Cabinet has today approved changes to the Mineral Royalty Tax regime and President Edgar Lungu has directed Ministers to bring to Cabinet
next Monday details to be presented to Parliament for approval.
This is contained in a media statement released to the media by the Head of State’s Special Assistant for Press & Public Relations Amos Chanda.
According to the statement, the change follows extensive consultations with the mining industry in the light of significant changes in the fundamental assumptions upon which the law was based and the sudden fall in the price of copper on the international market.
The budget approved by Parliament had the assumption that the price of copper was going to be US$6,780 per tonne but this has reduced to US$5,665 representing a reduction of $1,115. Production, which was also assumed to likely, stay at a peak of 959,696 tonnes has since dropped to 839,000 tonnes representing a drop by 130,696 tonnes.
All administrative and legislative procedures to effect the changes will be completed before the next cabinet meeting.
These measures will have revenue implications given the fact the basic assumptions in the budget regarding the price of copper and production have changed downwards. The changes to the MRT regime will have revenue implications requiring rationalization of expenditure, which the Minister of Finance has been directed to present to Parliament.
The President has also directed that the Technical Committee he appointed to interrogate the challenges that arose from the MRT regime will continue with consultations with stakeholders to ensure a robust and predictable mining tax regime, which will be linked to the Medium Term Expenditure Framework. The President hopes that the changes will promptly eliminate market anxieties in the mining sector and forestall any potential instability.
It’s a move in the right direction but technical committee it’s not useful, time and time again Zambian govt has been urged to focus on agribusiness not mining to earn it’s forex.
It seems cabinet is now listening to HH. The press release on mine taxation by HH earlier in the week was spot on. It is a good thing for the nation. Imagine HH as president, Zambia would develop faster
Finally the investors will say “the country is yours and money is ours” they have now won.Zambia 0,Investors 10.
“The budget approved by Parliament had the assumption that the price of copper was going to be US$6,780 per tonne but this has reduced to US$5,665 representing a reduction of $1,115. Production, which was also assumed to likely, stay at a peak of 959,696 tonnes has since dropped to 839,000 tonnes representing a drop by 130,696 tonnes.”
GUYS BE SERIOUS HOW DO YOU EXPECT THE PRICE OF COPPER TO BE THAT HIGH WHEN WE THE PRODUCERS DON’T USE IT TO MANUFACTURES GOODS AS A FORM CONTROL OF SUPPLY AND DEMAND. WE SELL IT ALL. THEREFORE, THE MANUFACTURERS OVERSEAS CONTROL US THE PRODUCERS. IF WE WERE PROCESSING COPPER TO FINISHED GOODS WE COULD HAVE BEEN EXPORTING LESS OR MORE DEPENDING ON HOW WE SUITABLY WANT TO CONTROL THE MARKET. JUST DREAMING THAT MARKET PRICES FOR COPPER WILL be high is…
@1.1
HH saw this change coming and he went aheard releasing that article. The president formulated the team to relook into the mine tax weeks before yo U5 released that article and if ‘ve been following we even castigated that article by U5. This move has nothing to do with U5.
Rüschlikon is a village in Switzerland with a very low tax rate and very wealthy residents. But it receives more tax revenue than it can use. This is largely thanks to one resident – Ivan Glasenberg, CEO of Glencore, whose copper mines in Zambia are not generating a large bounty tax revenue for the Zambians. Zambia has the 3rd largest copper reserves in the world, but 60% of the population live on less than $1 a day and 80% are unemployed. Based on original research into public documents, the film describes the tax system employed by multinational companies in Africa. https://www.youtube.com/watch?v=WNYemuiAOfU
why have so many cabinet ministers if the economy is weak. suck some of your ministers .
It is high time that we the workers also forced cabinet to reduce our PAYE on the premises that their earlier assumptions that we shall afford the bread basket in total has gone off the mark due to the lower purchasing power of the kwacha vis as vis the increased cost of good and service.
What do you do when your strategy or plan doesn’t yield the desired results?
