ZAMBIA should handle challenges in the mining sector with caution, bearing in mind that the industry remains the mainstay of the country’s economy.
About 70 percent of Zambia’s export earnings is derived from the mining sector, which is now faced with challenges.
Some of the mining firms have attributed the problems to high cost of production arising from the adjusted tax regime. But is this entirely true?
The 2019 mining fiscal regime, which took effect from January 1, this year saw increased mineral royalty tax rates at all levels of the sliding scale.
The other changes include capitalisation rules which has been replaced with new rules based on Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA).
Government has also introduced 15 percent export duty on gold and gemstones which the mining firms argue that it will hit emerging and established operations and push them out of business.
Further, a 5 percent import levy on copper and cobalt concentrates has also been introduced and the Zambia Chamber of Mines felt that such a move could lead to a shut-down of smelters and refineries.
However, it will be prudent to take a closer look at problems besetting Konkola Copper Mines (KCM) and Mopani Copper Mines to establish if indeed the adjusted fiscal regime is the real reason for their woes.
Firstly, stakeholders ought to appreciate that KCM started facing serious operational and financial malaise way before the adjustment to the mining tax regime was effected.
The change only took effect in January this year yet KCM lost balance over three years ago and has time and again promised to recapitalise its operations.
Secondly, Mopani’s decision to shut-down Mindola North and Central shafts has nothing to do with taxation, but that the units have reached the end of their economic life. The other reasons proffered are that the shafts are old and inefficient.
Therefore, it is important to digest and do a simple research before rushing to gush out misleading statements in the public domain.
There are some politicians and Civil Society Organisations (CSO) members who do not take time to analyse issues properly but elect to set in motion distorted information especially if the matter is of a negative nature.
A simple research will reveal that the most affected are mining firms that are engaged in underground operations.
In North-Western Province, most, if not all mines, are open-cast and the cost of production is relatively lower while underground operations on the Copperbelt are labour-intensive and costly.
They are old too. It is also true that accidents mostly occur in underground mines because of the nature of the terrain.
Therefore, politicians, CSO, the Church and other organisations ought to tread cautiously when discussing matters relating to mining.
There is no harm in debating issues in the mines, but those doing so must have sufficient and accurate information rather than misleading the public and causing panic and uncertainty.
Zambia is still rich in natural resources including minerals, hence citizens should speak positively about investment.
When they have sufficient information and require positive change, citizens must debate with due decorum and not in a manner designed to incite chaos.
Mining firms on their part must give out accurate information and not issuing technical and sugar-coated statements.
When there is failure, they must admit.