UPND Govt’s two years of mining stewardship
Published On August 16, 2023 » 1061 Views» By Times Reporter » Business, Columns
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AS Zambia observes the declaration of President Hakainde Hichilema as the winner of 2021 general elections two years ago today, it is important to look back at major developments and reforms in the mining industry.
In the main, it seems the sector will continue occupying special place in the economic sector of the country.
There is no doubt that Zambia since independence has depended on copper as the economic mainstay deriving about 70 per cent of the total national foreign exchange earnings from the sector.
Upon assuming power in 2021, the United Party for National Development (UPND)-led Government embarked on major mine tax reforms that saw the transition from a non-deductible and a deductible mining regime to make the industry more attractive to investors.
According to the Policy Monitoring and Research Centre (PMRC) Policy June Brief dubbed, ‘Zambia’s Key Reforms for the Actualization of the Three Million Tonnes of Copper in a Decade’, the Government has in the National Mineral Resource Development Policy of 2022 provided policy direction to up copper production.
The Government seeks to enhance geological mapping and mineral resource exploration to increase commercial exploitation of mineral resources in Zambia.
To facilitate the formulation of a consultative, competitive and sustainable mining tax regime, the Government has in the last two years embarked on the amendment of the Mines and Mineral Development Act of 2015.
The amendment to the 2015 Act will actualise the 2023 proposed restructuring of the mineral royalty regime concerning copper and introduce mineral royalty to be calculated on an incremental or sliding scale basis as opposed to aggregated value when the prices of copper cross respective price thresholds.
Already investors have started responding to policy changes in the mining sector as witnessed by First Quantum Minerals (FQM) pumping in more than US$1.3 billion in mine expansion which included the commission of the nickel mine whose production commenced this month.
On the other hand, KoBold Metals has so far invested $150 million to acquire the majority stake in the Mingomba Deposit, which it operates through Mingomba Mining Limited, the new licence holder.
The United States (US) investor has a majority interest of 52 per cent alongside joint venture partners EMR Capital which holds 28 per cent with ZCCM-Investment Holdings (ZCCM-IH) owning 20 per cent.
For the first time in the history of exploration in Zambia, KoBold is using Artificial Intelligence (AI) technology that is guiding the exploration and development of the Mingomba deposit.
Other milestones include the Government’s successful negotiation for Kansanshi Mine royalty conversion where it is assured of 3.1 per cent of Kansanshi’s total revenue in the next 23 years.
The royalty revenue will be paid on a quarterly basis over the entire life of the mine of Kansanshi that currently extends to the year 2045.
This, according to ZCCM-IH, will give the holding company enough liquidity to fulfil its mandate of galvanising the mining sector through increased investments in green and brownfields.
On the Artisanal, Small Scale Miners (ASM), the Government has come up with measures to support industry growth among them providing players with capital to acquire equipment which has been a major challenge to the ASM.
Previously, there was a uniform tax regime for large, medium and small players and now the government since last January came up with a presumptive tax at the rate of four per cent on gross turnover less MRT paid.
Zambia Revenue Authority (ZRA) assistant director–ASM Hambani Ngwenya confirms that the Government in the 2023 budget introduced a presumptive tax at the rate of four percent on gross turnover less MRT paid to grow the participation of the ASM in the mining value chain.
In the remaining three years, the issues surrounding Mopani Copper Mine (MCM), Konkola Copper Mine (KCM), Chambishi Metals and Kasenseli Gold Mine which needed serious and urgent recapitalisation and resumption will determine the future of mining in Zambia.
The Zambia Government then negotiated a US$1.5 billion share buyout deal with Glencore in 2021, resulting in ZCCM-IH having 100 per cent share in Mopani.
Since then, lack of capital injection has been suffocating operations of the company and the UPND government intensified efforts to scout for investors to inject capital in Mopani to raise copper production levels.
Reuters reported in July, 2023 that China’s Zijin Mining and Norinco Group, South Africa’s Sibanye-Stillwater and an investment vehicle owned by former Glencore officials have been shortlisted in the race to buy Mopani.
Another issue which is on the brink of being sorted is KCM whose operation woes started when the Patriotic Front (PF) regime took Vedanta Resources it then owners to court resulting in a lengthy liquidation battle.
But since taking over, the Government has made major strides in unlocking the impasse starting by withdrawing all the court cases it had with the Indian miner.
According to Mines and Mineral Development Minister Paul Kabuswe nine out of 10 issues have now been ironed out in readiness to hand back the mine.

. Kabuswe

Chambishi Metals has been in care-and-maintenance situation since January 2021 and, therefore, also calls for Government attention, so is Kasenseli Gold Mine which was closed in 2021 to brighten the country’s minerals diversification agenda.
The discovery of more gold deposits and now sugilite as well as lithium among other new minerals should engineer new impetus for the ‘New Dawn administration’ to come up with policy options to reap more benefits.
The Government needs to come up with a mechanism to regularise the new minerals so that they have ‘legal face’ for better resource management.
On the other hand, planned countrywide geological mapping as hinted by Mr Kabuswe at an event in Kitwe recently will be the way to go as this will provide a platform to woo investors to exploit the new minerals.

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