The Times of Zambia report that a question in Parliament has revealed that the Zambian State received just $71 Million in tax from mining companies over the period 2002-2006. This is a statistic that the researchers of 'For Whom the Windfalls?' were unable to access despite repeated questions to the Zambia Revenue Authority and Bank of Zambia.
The fact that Mines and Minerals Deputy Minister Maxwell Mwale was forced to produce the data in response to a question from MP Stephen Katuka (UPND) suggests that opposition parties, strengthened by the 2006 elections may start to put systematic pressure on the Government during any renegotiation of Development Agreements. As discussed by civil society activists during the launch meeting for 'For Whom the Windfalls?', both Government transparency about profits, tax take and other statistics, and social and political pressure on the state for a radical renegotiation would no doubt be extremely helpful to Government in securing the most beneficial renegotiation possible.
The Times report goes on to give considerable further detail: "The MP also wanted to know how much profit the mining companies made in the same period, to which the Mr Mwale said $652,296,093 was made as profit for the companies. The minister said the revenue the Government realised was in form of company tax, withholding tax, dividends and through mineral royalties. He explained that the low levels of company tax in the earlier years was attributed to carry-over losses agreed upon in the development agreements between the Government and mining companies to enable mining firms recover the heavy start-up costs. In 2006, most mining companies had started making positive declarations, hence higher tax figures. Mr Mwale said during 2002-05, there was an increase in the recapitalisation of the mining sector to take advantage of the up-turn in metal prices in the global market. The recapitalisation was tax deductible and, therefore, resulted in significant reduction in company tax. Mining companies did not make profits in 2002 due to various reasons, among them, the fact that the mines had just been privatised and a lot of rehabilitation was in progress and that there were low operating efficiencies and low copper prices."
Interestingly, other opposition MPs pressed the Government on renegotiations of the Mineral Royalty rate and adopted a considerably more aggressive position than the Government's current policy - to raise the level for new investors from the world's lowest - 0.6% to the world average, 3.0%, and to renegotiate with the existing companies towards a similar figure. The Times report, "Mr Katuka wondered why the Government could not increase the mineral royalty tax to about 10 per cent, and Mines Minister Kalombo Mwansa said the Government had already done so but over a longer period this would be considered."
The Times report continues, "The deputy minister also informed the House that Konkola Copper Mines (KCM) made a profit of $113 million during the 2005-06 financial year while Mopani made about $28 million. He was responding to a question by Kantanshi MP Yamfwa Mukanga (PF) who wanted to know how much profit was made by privatised mines on the Copperbelt during the 2005-06 financial year, mine by mine. Mr Mwale said Luanshya Copper Mines made a loss of about $1 million, while Chibuluma Mine made a profit of about $12 million and Chambishi had $385,000 due to cobalt price fall. On how much of the profit was ploughed back into the community mine by mine, the minister said KCM gave about $4 million, Mopani $2 million, Luanshya $361,000, Chibuluma $1 million, Chambishi $966,000 and NFCU$22,000. Lusaka Central MP Guy Scott (PF) wondered whether the special unit under the Ministry of Mines to monitor profits still existed, to which Dr Mwansa said a post-privatisation unit was in place to undertake such a task."
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