COUNTRY IN FOCUS
government. The company has the intent of managing gold
mining activities in Zambia, incorporating the whole mining
value chain from exploration, mining, processing, marketing
and value addition. What the impact of the creation of the
entity will have on the Zambian precious metals sector,
remains to be seen.
Government regulations
In 2019, the Zambian government introduced an export duty,
which was levied in addition to the 6% mineral royalty tax.
This in practical terms, resulted in precious stone miners like
Kagem, to pay 21% turnover tax. In addition, any profits were
also taxed at the prevailing 30% corporate tax rate. Fortunately,
the Zambian government announced shortly thereafter that the
15% export duty on precious stones would be scrapped in 2020.
Kagem was further adversely affected by wage negotiation
with mining unions. The outcome of the negotiations is that
unionised employees will receive a 10% increase in basic salary
for 2020 and a further 10% increase for 2021.
Administrative issues, such as awaiting correct
documentation, has also been cited as the reason that the
Zambian government withheld payment of tax refunds to the
major mining companies, in the region of 2.8-billion kwacha
(USD215-million). Maamba Collieries was fortunate to receive
the support of the Zambian government. This after having
to face some challenges to keep its 300MW coal-fired power
plant running, when one of its two units was forced to shut
down in October of last year. As a result, the country as a
whole, and specifically the mining sector, has had to deal with
power shortages.
22
African Mining March 2020
"The country as a whole, and
specifically the mining sector,
has had to deal with power
shortages.
While Zambia hosts some of the best copper deposits in the
world, the government has not done mining companies any
favours. Maybe Zambia is just too reliant on copper exports,
and diversification would go a long way in fixing a struggling
economy.
www. africanmining.co.za