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Friday, 8 March 2013

Zambia EITI Report 2010

Government revenues from mining in Zambia increased by almost 50% in 2010, to US $750 million. This was disclosed when Zambia published its 2010 EITI Report in Lusaka on 22 February 2013.

The 50% rise is explained by a 16% increase in copper production and booming copper prices worldwide (up 25% from 2009).

On launching the report, Zambia's Minister of Mines, Hon Yamfwa Mukanga said that being transparent about the Zambia’s revenues is necessary in order for “Zambian citizens to maximise benefits from the mining sector”.

Mining is a crucial part of the Zambian economy, with the direct contribution to GDP being about 11% in 2010 (US $590 million) and expected to grow to US $1.35 billion in 2015, according to the EITI report. The indirect contribution might be as much as half the economy. Copper exports of US $5.8 billion accounted for 78% of the Zambia’s total exports in 2010.

The largest source of revenue was corporation tax, which was 33% of total mining revenues. Mining royalties were 11%. The EITI Report goes on to note that almost US $3 million of the revenue went into an Environmental Protection Fund, which is set aside to offset pollution and other ecological costs of mining.

The 2010 report revealed a tiny discrepancy of 0.23% between what the government said they had received and what the companies said that they had paid, down from 1.2% in 2009.

The report includes an outline of the tax regime explaining that exporters of copper and cobalt are charged 30% corporate tax, and operators 3% royalties on their production. The report also covers production figures and an explanation and breakdown of the flows through the partially state-owned mining company.

The EITI Report itself can be found on the website of the Zambian EITI:

To learn more about the EITI in Zambia, please visit:


  1. Does Yamfwa Mukanga be a real mines minister or a single pitchman ?

    speaking is good, acting is better !

    Mopani should be punished for tax evasion – Mukanga

    By Chibaula Silwamba and Mutale Kapekele
    Wed 16 Feb. 2011, 03:59

    MOPANI Copper Mines must be punished for evading tax, says a member of parliament in whose constituency the mining firm operates.

    But finance minister Situmbeko Musokotwane says the government will wait for the complete mining audit report for the mines before taking action.

    And Musokotwane says former finance minister Ng'andu Magande should outgrow his sadness and stop issuing statements against his ministry.

    Yamfwa Mukanga, who is member of parliament for Kantanshi Constituency in Mufulira district, was commenting on the pilot audit on Mopani Copper Mines, which revealed glaring inconsistencies in production and revenue figures the mine submits to the Zambia Revenue Authority for tax administration, figures which the report indicated might not be trustworthy.

    Mukanga said no government official must protect Mopani Copper Mines for violating the law by evading tax.

    "I want to see the law taking its course. Let the law visit Mopani and we see what is going to happen. I believe they are not just evading tax, I believe that there are people in government benefiting from this," Mukanga said. "I am disappointed that the government has been crying every day and yet it is letting Mopani go scot-free. I want to go to Mopani and talk to management."

    Mukanga said the decision by the government, through ZRA, to protect Mopani and underpaying the mining firm's evasion of taxes raised suspicion.

    "I know there is something fishy. I am sure they government officials are not underplaying it for nothing. They are underplaying it at a cost and the cost is in their pockets. There is someone getting money from this evasion of tax," Mukanga said.
    He said Mopani was not undertaking any corporate social responsibility.

    "For Mopani to be evading tax, I am very disappointed because Mufulira, where the mine is, is in a deplorable state; the roads are so bad," he said. "If they Mopani were evading tax but were ploughing into the community they operate from, maybe people could be saying it channels money into the community but look at how bad Mufulira is. It's terrible. Mopani is not ploughing back into the community."

    Mukanga demanded that the government reintroduce windfall tax to ensure that all Zambians benefit from the minerals.

    He said the copper, which is currently trading at over US$10, 000 per tonne, was not benefiting the people.

    He said Zambians and investors must share the gains from the minerals equally.
    "This government is not providing enough tax regime. I am condemning the investors for failing to even pay what is due to Zambians," Mukanga said. "This high price of copper at US$10, 000 per tonne will only be there for a short time and after that the Zambians will have nothing to show what they benefited from it. We need to have something to show to our children when copper is gone that this is what we built from the copper taxes."

    According to the audit, which covered activities of the mine between 2006 and 2008, including trial balances from 2003, conducted by tax specialists Grant Thornton and Econ Pˆyry of Nordic region, irregularities at Mopani hinge on its relationship with its parent company, Glecore AG, of Switzerland and cover practices such as alleged transfer pricing, inflated operation costs, outright under-pricing of copper for exports and irregular hedging.

  2. continued

    Mopani which operates mining units in Kitwe and Mufulira is 73.1 per cent owned by the Swiss commodity trader, Glencore AG, and the firm received a 48 euros million loan from the European Investment Bank.

    ZRA regretted the leaking of the audit report.

    And Mukanga demanded the removal of Mwansa Mbulakulima from Copperbelt as provincial minister after he said the region would not receive development if it continued to vote for the opposition.

    "Rupiah Banda was supposed to have removed Mbulakulima from here," said Mukanga. "The under-development we have seen on the Copperbelt are as a result of such utterances."

    But Dr Musokotwane said the government would wait for the complete report before taking action against the mine, which is majority owned by Glecore AG of Switzerland.

    Musokotwane said the government had nothing to hide concerning mining revenue and that it had ordered the mining sector audit to satisfy itself that the mines were paying what was due to the ZRA as the country's biggest industry.

    He said the ZRA was "on top of things" and that it was too early to spell out specific action against the mine but promised that the government would act once the audit report was complete and submitted to them.

    But in an interview with The Post, former finance minister Ng'andu Magande said the government had been corrupted by foreign mining firms judging by the uncooperative attitude that mining investors took towards the auditors.

    "It is very clear that it can't be an ordinary investor who comes in and starts issuing instructions to somebody unless obviously he has been corrupted," Magande said. "That is the only thing some of us started suspecting that the people in government have been corrupted."

    In response to Magande's charge, Musokotwane said Magande should get over the fact that he was no longer a minister and allow him to work.

    "It is difficult to comment on him (Magande). There have been many ministers of finance in the past but you will never hear them commenting about the serving Minister of Finance. I have worked for Bank of Zambia as deputy governor, I have been Secretary to the Treasury before but do I have to comment about those offices? When you leave, you leave," Musokotwane said. "Outgrow your sadness and deal with it. That's what maturity is all about. He (Magande) wishes he was a minister. Maybe one of his agemates will advise him. He is older than me, so it's not good for me to talk about him. Let him leave the young man to do a better job. If he thinks we are compromised, he should go to ACC or anywhere in the world. He changed certain things when he was here but that's not the way we operate. We have a different approach for very good reason."


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