Royalty mineral tax model welcome-mining economist

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A mining economist in the Copperbelt Province has commended the government for shifting its tax collection model from the
dividend to the royalty method at Kansanshi Mine on its shares held by ZCCM-IH.

Speaking in an interview with ZANIS in Kitwe today, Professor Biemba Maliti, said the royalty model will enable the country to benefit from its
mineral resources.

Prof. Maliti explained that the dividend model can easily be manipulated to enable someone to declare losses every year to avoid issuing
dividends or under-declaring profits to reduce the value of dividends.

“Government should be commended for this bold decision as it will enable us to benefit from our mineral resources. As you may be aware, there has been an outcry from various stakeholders for a long time that the country is not getting enough from the mineral resources but I think this new model will now address this challenge,” he said.

He however said the royalty model should be extended to all mining companies where the government has shares through ZCCM-IH.

He said the royalty model should also be applied on all minerals other than copper.

Prof. Maliti however urged the government to be wary of any unscrupulous maneuvers aimed at depriving it of its accurate value from the mineral
resources.

Last week, the government announced the change of its revenue collection model at Kansanshi Mine from the dividend to the
royalty one to enable the country realise significant value from its stake in the mine.

Speaking when he met various mine unions in Kitwe on Friday last week, Mines and Mineral Resources Minister, Paul Kabuswe, said the government was
not getting full benefits from its shares in the mine under the dividend model hence its decision to shift from the earlier method.

And National Union of Miners and Allied Workers of Zambia (NUMAW) General Secretary, Stephen Mwaanga, said the royalty model that
has been adopted will ensure maximisation of value from the mining sectors.

Mr Mwaanga noted that the dividend model has failed to enable the government collect a fair share of profits from the mining companies.

He observed that most mining companies continuously declare losses, a situation he said may not have been a true reflection of their
operations.

“The royalty model is the best. Government will be guaranteed of its benefits from the mining companies whether they make profit or not, it
should have actually been implemented earlier,” Mr. Mwaanga said.

3 COMMENTS

  1. Really?
    Why is that I do not seem to agree with giving up ownership(dividends) in preference to rents without profits just? Any think tanks? SET please explain in simple terms what going on. This reads like ESAU giving up his birth right for a bowl of soup.
    The rationale for change of model seems playing ‘hide and seek’ ati the miner can manipulate dividend model and declare losses. Remember the first change this regime did was to allowed loyalty tax deductible the final accounts. Prof, we expect a better explanation than iya iya to the change. The question why is it easy to manpulate the dividend model?

  2. The mine will be 100% in the hands of the foriegners and we get money from what they say they sold with no sit at the table to keep them accountable…. And no one see’s a problem with this and how it can go wrong in addition as part of the deal the charges against the person running the mines are dropped????. In other words we are depending on someone who is not honest to be honest in their reports… The frog and the scorpion all over again

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