New mine taxes in Zambia seem likely to become an excuse for all manner of political manouvering by government, opposition, unions, global shareholders and investors and the mine companies over the next few months. Eventually everyone will calm down and realises Zambia remains a low-tax mining location, and with metal prices still high, a location for mega-profitable copper extraction. In other words, the boom continues. Questions about the equitable distribution of benefits between mine owners, government, workers and local communities remain.
Nonetheless, today's report in the Daily Mail that NFC-A will be investing $150 million in the Chambishi area, and wants to keep its wage bill down is treated as part of the mines tax debate.
NFC deputy chief executive officer, Gao Xiang, told the Daily Mail that the best way to respond to the challenges of the new mineral taxes was to increase the volume of investment. He said NFC was poised to be the biggest mine in the country once the two projects were completed in the next six years.On the new mineral taxes, Mr Xiang said: “Do you think we have any choice, no, we have no choice but it will have a very bad effect on our employees who expect 18 to 20 per cent salary increases every year.’’
He said the new taxes would entail that Government would take away 75 per cent of the US$30 million profit that the mine makes. But the mine would look for best ways of funding the west ore development project. He said the only concession they wanted from Government was to waive the export tax on concentrates because it was 15 per cent of the company’s profits. He said the mining company was spending K42 million per truck load of concentrate to the border. “I want to take this opportunity to appeal to Government, our export levy for concentrate is a very heavy tax on our income. We want to be waived for 12 months since we are focused on the construction of our new smelter,” he said.
He also said it would be difficult to substantially increase salaries for workers next year because apart from paying the new taxes, a lot of money would be spent on new investments. The company had no plans of reducing its workforce because the intention was to increase productivity and be able to increase the profitability of the mine. “We have to increase our production…that is the only solution for this. I don’t think reducing of employment will be the best way to overcome the difficulty. We hope the prices of copper stay like this at the international market,’’ he said. NFC employs 2,262 but the west ore body development project would employ an additional 800 Zambians during the construction phase while 1,000 Zambians would be employed once the project was at full production. Mr Xiang appealed to the Ministry of Home Affairs to approve an application for work permits of 163 Chinese experts who were expected to execute the west ore development project. A South African company has been contracted to sink a shaft at the west ore body whose lifespan is estimated at 25 years. And Minister of Labour and Social Security, Ronald Mukuma who visited NFC yesterday told management that Government was impressed with the investments the mine had made. The minister advised NFC management to integrate the Chinese and Zambian workers to avoid misunderstandings that arose as a result of lack of integration. Mr Mukuma said the mines should ensure that they employed Zambians on permanent basis and train them in various fields to ensure transfer of skills from the Chinese to the Zambians. NFC chief executive officer, Luo Xingeng, said the company was seeking assistance from the ministry of labour and social security to help it understand the country’s labour laws. He said it took the mining firm three years for managers to start understanding the labour laws.
At Mopani Copper Mines, Chamber of Mines president, Passmore Hamukoma, told the minister that mine owners tended to give contracts to foreign firms because Zambian companies were not very competitive.The minister said Government wanted the mines to give business to Zambians so that this could have a multiplier effect on employment levels.He urged the mines to support colleges and universities so that they could produce well skilled staff to work in the mines. Mr Mukuma urged the mines to come up with session plans so that executive jobs could be taken up by Zambians. He said it was dangerous for the country to sustain its mining operations using foreign expertise because there was bound to be a crisis in the event that they left suddenly.
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