By DERRICK SILIMINA
THE Zambia Chamber of Mines says the country’s mining companies have suffered an alarming drop in revenue over the three months from February-April 2020, illustrating the financial impact of COVID-19.
According to the World Bank forecast, economic growth in Sub-Saharan Africa will decline from 2.4 percent in 2019 to between minus 2.1 and minus 5.1 percent in 2020 due to the impact of the global pandemic.
Zambia Chamber of Mines Chief Executive Officer Sokwani Chilembo has said the global lockdown in response to the COVID-19 pandemic, and the ensuing economic freeze had disrupted billions of lives and was threatening decades of development progress.
“We have published this Report to kick-start a public debate, and to generate a dialogue with Government—our decision-makers that we are all looking to at this critical moment,” Chilembo said on Thursday at the launch of the Chamber’s policy brief for a post-COVID Zambian economy, entitled The Road to Recovery, at the Mulungushi International Conference Centre in Lusaka.
He stated that the report considers the economic impact of COVID-19, at global and continental levels, and specifically on Zambia adding that the report considers policy interventions, and the particular order in which they must be taken to avoid economic disaster.
Mr Chilembo said the mining companies’ collapse in revenues—falling 30 percent over the period—can be attributed to two main factors such as severe global restrictions on movement which have adversely affected the mining supply chain, and hindered the export of copper as well as the copper price which is down on average by 12 percent over the period when compared to 2019.
“So, while companies have been able to maintain production levels, they have struggled to export and sell their copper, and have received a considerably lower price for the sales they have made,” he said.
Mr Chilembo noted that the fall in mining revenues has led to a corresponding fall in mineral royalty payments which are estimated to have come in at approximately $60-65 million over the three months, rather than the $85-90 million that could have been expected, demonstrating how closely Government revenues mirror the fortunes of the mining industry.
He stressed that given escalating mining costs over recent years, and a drying up of capital, COVID-19 has added unbearable pressure on mining finances.
Mr Chilembo clarified that between 50 percent and 60 percent of the respondents to the Impact Capital Africa (ICA) June survey from the mining and mining services sector, mainly representing smaller operators, believe that their businesses will ultimately fail within the next three to 12 months.
“This finding is of great concern, given the significance of the sector to the wider Zambian economy,” he stated.
Regarding the collapse in mining revenues and royalty collections, Mr Chilembo said the COVID-19 pandemic has evidently had, and will continue to have, a large negative effect on economic activity in Zambia as is clear from the data on mining royalties, government revenues will also fall as activity and trade decline.
He emphasised that despite this, Government had to act to protect lives and livelihoods through the crisis.
In terms of the long-term fiscal position, Mr Chilembo suggested that if Zambia walks the tightrope to recovery, restructuring debt obligations under the Lazard Freres project, with revenue growth facilitated by policy reform and funding assistance, the expected long-term fiscal position should see increased revenue collections and reduced debt costs resulting from the Lazard Freres debt restructure programmes. – Story courtesy of SUMA SYSTEMS.
Covid go away. I am sure evil diasporans prayed for a pandemic
on a positive note I would like to thank lusaka times for fixing their website after I threatened to open my own. They know that I have a huge following and that people only blog here cause I am here. Kz xx
KZ if you have kids, they must be ashamed to call you daddy with your chikonko on the people living in the diaspora which includes you because you are from Malawi. Anyway back to the topic, we should not panic but diversify and invest more into agriculture to weather the storm. No need to panic because everyone is hibernating until deaths caused by COVID are controlled. The government should prioritise small scale and subsistence farming to keep people alive. The pits need to shut otherwise an epidemic kumigodi will mean us giving them away for free.
And that friend of KZ, staging robbery at KCM, Lungu something, never missed his commission. PF thugs are worst virus.
When you consistently put all your eggs in one basket expect that one day you will lose all. While the government has been putting a lot of resources in the mines and and borrowing based on the never stable revenue from the mines this was surely expected. It seems diversification is only a song for the government and not something they needed to take seriously especially with overwhelming demand for agriculture produce by our neighbors. Why has revenue also reduced in the mines if it is not also attributed to the govt inconsistent policies concerning the mines.
An African cannot be a diasporan within Africa. Africa is our home as Africans. We are the same. I am talking about those out of the continent who think the sun shines out of their behind and yet there in Europe they are considered an unwanted burden.
KZ ……
You and your PF are an unwanted burden to the west and us who pay taxes here seeing we have to bail your theiving monkey arse.s out every time with aid…….
When are you going to stop begging for aid and stand on your own ? Zambia is a rich country…
KZ, do you even know what the word diaspora mean? If your strategy is to infuriate just to get a few followings then you must be out of your mind. The reality is that good healthy food is the secrect to deal with comorbidity in most deaths caused by COVID. We need to prioritise resources in revamping the agriculture sector.
Copper prices are going up and they are now above $6,000/ton. And in Zambia mines do not just mine copper that’s why when they are told that you are complaining that business is bad could you please surrender the mine to government, they refuse.What a paradox. If government is serious they shouldn’t entertain these reports from the chamber of mines, this chamber has no interest of Zambians but their pay Masters. If mining has become unprofitable why not leave it. Why stay in unprofitable business? What has happened to forward contracts you talk about when copper prices go up? Government’s behaviour on fuel price is the same as mining companies behaviour on copper prices.
The republic of Zambia does not serve it’s citizens well when it comes to our minerals. In fact all over mineral Rich Africa including zSS, Congo, etc we are in slavery to Western conglomerates.
Investing comes with risk, let them put their risk assessment plan in place or leave. Clearly, they invested in a project going wrong due to changes in global economy. It means they close and sell ba k the mines at a loss to them. They can’t just Brian about taxes and royalties.
WE WANT OUR MINES BACK. Nationalise and run them for our benefit. The Investor project is not working. We can’t provide financial security for them if business is bad. They should take a loss. That’s the risk they took.
Our minerals must be put into good use