The Australian High Commissioner to Zambia has called for a stable business environment to ensure mining sector investors continue to contribute to the economic and social development of the country.
“For any productive direct investment, the operating environment has to be right,” said High Commissioner Bronte Moules. She was speaking during a tour of First Quantum Minerals’ (FQM) Sentinel Mine at Kalumbila.
“Foreign investment – of world-class standard and done responsibly – can be a really important contributor to a country’s economic development.
“At the Sentinel Mine, I was able to see the direct positive impact of the effort and resources FQM is putting into developing the surrounding community including in terms of health, education and agricultural livelihoods,” she said.
Her visit was set against a backdrop of increasing pressure on the mining sector following September’s 2019 Budget announcement, which included proposals for an additional 1.5%-point increase on all mineral royalty tax bands, and a new 10% mineral royalty tax when the copper price exceeds US$7,500 p/t.
Critically, mineral royalties would be non-deductible for corporate income tax purposes under the plan. Other proposals include the introduction of a sales tax to replace VAT, meaning companies could not reclaim tax on input purchases.
Moules visited the pit and FQM-built Kalumbila town and learned about the range of community development initiatives undertaken by FQM.
“It was great to have an overview of just how seriously these issues are taken and to see the positive impact this type of investment can make in a country and how it contributes to development – provided the business operating environment remains friendly.
“This is an important issue that applies in every country, but it’s particularly relevant now for the future of this operation,” said the envoy.
Copper accounts for 70% of Zambia’s exports, and through its Sentinel and Kansanshi mines, FQM produces half of that copper.
The company, which has invested US$6.4 billion in Zambia, employs over 8,800 direct employees.
It is the country’s largest taxpayer, having paid US$3.4 billion to the Treasury since 2005.
FQM Country Manager, General Kingsley Chinkuli, explained that if introduced, the recent Budget proposals threatened the stability of the mining sector and could result in the scaling back of investment plans, job losses and reduced tax revenues across the industry.