TAJ PAMODZI HOTEL

7TH NOVEMBER, 2016

INTRODUCTION

EITI is a global coalition of governments, extractive

companies and civil society organizations.

Zambia joined EITI in 2009 and became compliant

in 2012.

The reason was to address the perception of the

mining sector, and reduce poverty and under

development

EITI

CSO

GRZCOMPANIES

INTRODUCTION (continued)

The main objective of EITI is to promote

transparency and accountability in the

extractive sector

To address the paradox of the resource

curse.

To disclose payments and revenue through

EITI reports.

The goal of EITI is to contribute to poverty

reduction and sustainable economic

development

BEFORE PRIVATISATION

Before the privatization, the mining sector had

declined largely due to lack of investment and

fluctuating copper prices. This negatively

affected the Zambian economy.

The economy was experiencing negative

growth, production of copper and government

revenue had plummeted, the country was

experiencing high levels of inflation,

unemployment and mining towns on the copper

belt were turning into ghost towns.

AFTER PRIVATISATION However, following privatization the mining

sector started recovering and the economy started growing again and mining towns started coming back to life. The negative trends started improving and this led to increased investment in the sector

This period of economic rebound coincided with the introduction of EITI. This made it possible to promote transparency and accountability in the sector which resulted in the disclosure of information on revenue received by the Government.

COPPER PRODUTION BEFORE AND

AFTER PRIVATISATION

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015

Private National Private

FOCUS OF TREND ANALYSIS

To date Zambia has produced seven (7) EITI

reports on payments by extractives

companies and revenue by Government.

This presentation is on the mining trends in

Zambia with focus on revenue, copper

production, copper exports, GDP contribution

and employment after privatization covering

the period 2008-2014 when EITI started

disclosing the above mentioned information

REVENUE STREAMS IN THE MINING

SECTOR COVERED BY EITI

CONTRIBUTION OF TOP 10 REVENUE

STREAMS TO THE NATIONAL TREASURY

(2014)

REVENUE STREAM % CONTRIBUTION

Import VAT 20.00%

Mineral Royalty 18.31%

Company Income Tax 15.32%

PAYE 14.35%

VAT (Net Paid) 8.83%

Dividends from ZCCM-IH Shares 7.51%

Customs Duty 5.39%

Withholding Tax 3.67%

Property Rates 0.81%

Advance Income Tax 0.27%

REVENUE TRENDS (2008-2014)

YEAR AMOUNT

2008 ZMW 1.7 Billion

2009 ZMW 2.5 Billion

2010 ZMW 3.7 Billion

2011 ZMW 7.7 Billion

2012 ZMW 8.02 Billion

2013 ZMW 8.20 Billion

2014 ZMW 9.95 Billion

REVENUE TRENDS (2008-2014)

IN Bn KWACHA

REVENUE CONTRIBUTION BY TOP

FIVE COMPANIES IN Bn KWACHA

(2014)3.3

1.1 0.9 0.8 0.7

Kansanshi (32.96%)

Mopani (11.51%)

First Quantum Minerals

(9.70%)

KCM (8.37%)

Kalumbila (7.58%)

The top 5 companies contributed 70.12% of the total revenue from the sector

COPPER PRICE(USD) PER TONNE

Copper prices have been fluctuating over time on the international market

COPPER PRODUCTION TRENDS

(2008-2014) IN METRIC TONNES

COPPER EXPORTS (USD)

$0

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

$7,000,000,000

$8,000,000,000

2008 2009 2010 2011 2012 2013 2014

Copper exports have been increasing since privatization as shown in the

graph

GDP CONTRIBUTION BY THE MINING

SECTOR (2008-2014) IN PERCENTAGE

(%)

MINING SECTOR CONTRIBUTION TO

EMPLOYMENT

25,999

16,371

23,888 23,479

16,277

27,318

-

5,000

10,000

15,000

20,000

25,000

30,000

2015 2016 Projection as at Dec-15 2016 as at Sep - 16

Contractors Direct Employees

The graph above shows the trend of employment for direct employees and

contractors

MAJOR INVESTMENT PROJECTS

(2000-2015)

KONKOLA MOPANI KANSANSHI KALUMBILA LUMWANA LUBAMBE TOTAL

USD 2.93 USD 2.62 USD 2.51 USD 2.23 USD 2.10 USD 0.71 USD

13.13

CONCLUSION The mining sector is the main stay of the

Zambian economy. The average sector contributions to the country’s foreign exchange is over 70%.

Zambia will continue to depend on mining for a long time to come. However, it is imperative that Zambia lessens its dependence on mining by diversifying the economy. Diversification can be in the form of local mineral value addition, mineral diversification and development of other sectors such as manufacturing, agriculture etc, resulting into diversification of exports in general.

This is to cushion the impact fluctuating

prices of copper.

The government can use the revenue

generated from the mining sector to reduce

poverty and create an enabling environment

to promote investment.

SOURCES OF DATA PRESENTED

Revenue trends – Zambia EITI Reconciliation Reports

Revenue Contribution by top five companies – Zambia EITI Reconciliation Reports

Copper Prices-https://www.lme.com/en-gb/metals/non-ferrous/copper/#tab2

Copper Production trends – Central Statistics Office (CSO)/ Zambia Data Portal and Zambia Chamber of Mines

Copper Exports - United Nations Statistics Division(http://data.un.org/Browse.aspx?d=SNA)

GDP Contribution – Central Statistics Office (CSO)/ Zambia Data Portal

Mining Tax Regime-The rise and fall of mining royalty regime in Zambia (February 2016 Vol.15 No. 2)

THANK

YOU