Zambia to make 30 percent loss due to bad 2015 Budget – ZCM

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—-The Zambia Chamber of Mines (ZCM) has expressed concern with the implementation of the 2015 National Budget which has been passed by Parliament in its current form.


The Chamber stated that its analysis of the 2015 budget reveals the threat of wide-ranging, unintended ramifications for the country’s mining industry, including the suspension of certain mining operations which would significantly affect jobs, inward investment and reduced government revenues.


It stated that it is regrettable that as a result of the approval of the 2015 budget through Parliament, Barrick Gold Corporation has announced that it will initiate procedures to suspend operations at Lumwana Copper Mine.


The Chamber noted that Lumwana is a major driver of the North-western Provincial economy and its suspension of operations will also impact adversely on the operations of the three smelters on the Copperbelt which heavily depend on the Lumwana copper concentrates.


The mines mother body said it remains deeply concerned about the 2015 budget, mostly because of the introduction of the single tier system with no consideration of operations profitability and the legislation’s potential for significant unintended financial and social consequences.


The Chamber of Mines and its members have since appealed to government to undertake further consultations and conduct a thorough analysis to fully understand the serious financial and social impacts which will be caused by the introduction of the 2015 budget in its current form.


The firm contends that the 2015 budget will adversely impact tens of thousands of lives, and has asked government to pause whilst it reconsiders its implementation on 1st January, 2015.


The Chamber stated that the imminent implementation of the 2015 budget measures may make a number of other operations economically unviable, potentially leading to further mine closures.


It said of particular concern is the postponement and potential cancellation of major expansion projects such as Mopani’s Mufulira and Mindola Deep Shafts, Mopani’s Nkana concentrator and Kansanshi’s Sulphide Circuit and Smelter Expansion.


The Chamber said if the proposed Mineral Royalty based single tier tax system is implemented, the suspension of Lumwana could see the loss of around 4, 000 direct jobs.


It estimated that in 2015 alone, as a direct result of the introduction of the 2015 budget, mine suspensions and the postponement of major capital projects will lead to over 12, 000 direct job losses.


The Chamber stated that this will have a significant, detrimental impact on those towns and communities of the Copperbelt and North-Western Province who benefit from the significant investment in economic and social welfare by the mining sector.


The Zambia Chamber of Mines further estimated that production losses in 2015 will exceed 158, 000 tonnes, adding that more worryingly, over the next five years lost production will exceed 1.1 million tonnes of copper.


The Chamber furthermore stated that Zambia stands to lose over US$1 billion of export earnings in 2015, and a staggering US$ 7 billion over the following five years which it said equates to around 30 per cent of Zambia’s Growth Domestic Product (GDP).