Stop using Zambian Mine workers as tools for bargaining –CTPD

The Mining companies must stop using Zambian Mine workers as tools for bargaining in negotiations on the proposed tax changes, this is manipulative and government should not condone such cooperate behavior, CTPD has observed with great concern that every time there is a standoff between mining companies and government, the mining companies are quick in pushing back and often times using the Zambian workers as sacrificial lambs in the bargaining process. This is wrong and must end, while we understand that there could be some concerns from the mining companies with regards to the proposed tax changes, it is imperative that dialogue is prioritized over manipulative and arm twisting tactics.

One thing the mining companies must never forget is that the minerals they are extracting and exploiting belong to the Zambian people and Zambians have every right to participate and benefit from its natural resource endowment and employment is one of the ways through which this is archived.

We note that among the most notable proposed changes, the new mining tax regime proposes to make Mineral Royalty Tax (MRT) non-deductible from income tax and increases MRT by 1.5 percentage points on the sliding scale depending on the international copper prices. Government has also proposed to abolish VAT and replace it with Sale’s Tax effective April, 2019.
These proposed measures and other tax changes have infuriated the mining sector in Zambia and resulted into threats to lay-off close to 21,000 workers. The mining sector believes that the imposed new tax changes will affect production and expansion projects across on the sector.
While we do appreciate a number of concerns raised by the mining companies, CTPD would like to urge the mining companies to be a lot more open and sincere on their production costs, we do not think that the proposed tax changes could warrant such high number of job losses and backlash, unless they tell us that the Zambian work force is a burden they have always wished to get rid of.
It is sad that mining companies have continued to project a picture that they are operating under tough conditions and that its difficulty for them to trade profitably while publicly available information continue to show that this may not simply be true. For example, in 2017 alone, it was reported by Bloomberg that profits for Glencore, Mopani’s parent company, grew 400%, from $1.38 billion in 2016 to $5.78 billion in 2017. Owing to this, Glencore paid $2.9 billion in dividends to shareholders.

We urge the mining companies to explore other ways of cutting down on costs, this is something that can be worked in consultation with government and other key stakeholders, it will also be helpful if they can publish a detailed cost of production so that many can get to know what exactly goes in extracting minerals.

CTPD would like to urge government to step up efforts and invest in improving our technical capacity to understand the operations of the mining, failure to do so, will continue to make this country depend on the mining players information on how the sector is run, this will be making it difficulty for government to make informed policy decisions.

We further urge government to avoid irresponsible borrowing of loans going forward, as of June, 2018, the stock of external debt was US$ 9.37 billion. This represented 34.7% of GDP. The stock of domestic debt, in form of Government securities, was at K51.86 billion. This represented 19.2 % of GDP. The stock of arrears stood at K13.9 billion or 5.1% of GDP; and, the total stock of guarantees were US$1.2 billion or 4.4% of GDP, this is what is putting our country under pressure when it comes to domestic resource mobilization as the country now has huge debt repayment obligations.

Isaac Mwaipopo
Executive Director-CTPD

Contact: Executive Director: Mr. Isaac Mwaipopo Centre for Trade Policy and Development Phone: +260 211 264409|+260 955623226 Fax: +260 211266234 Plot 123, Kudu Road Kabulonga


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