Do you stick to it or you concede and make amendments, despite shame?
If HH was bright enough to be in the academic world, he was going to be jailed along time ago for plagiarism.
HH during the 2015 campaigns had said that the new mineral royalty tax would not work so what the heck are you talking about imwe ba mbajethetruth?
If Chikwanda had any morals and pride, he should resign with immediate effect. This is his 4th fatal mistake (removal of export duty on concentrate exports, SI 33, SI55 and now this 20% MRT). Chikwanda is the thickest Finance Minister Zambia will ever have.
Thick as a plank
Chikwanda may be “thick as a plank”, but he is the leading member of PF intelligentsia in the Cabinet. Can you imagine intellectual level of the rest?
@Buck Teeth Lungu…….
Spare sometime to learn how Ministries operate and you will learn how the budget process is managed. The Minister of Finance is supported by the Secretary to the Treasury with his team led by the Permanent Secretary (Budget). Prior to formulation of the budget draft, Sector Ministries submit proposals from their stakeholders. When the draft budget is ready a full Cabinet deliberates on each item and finally approves the budget as a government bill to be presented to Parliament for enactment into law. That is the process. That is why it is not true to say area development is brought about by an MP from the ruling party. Thought facts could help. Hon Chikwanda should not shoulder the blame alone.
@ Buck Teeth Lungu, this man make me sick. Why doesn’t Lungu fire him? He and his uncle Sata are responsible for the current economical quagmire.
upnd danda heads, why should chikwanda be fired. havent you read what has made goverment to change on the tax?? but i these ba sunguzi mine investors are tricking us. they are not honest. why should the price of copper be fixed in london the country that does not produce copper??
@ fact man
Copper prices have been under pressure and experiencing downward prices for more than three years now.
Check LMSE to see by yourself.
Budget was approved few months ago.
There are the facts of either absolute incompetence or wishful thinking for political gains.
As to fixing the price of copper in Zambia, do you really think that Zambia is only producer? Try to think before offering “solution”!!!
I really need to be educated here otherwise I do not buy the reasoning for making the changes. There has been times when copper prices have risen to US$8,000++ per tonne, and so what happens when the situation improves and the prices go higher than say US$7000, does this mean every time when there is a price change at the London Metal exchange, there has to be a new mineral royalty tax to be approved by the Zambian parliament? Second, we haven’t been told what factors led to reduced production of copper? Are those factors transitory or permanent? If at all they are transitory, once again what happens if the situation improves or the impact of those factors are reduced?
@ surprised. Good questions. thanks for asking on my behalf too. Your name suprise me but not your intelligence.
Zambians even if we had Gold instead of copper; I can tell you now that we would still be getting the selfsame crumbs we are getting today as our leaders are too weak, too frickle, too shortsighted…the global mining corporations know too well about and by the time we get savvy leaders who have worked in these companies and know how to balance the interests of business and public like countries like Chile and Australia it will be sadly too late.
The people at the Ministry have worked out the figures well. The case in point is not to be seen to fix or push FQM in the tilt corner but simply to listen to them and have a win situation to support them to grow their mining portfolio in Zambia without stifling and be at log ahead with Government
Consideration has been made for the resources, both inferred and measured according to low and high grade as they impact on the royalty tax regime fitting into the projects and operations cash flows in the mine for the foreseeable horizon bench making with similar mining industries
Things like scale and sensitivity of production to sales with base case av prod in volumes at FQM in…
that royalty decision with annual operating cash flows over the project horizon affecting those initial investments in capex with real options considered including the economics in production, spot and forwards sale of copper and the USD/CAD effect on the kwacha as an externality of those initial investments in costs -financing and operational taking commodity price assumptions in those initial cash flows flexing the royalty decision accordingly
Its a win win win situation taking helping FQM manage its known systematic and non systematic risks on its CAPEX and OPEX over that investments horizon leaving something to smile for Zambia also
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Good move in the right direction. Keep up Mr President. We are praying for your good health and wisdom.
