. SHULTZ

MINING, the bedrock of Zambia’s economy, is going through one of its roughest times in the country’s history and has subsequently sent the economy staggering.
Copper prices have plummeted to near-record low prices with reduced demand after China, the main buyer of the commodity, slowed down in the purchase of the orange metal.
Jobs in the mines have been lost in thousands as mine owners embark on downsising.
Calls by the Zambia Chamber of Mines that a long-term strategic consensus in the mining sector be reached now to promote diversification and economic growth is welcome.
What with support coming in from the US, Canada and Britain through their country representatives!
US Ambassador to Zambia Eric Schultz believes this initiative will help to encourage economic diversification.
Mr Schultz rightly states that a crisis sometimes offers an opportunity to make a lasting change.
And among the lasting changes the Government can consider is to come up with a proper taxing system that will make the country reap from its resources proportionate to the copper prices.
Everyone remembers how a proposal to amend the tax regime to introduce a better windfall tax on profits was rejected by the mine owners who threatened to pull out and kept complaining about the high electricity tariffs.
The new tax regime was rejected and that was because copper prices were as high as US$8,500 but now that prices are low, it would be a good time to spell out a tax regime that will see Zambia reap as much as it deserves.
The unfaithfulness in the mining investors needs to be checked.
When copper was at its peak price, one of the biggest mining investors in Zambia said they were not making a profit because they had hedged their copper at $ 4,500 per tonne for fear of the volatility in the prices.
This was a good tax-avoidance move and common with huge multinationals who engage in aggressive tax systems.
And then when copper prices fell to the same $4,500 per tonne, the same investors are now making huge losses and cannot sustain operations, so they have to either close the mines or lay off thousands of workers.
And that is how come we have this crisis.
But like the US envoy said, a crisis sometimes offered an opportunity to make a lasting change.
It will be an opportunity for the ministries of Finance and Mines to sit down with the investors, re-negotiate the tax regime and give Zambia what it rightly deserves.
The same money to be collected from the new tax regime can go a long way in diversifying the economy and stop the over-reliance of the economy on one commodity, namely, copper.
Chile, the world’s biggest copper producer which at one time produced the same quantity of copper as Zambia, has managed to diversify the economy using taxes from copper, and so can Zambia.
Acting British High Commissioner to Zambia Lucy Joyce says there is need to increase transparency between the mining industry, the Government, civil society and the public.
This cannot be said better.
Mr Schultz adds that copper will eventually rebound and will remain an important part of the Zambian economy going forward and this should spur diversification.