Mon, 30 Nov -0001 00:00:00 +0000
By BUUMBA CHIMBULU
AN outcry by mining companies and other stakeholders yesterday compelled Government to remove the 7.5 percent duty slapped on imported copper concentrates as proposed in the 2017 national Budget.
The decision to zero rate the imported copper concentrates was arrived at after an elaborate consultative process with the Parliamentary Estimates Committee where the mines complained that the proposal would disrupt the operations of copper smelters in the country.
According to Ministry of Finance head of media and public relations, Chileshe Kandeta, the estimated K500 million, which was expected to be raised from the importation of copper concentrates in 2017, would be compensated.
Mr Kandeta explained that the money would be recovered and possibly surpassed through the dividends which Government was expected to receive from the mines.
“The measure by the Government through Parliament, first and foremost, warrants the protection of jobs and, secondly, strengthens the diversification drive by instituting safeguard measures aimed at improving and sustaining the competitiveness of the local industry in the global economy,” he said.
Mr Kandeta said Zambia had an excess smelting capacity of over 1.2 million metric tonnes of copper concentrates per annum.
He said the move by Parliament was a clear sign that the Government was dedicated to managing the economy on a platform of respectable partnerships and stability of private sector investment.
He also said the action exemplified harmony with Government’s commitment to diversify the economy through enhanced investment in agriculture, tourism and manufacturing while stabilising the mining sector.
And Mr Kandeta said the Ministry of Finance was excited by the US$300 million planned injection by private investors for manufacturing of copper wire in the Chambishi Multi-Facility Economic Zone.
“We now hope to see its timely realization so that our diversification trajectory is sustained in line with our goal of remaining focused on attaining broad development objectives of wealth creation, employment generation and poverty reduction,” he said.
He said the ministry was happy that several mining houses have made commitments to undertake more exploration and development activities.
The Zambia Chamber of Mines (ZCM) on Tuesday requested Government to waive the introduced duty on imported copper concentrates of 7.5 percent as it will seriously compromise the mining industry.
According to information obtained from ZCM, finished copper output would be affected if there was insufficient supply of concentrates.
In a document submitted to the Parliament Committee on the Budget discussions, ZCM said the deficit of such material necessitated outsourcing from Democratic Republic of Congo (DRC).
ZCM also expressed concern that some companies had already signed long term contracts with mines in DRC, with fixed terms, which would not be executed once duty was implemented.
“To achieve or get a closer to required copper grade, copper concentrates from Congo will have to be procured, whose grade ranges above 40 percent,” the document said.
ZCM said that the introduction of customs duty at 7.5 percent would wipe out any marginal profitability earned through treatment and refining charges.
“Currently, Zambia has an immense deficit in terms of concentrates produced locally compared to the existing capacity to process.
“The present national processing capacity stands at being more than 3.6 million metric tonnes of concentrates per year and the output in Zambia is around 2.9 million metric tonnes,” said the report.