BUT WHAT MEASURES ARE PUT IN PLACE FOR THE SHORT FALLS?
EVERYTHING IN REVERSE GEAR.
ZAMBEZI PORTLAND,COAL MINE,RUBIA BANDA AND SOON ZAMTELL WILL BE GIVEN BACK.
CAN THE WISE OPEN THE EYES AND SEE
Lungu running a country with his fellow widowers.
and a few widows of our land.
If you have a cabinet Miniser leading a Ministry like Finance who is not able to analyse financial issues and only believes in fattening his pocket then you have a problem with the economy. I am afraid that Mr. Chikwanda if the powers that be , he should be relieved of his duties. It must not take the entire President to see some of these flows in the economy. The President has got other areas he has focus on not always assisting this man when he is supposed to have minimal supervision. In addition, what are these so called technocrats within the Minstry of finance doing? This is all because PF has decided to remove all the intelligent guys from other tribes who are running prosperous businesses now just because they were not speaking their language. let PF under LUNGU be as inclusive as
This just proves how incompetent Chikwanda is. What fiance minister makes decisions based on the copper price today when everyone knows the price changes all the time? The production figures have been in dispute for sometime because government was dull double counting copper concentrates sold to smelters and then sold by the smelters. More incompetence. Chikwanda must go. For those wanting to know how the mines can pay more tax when the price is good they need to understand the variable profit tax which kicks in for this situation. We also need to know that just as prices of copper go up so do costs. The mines are also paying off capital spent on building mines and smelters so there is not going to be big profits now only later.
Look at the latest management analysis and discussion of FQM on capital structure risk and strategies,management disclosure and analysis in Composite Statistics of those inferred and measured minerals, including the outlier restrictions, that formed the capital financing decision do a sensitivity analysis of those scenarios as impacted by current movements see strategies in place to deal with the current risks in sales ,credit,default,financial and operational risks and see what strategies are put in place by FQM to navigate through these times of commodity down turn
It should be transformational perspective and reacting to position and taking measures in Risk strategies to emerge
You may not also blame FQM its understood the mistakes in risks strategies were overlooked and only paid a lip service at the planning stage
Its understood politics played more influence than the business case and that can only be corrected to move forward and fit in the current scenarios prevailing
The developer appeared to have been technically oriented and not risk averse and financially optimistic on the commodity super cycles
Move forward is the point
What other key assumptions have changed in the budget? What was the ZMW/USD exchange rate projection in the budget? Now that the cost of living keeps on rising, does the employment freeze assumption still relevant? Is Zambia on auto pilot? No wonder Kabimba said Zambia is being run on common sense. How does change in assumption necessitate change in budget that has already been approved by Parliament! What changes is just your forecast!
Zambia is becoming a circus ; flip flop on major policies a result of shoddy performance in Government.
What we need is tax stability! Tax the profit through enhanced monitoring mechanism. We need to have a variable Tax which targets optimum revenues from the MINES in cases when copper is enjoying a super cycle with price in excess of US$7000/T –
Zambia needs to build capacity in government to ensure mining industry is effectively monitored – no room for cheating or transfer pricing. Other wise the Mines will continue to cheat on production costs to avoid profit Tax.
Let the government team consult widely prior to the NEW mineral royalty.
AFTER READING ALL THE COMENTS POSTED HERE THERES IS NO OTHER TRUTH EXCEPT THE REALITY OF OUR LACK OF SERIOUSNESS AS A COUNTRY IN SELECTING OUR LEADERS. TULEBAKO SERIOUS!
this issue of wasting asset is very disturbing, every time that i see mining equipment crossing into the country my heart bleeds, because i know that as a country we dont benefit at all,zimbabwean rules are clear on mining you mine 10 tons automatically 5 tons is for the government,i had hope the late President Sata was going to manage to ensure we as a nation can benefit handsomely from our own mineral exports,but nothing worked due to ill health.When we control our mineral wealth,thats the only time the economy will pick up reasonably …
@ Surprised
It is a one way bet!