chamber of mines solwezi presentation
TRANSCRIPT
AN OVERVIEW OF ZAMBIA’S MINING SECTOR
ZAMBIA – FINLAND BUSINESS FORUM
MONDAY 1ST JUNE 2015
SOLWEZI
“Giving back to Zambia”
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Mr. SHULA JALASI SHULA – Economist, Zambia Chamber of Mines/Zambia EITI Council
KEY POINTS TO NOTE:A. INVESTMENT:
1. Mine development takes many years to achieve; an average of about 10 years from Exploration to start of Mine Production. 2. Huge upfront investment is required to undertake mining. It takes about 5 to 15 years to recoup the investment into the operations, depending on the metal being mined and scale of operations. 3. Mining is for the strong hearted, high risk takers with high levels of perseverance and not for faint hearted.
4. It requires long term investment mind-set. The investment runs from hundreds of USD millions to billions.B. CURRENT STATUS OF ZAMBIAN MINING INDUSTRY: Copperbelt Mines – Old, Mature and Mainly Underground & labour Intensive,
structural factors and legacy issues rendering them high cost New Mines – e.g Northwestern Province – New frontier, mainly open pits which
are highly mechanised.
TYPICAL PRODUCTION PROFILE
2yrs -20yrs
1 2 3 4
1 Mine Exploration - 7-10 years
2 Mine Development- 5-10 years
3 Mine Operation 2-20 years
4 Mine Closure 2-10 years
7-10yrs 5yrs -10yrs 2yrs -10yrs
Production
Time
OVERVIEW: MACROECONOMIC CONTRIBUTIONS OF MINING
Foreign Direct Investment
Exports
Government Revenue
Gross Domestic Product
DirectEmployment
Zambia2012
Typical share in low and middle income mineral-driven countries
86% 60 – 90%
80% 30 – 60%
>25% 3 – 20%
>10% 3 – 10%
1.7% 1%
>
>
>
>
Source: ICMM MPD Toolkit analysis
>
6
8
EMPLOYMENT STATUS
DIRECT EMPLOYEES CONTRACTED LABOUR OTHER(specify)
MOPANI
10,000 10,000
KONKOLA
7,000 9,000
LUMWANA
1,882 2,054
KANSANSHI
4,781 3,731 5407 (on the expansion
projects)ALBIDON 63(due to care and maintenance of mine)
LUBAMBE
1,200 1,000
CHIBULUMA
602 345
CHAMBISHI METALS
741 147 CHAMBISHI COPPER SMELTER
1,600 400
NFCA
1,064 1,219
TOTAL
28,870 27,896 5407
GRAND TOTAL 62,173
10Source: ZAMBIA CHAMBER OF MINES.
MOPANI *KONKOLA KANSANSHI LUMWANA CHIBULUMA LUBAMBE NFCA0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Female Employees
Total Direct Employees
DIR
EC
T E
MP
LO
Y-
EE
S
7.9%
8.3% 9.0
%11% 10
%7.1% 4.7
%
ZAMBIA’S MINING AND GENDER PROFILE AS AT MARCH 2015 – A SAMPLE OF SEVEN LARGE MINES
*KONKOLA COPPER MINES is an industry average as the actual number could not be obtained in time for the study tour. However, the percentage of female employees is 10%
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MAJOR INVESTMENT PROJECTS 2000 TO DATE (US$12.4BN)
MOPANI KONKOLA LUBAMBE FQM LUMWANA KANSANSHI
US$ 2.24BN US$ 2.9BN US$ 0.49BN US$ 2.23BN US$ 2BN US$ 2.54BN
COPPER PRODUCTION
Source: International Council on Mining and Metals 2012 (Enhancing the Contribution of the Zambian Mining Sector to the Economy and Society) from 1963 - 2011 and Zambia Chamber of Mines onwards
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
0%
200%
400%
600%
800%
1000%
1200%
1400%
1600%
Private ownership National ownership Private ownership
Share of global production (Percentage)
Copper production (Tonnes)
16Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
2008 2009 2010 2011 2012 20130
1
2
3
4
5
6
7
8
9
10Mining Company Payments
Government Receipts
ZM
W B
IL-
LIO
N
Government Rev-
enue from the ex-
tractive sector has
been increasing and
almost doubled be-
tween 2010 and
2011
*Note: all figures are in ZMW and encompass the overall extractive sector
