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Tuesday, 29 April 2008

BOZ Quarterly Brief (Q1 2008)

The Bank of Zambia Quarterly Brief was out yesterday. You can access the briefing in PDF or powerpoint. The big announcement was that finished copper output rose 12 percent in the first quarter of 2008 over the same period last year to 128,913 tonnes (despite the flooding of major mines), translating into $886 million worth of copper revenue or equivalent to $6,708 per tonne - uh? isn't this lower than the actual copper prices in recent months?) On the upward trend of the Kwacha, the report does not say much beyond the following :

In the domestic foreign exchange market, the Kwacha maintained its resilience and appreciated against the major foreign currencies with the exception of the Euro. The Kwacha extended its gains against the US Dollar and appreciated by 4.2% from 3.3% in the previous quarter......The general appreciation in the Kwacha was due to stronger supplies of foreign exchange into the market relative to demand and the sharp weakening of the US Dollar in global markets triggered by the ongoing credit crisis. The factors accounting for strong foreign exchange inflows are high copper prices in international markets and increased foreign investor participation in the Government securities market following the reduction of interest rates in the US. These rate cuts and growing concerns that the sub-prime triggered credit crisis may result in a recession of the US economy, have subjected the Dollar to severe downward pressure on global markets.

Update :

On further reading of the BOZ report, I note that they attribute the copper from to the London Metal Exchange :

Copper export earnings at US $886.0 million were 3.2% higher that the US $858.4 million recorded during the previous quarter, reflecting higher realised LME prices which increased to US $7,746.94 from US $6,949.22 per ton. However, copper export volumes declined to 114,367.8 metric tons (mt) from 123,523.8 mt. Compared to the corresponding quarter in 2007, export receipts were also favourable as they were 34.7% higher than the US $657.5 million realised in that quarter.

Again this upper figure for March being quoted at US$7,746 per tonne is not consistent with the . I have also checked the London Metal Exchange historic data. It also shows a much higher peak. See the graphs below from both sources - essentially with the same profile.


  1. Well that raises two questions:

    1) How does the BOZ calculate the average price or the price at which copper is taxed?

    2) Isn't this a clear instance where it is clear how important openness in financial matters is when it comes to governance?

  2. This is a mystery at the moment. The BOZ claim they use the London Metal Exchange prices, but the basis for their revenue calculations are not consistent with market prices at LME. Its also not consistent with any information from Reuters and other sources. A real mystery.

    I have written to the BOZ, stating in the strongest terms that it is not right for the Zambian people that BOZ should issue arbitrary press briefings without proper references.

    What I am hoping to do is that based on the LME figures end of June, when the output figures are know I hope to calculate independent estimates from the new tax regime.

    I think BOZ should not only be releasing "revenue" figures in their reports, but they should provide some indications of how much tax Government got in the last quarter.


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