effective than others other mines in decline

  14. In-fact there is no need to reduce labor but make use of it and redesign to create further value chains within the business away from exports of raw copper They need more technicians and artisans because the volumes in demand for copper and cobalt will upswing as more EV requires more winding’s and metals that transport electricity effectively Its like a new intensity need for power copper cables away from traditional switch gears and tt cables

  15. That is what makes the sales tax more better for them because they can increase productivity and mange the costs

    Its basically a CVP optimization and a mine that will increase output will be well off from this tipping point into the future The oppose of leveraging productivity or volume will confirm one mine to decline and eventual closure given their Financials and CAPEX

    Gone simply reviewing and appreciating the diverse comments quietly

Comments are closed.

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