GOVERNMENT REVENUE FROM THE EXTRACTIVE SECTOR HAS BEEN INCREASING
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2008 2009 2010 2011 2012 2013 -
500
1,000
1,500
2,000
2,500
3,000
3,500
MINERAL ROYALTY TAX
CORPORATE INCOME TAX
MINERAL ROYALTY AND CORPORATE INCOME TAX CONTRIBUTIONS HAVE INCREASED
*Note: all figures are in ZMW and encompass the overall extractive sector
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
ZMW
MIL
LIO
N
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CORPORATE INCOME TAX CONTRIBUTIONS PER MINING COMPANY
2008 2009 2010 2011 2012 20130
500
1000
1500
2000
2500
3000
3500
Lumwana
Chambishi Metals
Mopani
Konkola
NFCA
Chibuluma
Kansanshi
ZMW
MIL
LIO
N
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
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2008 2009 2010 2011 2012 20130
10
20
30
40
50
60
70
80
90
100PROPERTY RATES AND ANNUAL BUSINESS FEES
PROPERTY RATES AND ANNUAL BUSINESS FEES
CONTRIBUTIONS ARE MADE TO LOCAL COUNCILSZM
W M
ILLI
ON
*Note: all figures are in ZMW and encompass the overall extractive sector
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
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INCREASES IN MINERAL ROYALTY AND CORPORATE INCOME TAX PAYMENTS BY MINING COMPANIES
• Mineral Royalty contributions have increased due to upward adjustments of
the royalty rate as well as increased production volumes from mining
companies owing to increased investment into exploration and expansion
projects under previous fiscal regimes.
• Over 5 mining companies have been consistently contributing to Corporate
Tax.
• Profitability in the mining sector as a whole has been impacted mainly by
different cost profiles resulting from structural factors and legacy issues in
different operations. Zambia’s mining industry is not homogenous.
• Payments to local councils have increased as a result of mining projects
commencing in new districts in addition to the expansion of projects in old
mining towns.
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MOPANI COPPER MINES SUB-NATIONAL PAYMENTS
2008 2009 2010 2011 2012 20130
2
4
6
8
10
12
14KITWE/MUFULIRA COUNCILS
KITWE/MUFULIRA COUNCILS
ZMW
MIL
LIO
N
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
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KONKOLA COPPER MINES SUB-NATIONAL PAYMENTS
2008 2009 2010 2011 2012 20130
5
10
15
20
25
KITWE/CHINGOLA/CHILILABOMBWE COUNCILS
KITWE/CHINGOLA/CHILILABOMBWE COUNCILS
ZMW
MIL
LIO
N
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
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KANSANSHI MINING PLC SUB-NATIONAL PAYMENTS
2008 2009 2010 2011 2012 20130
2
4
6
8
10
12
SOLWEZI MUNICIPAL COUNCIL
SOLWEZI MUNICIPAL COUNCIL
ZMW
MIL
LIO
N
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
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LUMWANA MINING CO SUB-NATIONAL PAYMENTS
2008 2009 2010 2011 2012 20130
2
4
6
8
10
12
14
16
18SOLWEZI MUNICIPAL COUNCIL
SOLWEZI MUNIC-IPAL COUNCIL
ZMW
MIL
LIO
N
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
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CHIBULUMA MINES SUB-NATIONAL PAYMENTS
2008 2009 2010 2011 2012 20130
200
400
600
800
1000
KALULUSHI/LUFWANYAMA COUNCILS
KALULUSHI/LUFWANYAMA COU...
ZMW
TH
OU
SAN
DS
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
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For further information please contact:
Maureen Jangulo Dlamini – Chief Executive Officer
Shula Jalasi-Shula - Economist
Talent Ng’andwe – Communications Manager