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Monday, 8 March 2010

Parliamentary Question (Mineral Royalties)

A recent Parliamentary exchange provides a good source of information on the mineral royalty payments by the key mining companies and the projections for 2010. In 2008 and 2009, they paid a combined total of US $90m. The projection for 2010 is around US$50m. The mineral royalties are set at 3% of gross revenue. That would suggest the four companies earned around $3bn in 2008 and 2009.  My understanding is that the gross national mining revenues in 2008 was around $3bn and 2009 slightly lower.  Which mining companies produced the missing $2bn or so? Lumwana is obviously out of the picture. I would be interested to see how others see these gross figures. Interesting to see also that the revenue sharing mechanism is still not being legally enforced.

Payment of Mineral Royalties, Oral Answer (265), Edited Transcript, 26th February, 2010 :

Mr Mwango (Kanchibiya) asked the Minister of Mines and Minerals Development :

(a) how much money was paid, in form of mineral royalties, in 2008 and 2009 by the following mining companies: (i)Konkola Copper Mines Plc; (ii)Mopani Copper Mines Plc; (iii)Chibuluma Copper Mines Plc; and (iv)Kansanshi Copper Mines Plc.

(b) how much money was expected to be collected, in form of mineral royalties, in 2010 from the mining companies at (a).

The Deputy Minister of Mines and Minerals Development (Mr Nkhata) : Madam Speaker, a total of K423,841,162,783 was paid in form of mineral royalties by mining companies listed in the question in 2008 and 2009 broken down as follows (click to enlarge):
[Note: Expressed in US$ below for ease of handling]

Madam Speaker, as regards to question (b) a total of K236,517,604,580.39 is expected to be collected as mineral royalty in 2010 broken as follows:
Madam Speaker, 2010 projections are based on 2009 collections with an annual projected growth rate of 9 per cent.

Mr Mwango: Madam Speaker, may I know if the Government has any intentions of introducing new taxes since they scraped the windfall tax.

Mr Nkhata: Madam Speaker, the taxes that were mentioned in the 2010 Budget last year are the ones that Government is currently using.

Mr Kakoma (Zambezi West): Madam Speaker, the contributions by the mining companies stated in question on mineral royalties has been going up except for Kansanshi Mines. May I find out from the hon. Minister why mineral royalties for Kansanshi Mines dropped from K70 billion in 2008 to K30 billion in 2009 and is expected to lean low in 2010? May I know the reasons?

Mr Nkhata: Madam Speaker, the reason for that is that Kansanshi decided to step back because of the development agreement. The Government has set up a team of ministers to dialogue with Kansanshi over the decision that it took. That is the reason the mineral royalties from Kansanshi dropped.

Mr Mwenya: Madam Speaker, we are told that K423 billion is what was realised from mineral royalty tax for the past two years. I am aware that according to Section 136 of Mines and Minerals Act, the K424 billion is supposed to be shared with the local authorities and the local community. I am also aware that the Ministry of Mines and Minerals Development had come up with a committee that was trying to come up with the mechanism of sharing this money. I would like to find out from the hon. Minister how far we have gone with the sharing mechanism and when we intend to disburse these funds so that we can bring development in our areas which have been neglected by the Government.

Mr Nkhata: Madam Speaker, the Government is still working on those sums and as soon as it finishes, it will come back to that.

Mr Lubinda: Madam Speaker, I would like to find out from the hon. Minister how much of this money is in the so so-called stabilisation account and how much was taken to control ninety-nine and voted upon by this Parliament in both 2009 and also for the 2010 Budget.

Mr Nkhata: Madam Speaker, that question would be better placed if it was directed to the Ministry of Finance and National Planning because it is the ministry which has the figures which can be given to the hon. Member.

Mr Kambwili: Madam Speaker, by and large, Konkola Copper Mines (KCM) is the largest producing mine in Zambia, may I know why it only contributed K55 billion in 2008 as compared to K71 billion by Mopani Copper Mines and K87 billion by Chibuluma Copper Mines. May I know if indeed KCM is the largest copper producing company in this country?

Mr Nkhata: Madam Speaker, the question is well tabulated and well answered. The reasons are based sometimes on production and what they find during the time of production.

Dr Katema: Madam Speaker, after putting the mechanism of sharing mineral royalties in place, is Government going to pay local authorities and communities for the years 2008 and 2009?

Mr Nkhata: Madam Speaker, as I mentioned earlier on that over the years, the Government has been working on this and when it is done, the mechanism will indicate as to how these things will be done.


  1. Hi Cho,

    I think taking responsibility has it's limits.

    1) Do people really consciously vote for the party that will rip them and the country off by not taxing the mines?

    When it comes to election time, do they have a choice? Or will all politicians do the same thing?

    We need a party that will tax the mines to the max and diversify the economy.

    2) Taking personal responsibility does not extend to taking responsibility for other people's crimes

    These politicians have taken the decision not to rock the boat, and take the bribes and not upset the mines and their power.

  2. MrK,

    You have lost me!

    A different post perhaps?


  3. I guess I compressed my response to several posts.

    My basic point is that I don't know whether the 'opposition' is just as bought as the MMD.

    I just had the opportunity of watching the Musokotwane tape. What an embarassment. The insisted that 'the mines are paying taxes', and then went on to mention income tax, without pointing out how easy it is for the mines to understate they taxable income.

    And he never mentioned how little taxes the mines are paying relative to their profits.

    Check it out here.

    Zambia: Finance Minister Situmbeko Musokotwane on CNBC Africa

    Blood pressure medication or a good joint are recommended.


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