Zambia’s mining industry improves
By Nawa Mutumweno – The mining sector is expected to account for 3.8% of the gross domestic product (GDP) in 2012 despite a slump in output, the World Bank has revealed.
According to the Zambia’s Economic Brief produced by the Bretton Woods institution, although there was a decline in mining output, revenues from the sector were expected to hit 3.8% of GDP partly due to increase in royalty taxes.
Launched on December 10, 2012 in Lusaka, the report states that from 2008 to 2011, mining revenues averaged around 2.6% of GDP, a sharp increase from the previous range of 1.0 to 1.4% for 2003 to 2008.
Government was making efforts to further rationalise the fiscal regime and improve mining tax compliance, while keeping the regime predictable.
“Mining revenues are expected to be 3.8% percent of GDP in 2012 partly due to an increase in royalty rates, the Government is making efforts to further rationalise the fiscal regime and improve mining tax compliance while keeping the regime predictable,” the brief reads in part.
In the medium term, as carryover losses of mining firms are exhausted and tax compliance is strengthened, while non-mining revenue could also grow given their fairly low current levels.
The country’s economic growth medium-term growth prospects remain strong but are subject to considerable downside risks arising from global uncertainties.
Despite the ongoing slowdown in China’s economy which is Zambia’s largest trading partner, international metal and mineral prices, including that of copper, are expected to remain fairly high over the medium-term.
Copper prices are expected to recover from $7 900 per tonne in 2012 to $8 500 in 2013 before falling back to $8 000 in 2014.
As a result, the strong FDI flows in the mining sector in recent years are expected to continue supporting the expansion of existing mines such as the Kansanshi, Lumwana, and Konkola in addition to the construction of new mines like First Quantum Mineral’s Trident Mine and smelter project.
