By MAIMBOLWA MULIKELELA –

THE mining sector will be hit by severe consequences threatening its viability once various tax changes and other policies are rolled out, the Zambia Chamber of Mines (ZCM) has warned.
The Chamber raised concern on some policy measures targeted at the mining industry whose overall effect had been to substantially increase the cost of operating mining assets.
Concerns were raised on issues such as the pending rolling-out of road tolling, the introduction of export duty on semi-processed copper products and import duty on various copper products, increase of
electricity tariffs to the mines and the abolition of capital allowances.
ZCM communications manager Talent Ng’andwe said if the above measures were not urgently addressed, the combined effects threatened the viability of the mining sector and makes its extremely vulnerable to collapse in the current commodity cycle.
Highlighting the 2014 performance of the mining industry, Mr Ng’andwe said in a statement that the non-payment of the withheld Value Added Tax (VAT) refunds continued to have an adverse impact on the operations of mining companies as cash flows remained constrained.
“Zero rating of exports is not a tax incentive and is applicable across many countries.
It is designed to promote the growth of export earnings through competitive pricing on the international market.
We wish to state that the Zambia Revenue Authority’s continued withholding of tax refunds which exporters are legally entitled to, will render their products uncompetitive,” Mr Ng’andwe said.
He said the announcement to increase electricity tariffs to mining companies under the Bulk Supply Agreement by 28.8 per cent effective April 2, 2014, was another area unsettling the mining industry.
“With the falling of commodity prices on the global market which has been forecasted to remain low over the medium term against the rapid increase in production costs, the mining customers are asking for a robust, transparent and long term tariff migration path,” he said.
Going ahead, Mr Ng’andwe appealed to the Government and other players in the economy to strive to achieve value addition to minerals and encourage a more robust manufacturing sector.
It was important for the Government to focus on the diversification of the economy to areas such as agriculture and tourism.
“Create enabling environment for Small and Medium Enterprises (SME’s) to grow in order to leverage off the mining sector.
Skills development programmes and focuses on Research and Development to enhance innovation,” Mr Ng’andwe said.