Mines body predicts losses for mines with new tax regime

The Zambia Chamber of Mines says more than half of Zambia’s copper mines will become loss making at current copper prices should the government go ahead to implement tax measures announced in the 2019 national budget.

New Chamber of Mines President Goodwell Mateyo has told a media briefing to announce the release of a new report entitled ‘taxing the mining industry’ that the position would be even worse for gemstone producers, who have an additional export duty to contend with.

Mr Mateyo says the combination of royalty increases, and the new export duty, will kill off the legal gemstone industry within the next two years.

He says the only people who will benefit will be illegal miners, who do not pay taxes, and whose costs will thus be radically be cheaper than their legitimate competitors.

He states that given the seriousness of the present industry situation, the chamber had chosen to issue their informative report to provide citizens with a better understanding of the subject matter, to underpin and inform public debate.

Mr Mateyo says research shows that if the 2019 budget proposals are enacted, Zambia will have by far the highest tax burden of the 12 mining countries sampled which include Chile,Australia,DRC,Botswana,Soth Africa,Angola and Tanzania.

He says Zambia’s mines are grappling with the reality of massively increased costs next year, and that the only operational response available will be to scale back certain operations,reduce capital expenditure,and mine only the highest grades available.

Mr Mateyo says the unwanted effect of these survival measures will be lost production, lost investment, lost employment, and less supplies and goods procured from other parts of the economy.

He states that when one factors this in, the estimated  net gains the government will make next year from these changes will be a mere us$28 million.