5 firms contribute 88% mining revenue

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GOVERNMENT revenues from the extractive industry sector significantly increased from over K3.7 billion in 2010 to over K7.5 billion in 2011, the Zambia Extractive Industries Transparency Initiative (ZEITI) report says.

The analysis of Government revenues by companies’ contribution indicates that five companies contributed approximately 88 percent of the total government revenue in 2011 and Kasanshi Mining Plc accounts for almost 56 percent of the extractive revenues for the period.
The top five extractive companies are Kansanshi Mining Plc, Konkola Copper Mines Plc, Lumwana Mining Company Limited, Mopani Copper Mine Plc and First Quantum Mining and Operations Limited.
According to the EITI latest reconciliation report based on the 2011 financial year, the substantial increase amounting to about K3.7 billion is mainly due to new taxes and rates introduced by the 2008 mining fiscal regime.
The taxes were effectively entered into force in 2011, further to the arrangement reached towards the end of 2010 between mining companies and the government.
The 2008 tax changes increased company tax from 25 percent to 30 percent, mineral royalty rose from 0.6 percent to three percent and introduced variable profit and windfall taxes.
“Until 2010, mining companies continued paying taxes at the old rate pending the clarification of the changes with regard to the fiscal stability clause in the development agreements signed with the government,” the report says.
The report says according to the arrangement, mining firms were requested to pay all arrears arising from 2008 mining taxes.
The back taxes which were paid in 2011 totalled over K1.7 billion.
The report also says the revenue increase is also partly due to the seven percent in copper production and an increase in metal prices.
In 2011 ZCCM-IH made social payments amounting to over K107 million (US$22.1 million) in 2011. The increase of the firm’s revenues from the extractive sector comes mainly from the sale of 2.28 percent stake in Equinox Minerals Limited, the former parent company of Lumwana Mines.
The report says dividends were relatively unchanged between periods.
At the beginning of the reconciliation, the total amount reported by Government is above K7.5 billion while the total net difference between the companies’ submissions and those of the agencies amounted to K139, 346,618.
At the end of the reconciliation, a total amount of over K7.7 billion was reported to have been received by Government between January 1, 2011 and December 31, 2011.
A net difference of K48.8 million representing 0.6 percent remained unreconciled.
The report was conducted on 26 mining firms that included Konkola Copper Mine, Kansanshi Mining Plc, Mopani Copper Mines Plc, First Quantum Mining and Operations Limited, Lumwana Mining Company Limited and NFC Africa Mining Plc.
Other firms are Chambishi Copper Smelter Limited, Ndola Lime Company Limited, and Chambeshi Metals, Maamba Collieries Limited, Lafarge Cement Zambia and ZCCM-IH.
The EITI is a global coalition of governments, companies and civil society working together to improve transparency and accountability in the management of revenues from natural resources.
Zambia became a candidate country in May 2009 and became fully compliant on September 9, 2012. Zambias’ next validation is due before July 1, 2016.
The forth reconciliation report covers a period from January 1 to December 31, 2011.

 

 

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