THE Association of Mine Contractors and Suppliers have described their business performance this year, as bad.
Speaking in an interview in Kitwe yesterday, Association President Augustine Mubanga said its members failed to realise significant business opportunities due to the poor performance of the mines, especially on the Copperbelt.
“The challenges surrounding Konkola Copper Mines and Mopani Copper Mine greatly impacted negatively on the suppliers and contractors as operational activities were reduced as well as business opportunities,” Mr. Mubanga said.
Glencore, the owners of Mopani Copper Mine are on the verge of exit the Zambian market while KCM is under liquidation with no investment being pumped into the mine for almost the whole year as the government seeks for a new investor to take up the mine when the legal stand-off between Vedanta and ZCCM-IH is concluded.
Mr. Mubanga also cited the COVID-19 pandemic as another major factor that contributed to the low business opportunities for the suppliers as most mines had to downsize on labour while others went on care and maintenance as a result they could not offer any meaningful business to the suppliers and contractors.
Explaining the impact of the COVID-19 pandemic which he said has also restricted the movement of cargo from import markets , the Association President stated that the global pandemic made it difficult for Zambian suppliers to buy goods for supplying as most goods supplied to the mines are imported.
“ Suppliers are now hoping that government will intervene in 2021 by putting measures that will create a win-win situation between the mines and the local suppliers as the copper prices sour on the international market, “ he added.
He said the mines should look at the high copper prices as a motivation to increase their production and also reduce the cost of production so that they remain sustainable so that they give more business opportunities to local suppliers and contractors.
“We are hoping to see a situation where preference should be given to local suppliers and with the coming in of the Statutory Instrument on local content, we want to see a situation where the mines are in the forefront to drive support into manufacturing, industrialization and also giving long term assurance in terms of contracts to those that have already started manufacturing products that mines are consuming,” he said.
He also stated that there is need to ensure that the mining sector begins to significantly plough back into the communities they operate from through Corporate social responsibility so that the local people also benefit from the current high copper prices as much as the mines are making profits.
Mr. Mubanga also challenged the government to protect the local suppliers who are currently sidelined in terms of getting a business opportunity from the mines.
“Government should promote more Zambian companies to supply because at the end of day government will benefit more through the taxes that will be collected from these companies through pay as you earn taxes from the workers of these supplying companies, corporate taxes again from the same companies, and other taxes in addition to the mineral loyalty tax from the mining companies,” he noted.
He noted that the government is losing all these revenue generation avenues when supply contracts are given to foreign companies.
The year 2020 has been a challenging year for almost all business sectors mainly due to the Covid-19 pandemic and the instability in the performance of the Kwacha which has continued tumbling against the United States Dollar.
I don’t see any difference between Augustine Mubanga and Fanwell Banda who was the leader of the inaugural mine contractor’s association. As interim President of the new association Augustine has held on to the position in the same way Fanwell did yet he was in the forefront to condemn the latter. Why do people want to look good when they’re fighting others? Very shameful
Zambian contractors need to revise their financial models. I worked in Luanshya for 15 years. During that time, I concluded that Local contractors went for profit and exorbitant mark ups when compared to contractors from Namibia, Zimbabwe and South Africa. A paradigm shift is needed by our Zambian contractors.
It has been a tough year globally.
Sunil, Zambian contractors borrow at 40% interest for 56 days, factor that and the volatile Kwacha. It’s the environment that isn’t conducive
Its cost of doing business which leads to that Sir. Accessing money in Zambia is expensive. Imagine getting money at 30 percent monthly. then the company will pay you after 120 days. so to break even you even do a 300 percent mark up. the sooner companies sign memorandum with banks for invoice discounting and revise to 30 days payment. I wont talk about the corruption coz we all pretend it doesnt affect the buisness
Its not only mine suppliers, even our women selling potatoes, remove 1 to 1.5 kg from each bag they sell and sell them under weights telling customers that they are 10kg. They even mix a few rotten potatoes in between so that they get rid off the few rotten bags which they have. which motorist will have time to start weighing these bags before they buy and so they are cheated. Some supermarkets owned by foreigners sell a full 10kg bag at the same price as these women. Then we complain that foreigners are taking away our businesses.
We need to put in a leadership which can come in and put up a resilient economy, other countries have been battered by the same global challenges as Zambia but have not had their currencies depreciate by 52% in a single year. Whether you like it or not, it tells you that there is a management issue here.
These are due to the current government policies. If you need improvement in the mining sector then you need to change government.