Saturday, June 15, 2024

Why should Zambians be suffering when Copper Prices are at an all time high

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ABOUT AN ILLICIT LOVE AFFAIR: THE CASE OF UPND AND THE MINES

By Sean Tembo – PeP President

1. There is no question that Zambia’s economy has gone through ups and downs since independence. Due to the fact that we are heavily dependent on copper exports, our economy has performed exceptionally well during the times that copper prices have been high on the world market, and has performed poorly during the times when copper prices have been low.

2. During the first and second republics, KK managed to build various national infrastructure out of proceeds of copper. He managed to provide free education from grade 1 to university, he managed to set up industries in each and every district of Zambia, all from proceeds of copper. This gravy train came to a screeching halt when copper prices fell on the world market in the late 80s, which was totally understandable.

3. Similarly, during the second term of the Mwanawasa administration, we benefited from high copper prices in terms of high economic growth, the extremely low exchange rate between the Kwacha and the Dollar and a generally low cost of living as well as a huge accumulation of foreign reserves.

4. However, this time around copper prices on the world market are not just high, but they are the highest ever, at more than US$11,000 per metric tonne. But the nation does not appear to be benefiting in any way. There are no visible infrastructure projects being undertaken. The few that are in the pipeline are not funded by taxpayers but through private public partnerships (PPP). There is no significant appreciation in the Kwacha against the dollar. The cost of living is extremely high. Economic growth is stagnant. The government is even failing to buy medicines in hospitals. Our foreign reserves are depleting at a very fast rate as BOZ tries to support the Kwacha. ZRA is failing to meet its targets.

5. In other words, there is nothing to show for the current highest copper prices on the world market in recorded history. Nothing at all. The question is why? Why should this country suffer when copper prices are low and then suffer again when copper prices are high? When are we ever going to take a break from suffering?

6. The answer is simple. We are unable to benefit from high copper prices because we have an administration in office that decided to give the mines a de facto tax holiday. Based on recent studies, on average the mines are able to make a decent profit and sustain their operations when copper prices are at US$4,000 per metric tonne. So imagine the number of supernormal profits that the mines are currently making with copper trading at more than US$11,000 per metric tonne? And yet, we as a nation are not benefiting a single Ngwee from those profits, yet it is our copper!

7. According to the Minister of Finance’s own admission in the 2022 national budget, this de facto tax holiday has resulted in loss of more than US$2.6 billion in tax revenue. And that is even a conservative estimate. Our estimate is that the net loss in tax revenue is north of US$5 billion. That money would have been enough to pay off the entire Eurobond and further clear all local contractors who are owed money.

8. But how does the new dawn administration give the mines a tax holiday when we are supposed to be reaping the benefits of high copper prices on the world market? That is the question that every well-meaning Zambia should ask. Well, it is because most mining houses actually funded UPND during the 20 plus years that it was in the opposition, and now it is time for payback. But since UPND as a political party is just as broke as any other political party, they cannot pay back their nkongole to the mining houses by themselves, so they have to use government resources to do so. They have to give the mines a de facto tax holiday. All at the expense of the Zambian citizens who are currently dying like flies in hospitals due to lack of medicines. What a sad day in the history of our nation indeed.

23 COMMENTS

  1. 195. Madam Speaker, to attract investment and boost production in the mining sector, I propose to reintroduce the deductibility of mineral royalty for corporate income tax assessment purposes. This measure is in line with international best practice. THE REVENUE LOSS FROM THIS MEASURE IS PROJECTED AT K3.2 BILLION.

  2. Sean if you’re as candid as you sound please tell us who funds PeP? How much do you raise from member subscriptions? Almost all political Parties that are formed in Zambia trek to the British High Commission and US Embassy to seek funding. For as long as we expect others to fund our politics we’ll remain in this sorry situation. There’s no free money.

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  3. You went very early to the polls, voted in UPND. They did not waste time to make decisions to grow their personal businesses. Through madam speaker, and to make stealing lawfully, Finance Minister tricked our MPs ( read comment 1 Deja Vu ). It is now a law. Sad, we have been duped.

  4. #2 Ayatollah Funding is in different forms. Like SET he can only get donations from poor me. HH has connections with multinationals and these may be his funders. The difference between the two 1) I may be favoured when it comes to getting business with government.2) We have someone here who use national assets and resources as bet to get these funds.
    Same with national plunder… some will export all the stolen money to foreign countries…. these assets have just zero chance of returning to Zambia… the other one I call petty theft where you steal from governmet and buy 48 houses. These the State can recover depending on how the courts rule.

