Tuesday 16th January 2018

Open Zambia Reviews: Mining Contribution Reports

Yesterday saw the launch of the first independent survey of the mining sector’s contribution to Zambia at the Taj Pamodzi Hotel in Lusaka. The report was a source of good news for the county’s coffers as it showed production and tax receipts have both increased significantly in recent years with all expectations for this trend to continue.  By 2016, tax contributions are expected to double to around K10 billion.

Vice President Guy Scott launched the report called ‘Enhancing mining’s contribution to the Zambian Economy and Society’, alongside Minister of Mines, Energy and Water Development Christopher Yaluma, Chamber of Mines President Emmanuel Mutati and the author of the report Aidan Davy, Deputy President of the ICMM. The report looked at four of the countries biggest copper mines: Mopani Copper Mine, Konkola Copper Mine, Kansanshi mine and Lumwana mine. Highlights included:

•                Mining contributes 32% of tax receipts, up from 16% in 2008

•                Estimates put GDP contribution at 12%

•                Mining accounts for 80% of exports

•                Mining accounts for 86% of FDI

•                Mining accounts for 25% of private sector jobs

•                For each job created by the mines another 2 to 4 are created indirectly

•                Total social investment in 2012 at the four mines was roughly K425 million

However, the report also brings focus onto four key areas where there is still work to do: data quality and accessibility; local content and jobs; social investment and partnerships; and ensuring there is a competitive mining industry.

The data used by both the government and the mines is of a poor quality, meaning decisions can be misguided. The government and Chamber of Mines have both expressed their commitment to improving the data available, with the Zambia Revenue Authority already working on a single data template. Hopefully, this will lead to all those involved in the mining sector being better informed, an essential step forward.

The report also examines the skills shortage that the industry faces. Mines have already started to run supplier development programs and improve local industrial capability. These are important moves that will provide skills education and employment for many living locally to the mines. In 2012, 98-99% of the 56,300 employed by the four mines were Zambian nationals. This compares favourably to other countries where the ICMM has run similar research,coming second only to Chile.

Total social investment in 2012 at the four mines was almost K425 million. This shows that the investment already being made by sector is significant. However, the report recommends that social investment could be made even more effective by making use of partnerships and greater monitoring. For instance, through closer alignment between the mining companies and key stakeholders, as well as a focus on district-level development plans.

Finally, the report notes that the current successes of the mining industry rest upon fragile grounds. In order to continue to build confidence in the industry, there should be a focus on increasing transparency, and accountability. In doing so, the competitive position of the mining industry will be maintained which benefit both Zambian people as well as providing international investors wit the security and confidence they require. Policy stability was also flagged as being important in protecting the gains made in recent years and the continued increase in revenues.

There are two clear points arising from the report, firstly, greater transparency within the sector can only be a good thing. For too long the industry has been overly complicated to understand, which has only led to rumours and misconceptions. Secondly,  its clear that the contribution of the mining sector has increased in recent years and given current trends we can look forward to the improved benefits brought by the sector.  However for this to happen we need not to be scared of the industry, but to continue to work closely together for everyone’s benefit.

 

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