The document provides an overview of Zambia's mining sector, including:
1) Mining requires huge upfront investments that can take 5-15 years to recoup, as well as long-term investment horizons of 10-20 years.
2) Copper mining is a major contributor to Zambia's economy, accounting for over 10% of GDP and over 25% of government revenue.
3) Five large mining companies - Mopani, Konkola, Kansanshi, Lumwana, and NFCA - are the largest employers and taxpayers in the sector.
4) Payments to local and regional governments by mining companies have increased as new mines have opened and existing mines have
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Chamber of mines solwezi presentation
1. AN OVERVIEW OF ZAMBIA’S MINING SECTOR
ZAMBIA – FINLAND BUSINESS FORUM
MONDAY 1ST JUNE 2015
SOLWEZI
“Giving back to Zambia”
1
Mr. SHULA JALASI SHULA – Economist, Zambia Chamber of Mines/Zambia
EITI Council
3. 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.
4. 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
10. 10Source: ZAMBIA CHAMBER OF MINES.
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
MOPANI *KONKOLA KANSANSHI LUMWANA CHIBULUMA LUBAMBE NFCA
Female
Employees
DIRECTEMPLOYEES
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%
14. 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
0%
2%
4%
6%
8%
10%
12%
14%
16%
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014
Private ownership National ownership Private ownership
Share of global production (Percentage)Copper production (Tonnes)
16. 16
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
0
1
2
3
4
5
6
7
8
9
10
2008 2009 2010 2011 2012 2013
Mining Company Payments
Government Receipts
ZMWBILLION
Government
Revenue from the
extractive sector has
been increasing and
almost doubled
between 2010 and
2011
*Note: all figures are in ZMW and encompass the overall extractive sector
GOVERNMENT REVENUE FROM THE EXTRACTIVE SECTOR HAS BEEN
INCREASING
17. 17
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2008 2009 2010 2011 2012 2013
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.
ZMWMILLION
18. 18
CORPORATE INCOME TAX CONTRIBUTIONS PER MINING COMPANY
0
500
1000
1500
2000
2500
3000
3500
2008 2009 2010 2011 2012 2013
Lumwana
Chambishi Metals
Mopani
Konkola
NFCA
Chibuluma
Kansanshi
ZMWMILLION
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
19. 19
0
10
20
30
40
50
60
70
80
90
100
2008 2009 2010 2011 2012 2013
PROPERTY RATES AND ANNUAL BUSINESS FEES
PROPERTY RATES AND
ANNUAL BUSINESS FEES
CONTRIBUTIONS ARE MADE TO LOCAL COUNCILSZMWMILLION
*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.
20. 20
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.
22. 22
MOPANI COPPER MINES SUB-NATIONAL PAYMENTS
0
2
4
6
8
10
12
14
2008 2009 2010 2011 2012 2013
KITWE/MUFULIRA COUNCILS
KITWE/MUFULIRA
COUNCILS
ZMWMILLION
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
23. 23
KONKOLA COPPER MINES SUB-NATIONAL PAYMENTS
0
5
10
15
20
25
2008 2009 2010 2011 2012 2013
KITWE/CHINGOLA/CHILILABOMBWE COUNCILS
KITWE/CHINGOLA/CHI
LILABOMBWE
COUNCILS
ZMWMILLION
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
24. 24
KANSANSHI MINING PLC SUB-NATIONAL PAYMENTS
0
2
4
6
8
10
12
2008 2009 2010 2011 2012 2013
SOLWEZI MUNICIPAL COUNCIL
SOLWEZI MUNICIPAL
COUNCIL
ZMWMILLION
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
25. 25
LUMWANA MINING CO SUB-NATIONAL PAYMENTS
0
2
4
6
8
10
12
14
16
18
2008 2009 2010 2011 2012 2013
SOLWEZI MUNICIPAL COUNCIL
SOLWEZI
MUNICIPAL
COUNCIL
ZMWMILLION
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
26. 26
CHIBULUMA MINES SUB-NATIONAL PAYMENTS
0
200
400
600
800
1000
2008 2009 2010 2011 2012 2013
KALULUSHI/LUFWANYAMA COUNCILS
KALULUSHI/LUFWAN…
ZMWTHOUSANDS
Source: Zambia Extractive Industries Transparency Initiative (ZEITI), Ministry of Mines, Energy and Water Development.
27. 27
For further information
please contact:
Maureen Jangulo Dlamini – Chief Executive Officer
jangulom@mines.org.zm
Shula Jalasi-Shula - Economist
sshula@mines.org.zm
Talent Ng’andwe – Communications Manager
ngandwet@mines.org.zm
Hinweis der Redaktion
Zambia conforms closely to the inverted pyramid pattern of contributions seen in other MPD case study countries.
At the top of the pyramid we see that FDI in Mining has completely dominated that for all other sectors in the past decade.
Mining accounted for 86 % of all FDI inflows in 2011. For comparison, agriculture accounts for less than 3% of FDI inflows.
Looking down the pyramid, mining’s export contribution in Zambia is exceptionally high by international standards (UNCTAD data).
Its contribution to government revenue has recently (post 2008) averaged over 25% of government revenue, which is also high by international standards (ZRA and IMF data, discussed later).
The GDP and employment contributions are similar to what is seen in other countries where the Toolkit has been applied (CSO data).
Based on the sample data aggregated from four mines*, direct mining employment has increased, but part of the increase, particularly for contractors, is due to capital investment taking place – if there is no new investment this part of direct employment will fall.
Indirect employment – mainly in the supply chain – has some scope for increase by raising the share of mine inputs provided by Zambian manufacturers, rather than Zambian importers of foreign produced goods.
Induced employment, which results from employees spending their wages is the most important driver of job creation from mining, both in terms of numbers of jobs, and in making the greatest contribution to poverty reduction.
The scale of induced employment is probably under estimated here, since reliable data on the informal sector are hard to obtain.
*OPM has analysed and aggregated current and forward looking data from four mining operations: Mopani Copper Mines (Glencore), Konkola Copper Mines (Vedanta Resources), Lumwana Mine (Barrick) and Kansanshi Mine (FQML).