The Engineering Institution of Zambia has urged mining companies to reconsider their position to downsize on employees as a direct response to the 2019 Tax Regime.
EIZ President Engineer Sydney Matamwandi said the mining companies must critically re-examine their cost structures and supply chain costs.
Engineer Matamwandi says it is saddened to learn that some mining companies have taken resort to scaling down on production and downsizing on employees as a direct response to the 2019 Tax Regime.
He said there is an opportunity to achieve cost efficiency if the mining companies enhanced buying local services and increased local employee numbers.
Engineer Matamwandi said this approach would be a solid hedge against foreign exchange costs in addition to increasing the competitiveness of local service providers as well as the overall competence of the employee pool within the business environment.
He has reaffirmed the Institutions commitment to ensuring that the mining companies prosper and that the Government continues providing the services as well as an efficient environment that is the foundation for the long term competitiveness of the mining companies.
Engineer Matamwandi expressed hope that the mining companies will take up the challenge of exploring and effecting cost efficiencies that feed into the improvement of resource mobilization that the Government has put in place without harming production and mining income.
He stressed the need for consultative dialogue at the earliest opportunity to ensure that decisions made do not undermine the national development agenda while ensuring that the viability of the businesses whose taxes drive the economy is not compromised.
Engineer Matamwandi said the EIZ has taken keen interest in ensuring that mining companies prosper and contribute to the overall development of the country and they clearly understand that the primary role of management is to deliver shareholder value.
He said it is this return on investment that attracts investors to commit capital that is essential to the success and continuation in business of any enterprise.
Engineer Matamwandi said on the other hand, it is common knowledge that services provided by a national government are a catalyst for investment and are essential to the prosperity of enterprises engaged in business in the country.
He said in a statement that such services include good infrastructure, social services, a healthy workforce, a secure environment and a support system in the form of an effective civil service among others.
Engineer Matamwandi said these services have a direct impact on the efficiency of any business inclusive of the entire support supply chain adding that the Zambian Government has gone further in this effort by committing to supplying electricity to mining companies at rates that are not financially viable.
He said the changes to the tax regime are an effort to enhance efficiency in the mobilization of resources essential to the delivery of the support services the Government is rendering to the mining companies.
Engineer Matamwandi said these services directly feed into the long term sustainability and competitiveness of the mining companies.
“The mining companies have opted to reduce production and consequently turnover. It is not clear how reduced turnover will increase earnings. It is our view that this action adversely impacts on all stakeholders including the shareholders”, He added.