Zambia to audit mining firms
Lusaka – Copper-rich Zambia is conducting an audit of mining companies to determine their earnings and will punish companies found cheating over declaration of revenues. Finance Minister Situmbeko Musokotwane said the country was also on course to produce 700,000 tonnes of copper this year following an increase in metal output at the mines and a rally in global prices, media reports said. Copper output at 675,000 tonnes last year was far above expectations of a forecast 500,000 tonnes. Musokotwane said the audit had been ordered following claims by some players that the country was not realising enough benefit from the mining industry because of mis-reporting of revenues by some foreign owned mining companies. The players are asking for the re-introduction of a 25 percent windfall tax the government scrapped recently following an outcry from the mining companies. “We have asked for a special audit to be done on the mining sector and if we find someone cheating, we will deal with that,” Musokotwane said. He added that cheating is dealt with by punishing offenders and not by increasing tax rates. Recently the chamber of mines said reviewing the windfall tax was not the best solution to the growth of the industry and agitated for the reintroduction of development agreements signed when mining companies secured various mining units after privatisation of the Zambia Consolidated Copper Mines. Some players argued that the scrapping of the windfall tax has cost the country in excess of US$400 million in revenue which could have helped in meeting challenges in the social sector. Zambia, Africa’s largest producer of the metal is optimistic that in the long run it will begin accruing more revenue from its mines after foreign investors put in up to $5 billion in reviving the mining industry in the last eight years. Zambia has been undertaking stringent fiscal and monetary policies that have fostered growth in the mining industry and other sectors, resulting in the economy growing by an average 6.3 percent last year, making it look at options like diversifying the economy to accelerate growth. Zambia’s resilience to accelerate economic growth has resulted in the country reducing its annual inflation to 7.8 percent at the end of June from double digits recorded in the past.