  5. Sean, I hope you realise that PF left the economy in a coma. The reason why we are poor as Zambians in a very rich country is because all past governments have not had the vision to truly diversify to agriculture. In all provinces we should by now have had highly mechanized massive farms either run by the state or individuals given favourable concession loans. More over our mining policies are that our foreign companies can externalize all their revenues, they just leave money in the country for paying salaries and statutory obligations, the rest of the money goes to develop their nations. Sean, lamentations wont help, atleast have a party organize it and win elections and implement your plans, if not zeroes await you again

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  6. Because only hh and upnd ministers can be rich in zambia, while the rest are considered thieves. Meanwhile the same hh sold our mines for peanuts to enrich his ugly self. Tell him to eff off

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  7. How can we feel the impact of the high copper prices in the midst of huge debt obligations?? We make profits from copper sales and they go directly to pay kaloba..the case of poor dad rich dad.

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  8. A windfall tax at least. New Dawn iyanganepo please. They are doing here in the UK

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  9. Sean keep your ignorance to yourself .Have looked at the copper production levels in other countries in 2021 ?
    Zambia is not the only country that produces copper.
    Zambia only produced 800, 696 tonnes
    USA produced 1.0 million tonnes
    China produced 1,5 million tonnes
    DRC produced 1.3 million tonnes
    Peru produced 2.3 million tonnes
    Chile produced 5.73 million tonnes
    Its one thing to produce copper and another to sale it on the world market . How can you blame you blame the UPND if in the last 10 years , the PF did almost Zero to clinch lucrative copper export deals. $11,000 per tonne is the best price and not the general price. You have to consider supply and demand issues.

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  10. #4 De Javu, you require in excess of US$10M to mount a formidable General Election program. These funds aren’t available locally and not even the few coins that diasporans throw at you can add up to such amount. Governments in the East will support you through the ruling Party while the West will connect you to corporate entities but either way that money comes with conditions and that’s what influences the policy of each Party. FDD has sponsors, the Cuban Ambassador was expelled because of Fred Mmembe and we have his position on international politics. Should Fred back the Imperialist West on any matter he’ll lose that support and he won’t be able to field as many candidates as he did in the last election. Who pays the piper calls the tune. Sean knows what I’m talking about

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  11. Ndipo Zambians you will sweat. You will sweat not normal sweat but a mixture of sweat and blood. Both are salty at taste.
    We warned amidst political noise and our points were mixed with noise. Then you picked a pompwe and his pompweliness.
    You’re are condemned to die for your choice. We warned you including the writer. The country is being torn apart by simple parliament pronouncements in the National Assembly. Who doesn’t know the dollar was manipulated in the run up to 2021 polls. Infestors are raking it big.
    Enjoy the ride.

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  12. Spaka #11
    The issue is not about owing money but benefitting from our resources.
    If we don’t collect enough money from our own resources, we shall forever continue borrowing.

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  13. I believe the government is doing well. We can hip all on the current government. These are successive issues from time from independence.
    However, current administration is liquidating local debts first and also a good chunk of international debt. Go on guys, you won’t make everyone ok but for the good of the country.

  14. “13  Issacher March 26, 2022 At 4:31 pm

    Spaka #11
    The issue is not about owing money but benefitting from our resources.
    If we don’t collect enough money from our own resources, we shall forever continue borrowing…”

    Issacher

    I think last time zambia paid $750 million debt servicing……….

    That is where your money is going……..

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  15. UPND is on course and Zambians are solidly behind the UPND with total support. Come 2026 it will be repeat results.

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  16. UPND has a five year mandate, they need to sort out the total mess left by the PF first, so the issue will take a bit of time

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  17. Sean Tembo’s argument is flawed/misleading.Economists will tell you you need long sustained high prices to have a meaningful impact.In fact now it time to save for a rainy day,not spending the surplus for political mileage.

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  18. #17  Mlevi Kachasu 
    March 26, 2022 At 11:10 pm

    “Sean Tembo’s argument is flawed/misleading.Economists will tell you you need long sustained high prices to have a meaningful impact.In fact now it time to save for a rainy day,not spending the surplus for political mileage…”

    Very flawed and shallow………

    Meant for PF caders………

  19. At this point Emmanuel mwamba sounds more relevant than ST , imo……….

    EM has reached a point where he sees what the reality is , the debt , and offers solutions based on that……….

  20. Its for the same reasons that Zambiains did not benefit from these high copper prices since the pf rule as the prices went up in 2019 when pf was at its prime.

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