Download MINING TRENDS IN ZAMBIA (2008

TAJ PAMODZI HOTEL
7TH NOVEMBER, 2016
INTRODUCTION

EITI is a global coalition of governments, extractive
companies and civil society organizations.
CSO
EITI
COMPANIES
GRZ
Zambia joined EITI in 2009 and became compliant
in 2012.
 The reason was to address the perception of the
mining sector, and reduce poverty and under
development

INTRODUCTION (continued)
The main objective of EITI is to promote
transparency and accountability in the
extractive sector
 To address the paradox of the resource
curse.
 To disclose payments and revenue through
EITI reports.
 The goal of EITI is to contribute to poverty
reduction and sustainable economic
development

BEFORE PRIVATISATION
Before the privatization, the mining sector had
declined largely due to lack of investment and
fluctuating copper prices. This negatively
affected the Zambian economy.
 The economy was experiencing negative
growth, production of copper and government
revenue had plummeted, the country was
experiencing high levels of inflation,
unemployment and mining towns on the copper
belt were turning into ghost towns.

AFTER PRIVATISATION
However, following privatization the mining
sector started recovering and the economy
started growing again and mining towns started
coming back to life. The negative trends started
improving and this led to increased investment
in the sector
 This period of economic rebound coincided with
the introduction of EITI. This made it possible to
promote transparency and accountability in the
sector which resulted in the disclosure of
information on revenue received by the
Government.

COPPER PRODUTION BEFORE AND
AFTER PRIVATISATION
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015
Private
National
Private
FOCUS OF TREND ANALYSIS
To date Zambia has produced seven (7) EITI
reports on payments by extractives
companies and revenue by Government.
 This presentation is on the mining trends in
Zambia with focus on revenue, copper
production, copper exports, GDP contribution
and employment after privatization covering
the period 2008-2014 when EITI started
disclosing the above mentioned information

REVENUE STREAMS IN THE MINING
SECTOR COVERED BY EITI
CONTRIBUTION OF TOP 10 REVENUE
STREAMS TO THE NATIONAL TREASURY
(2014)
REVENUE STREAM
% CONTRIBUTION
Import VAT
20.00%
Mineral Royalty
18.31%
Company Income Tax
15.32%
PAYE
14.35%
VAT (Net Paid)
8.83%
Dividends from ZCCM-IH Shares
7.51%
Customs Duty
5.39%
Withholding Tax
3.67%
Property Rates
0.81%
Advance Income Tax
0.27%
REVENUE TRENDS (2008-2014)
YEAR
AMOUNT
2008
ZMW 1.7 Billion
2009
ZMW 2.5 Billion
2010
ZMW 3.7 Billion
2011
ZMW 7.7 Billion
2012
ZMW 8.02 Billion
2013
ZMW 8.20 Billion
2014
ZMW 9.95 Billion
REVENUE TRENDS (2008-2014)
IN Bn KWACHA
REVENUE CONTRIBUTION BY TOP
FIVE COMPANIES IN Bn KWACHA
(2014)
3.3
1.1
0.9
Kansanshi Mopani
First
(32.96%) (11.51%) Quantum
Minerals
(9.70%)
0.8
0.7
KCM
(8.37%)
Kalumbila
(7.58%)
The top 5 companies contributed 70.12% of the total revenue from the sector
COPPER PRICE(USD) PER TONNE
Copper prices have been fluctuating over time on the international market
COPPER PRODUCTION TRENDS
(2008-2014) IN METRIC TONNES
COPPER EXPORTS (USD)
$8,000,000,000
$7,000,000,000
$6,000,000,000
$5,000,000,000
$4,000,000,000
$3,000,000,000
$2,000,000,000
$1,000,000,000
$0
2008
2009
2010
2011
2012
2013
2014
Copper exports have been increasing since privatization as shown in the
graph
GDP CONTRIBUTION BY THE MINING
SECTOR (2008-2014) IN PERCENTAGE
(%)
MINING SECTOR CONTRIBUTION TO
EMPLOYMENT
30,000
25,000
25,999
27,318
23,888
23,479
20,000
16,371 16,277
15,000
10,000
5,000
2015
2016 Projection as at Dec-15
Contractors
2016 as at Sep - 16
Direct Employees
The graph above shows the trend of employment for direct employees and
contractors
MAJOR INVESTMENT PROJECTS
(2000-2015)
KONKOLA
MOPANI
KANSANSHI
KALUMBILA
LUMWANA
LUBAMBE
TOTAL
USD 2.93
USD 2.62
USD 2.51
USD 2.23
USD 2.10
USD 0.71
USD
13.13
CONCLUSION
The mining sector is the main stay of the
Zambian economy. The average sector
contributions to the country’s foreign exchange
is over 70%.
 Zambia will continue to depend on mining for a
long time to come. However, it is imperative that
Zambia lessens its dependence on mining by
diversifying the economy. Diversification can be
in the form of local mineral value addition,
mineral diversification and development of other
sectors such as manufacturing, agriculture etc,
resulting into diversification of exports in
general.

This is to cushion the impact fluctuating
prices of copper.
 The government can use the revenue
generated from the mining sector to reduce
poverty and create an enabling environment
to promote investment.

SOURCES OF DATA PRESENTED







Revenue trends – Zambia EITI Reconciliation Reports
Revenue Contribution by top five companies – Zambia EITI
Reconciliation Reports
Copper Prices-https://www.lme.com/en-gb/metals/nonferrous/copper/#tab2
Copper Production trends – Central Statistics Office (CSO)/
Zambia Data Portal and Zambia Chamber of Mines
Copper Exports - United Nations Statistics
Division(http://data.un.org/Browse.aspx?d=SNA)
GDP Contribution – Central Statistics Office (CSO)/ Zambia
Data Portal
Mining Tax Regime-The rise and fall of mining royalty regime
in Zambia (February 2016 Vol.15 No. 2)
THANK
YOU