Mines Contribute $1 billion to treasury – EITI report

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Latest figures from the Extractive Industries Transparency Initiative (EITI) reveal the mining sector accounted for more than a quarter of the Zambia government’s income, contributing K10.72 billion – over US$1 billion – in 2016.

The country’s largest taxpayer, First Quantum Minerals (FQM), accounted for 41 percent of the industry’s tax payments through its subsidiaries Kansanshi Mining, Kalumbila Minerals and First Quantum Mining and Operations.

The Zambia Revenue Authority (ZRA) collection from the sector amounted to K10.28 billion,: K2.34 billion from Kansanshi Mining, K1.1 billion from Kalumbila Minerals and K751 million from First Quantum Mining and Operations, according to the just-published EITI’s ninth report on Zambia, covering 2016.

The Extractive Industries Transparency Initiative is a global coalition of governments, companies and civil society groups working together to improve transparency and accountability in the management of revenues from natural resources.

“EITI principles are based on the belief that prudent use of natural resources contributes to economic growth, sustainable development and reduction of poverty in resource-rich countries,” said the report, compiled by London-based accounting firm Moore Stephens acting as independent administrators.

Konkola Copper Mines (KCM) was the second highest taxpayer in the industry, paying K1.24 billion to ZRA in 2016, while Lumwana Mining Company paid K1.2 billion, and Mopani Copper Mines K1.1 billion.

When other government payments such as dividends, local council rates, social payments and Environmental Protection Fund contributions are included, the state received K10.72 billion in revenue from the mining sector during the year.

Minerals Royalty tax accounted for 29 percent of the total, import VAT for 21 percent, PAYE 16 percent, company income tax 13 percent, and VAT 6 percent.

Of the K96 million paid by the sector in local council rates, Solwezi Municipal Council received 30 percent, amounting to K28.8 million.

Social payments by the industry amounted to K287 million, of which K188 million – 41 percent – was contributed by FQM operations, and K151 million by Mopani Copper Mines.

The government revenue was generated largely by the production of more than 725,359 tonnes of copper, accordingly to industry figures in the report, of which FQM’s Kansanshi and Kalumbila mines accounted for 386,394 tonnes or 53 percent, KCM reported extraction of 174,985 tonnes, Lumwana 174,985 tonnes or 17 percent, and Mopani 41,109 tonnes of 5.67 percent.

The figure for Kalumbila Minerals has grown significantly since its Sentinel Mine went into commercial production at the end of 2016.
Mining companies directly employed about 58,007 individuals representing 2 percent of the country’s 2017 total employment of 2,791,170.

EITI used a Bank of Zambia average exchange rate of K10.29 per US dollar.

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