IT’S PF TRANSACTION, SAYS MUSOKOTWANE
By NATION REPORTER
FINANCE and National Planning Minister Situmbeko Musokotwane has accused the Patriotic Front (PF) administration of being the brainchild of the now scandalously infamous and controversial royalty transaction with Kansanshi Mines which has seen government dubiously surrender 20 percent shares of the ZCCM-IH to First Quantum Minerals (FQM).
The transfer of the ZCCM-IH 20 percent shares to FQM by government has sparked outrage among Zambians as they feel the deal between government and Kansanshi mine is not in the interest of the country but politicians in the UPND government.
Dr Musokotwane says the transaction was mooted by the PF while in government and that the UPND administration had only inherited the royalty transaction and has since adopted it as is own.
Dr Musokotwane dispelled assertions that Government had sold its shares in Kansanshi Mines and claimed the shares were still intact.
“Government will continue collecting other taxes and that negotiations that culminated into the latest changes started about three years ago but we adopted the method because it was progressive,” Dr Musokotwane said.
Dr Musokotwane said that the PF was the one that initiated the proposal to change from the dividend model of tax to the royalty model which would see the government reap more money from the investor.
An uproar arose after First Quantum Minerals agreed to convert dividends from its Zambian copper mine Kansanshi to a revenue royalty.
The agreement follows fiscal changes implemented by President Hakainde Hichilema shortly after his election in 2021 in which royalties were made tax deductible.
In terms of the agreement, ZCCM-IH will receive 3.1 percent in a revenue royalty from the mine which is forecast to produce between 140,000 and 150,000 tons for the financial year ended December 31. But Mr Musokotwane said that the Royalty model was the best way to go because government would be able to get dividends whether the firm was making profits or not. He said the major difference was that the current dividend model made it impossible for government to get resources if the firm was not making profits.
And ZCCM IH board chairperson Dolika Banda said that the firm had engaged its shareholders over the move to adopt this model.
Ms Banda said they were expected to meet with the shareholders at an extra ordinary general meeting in order for them to understand the transaction.
And Mines Minister Paul Kabuswe said countries like Canada were using the same model and it was working wonders.