NEW MINING POLICY TO MEET RISING CHALLENGES

TODAY, I will focus on some developments in the mining sector by looking at the recently launched Mineral Resources Development Policy (MRDP).
The policy, which was launched on September 19 2013, is a revision of the 1995 Mining Policy which was designed to facilitate the development of private-driven mining industry through the privatisation of ZCCM mining units.

Generally, the 1995 document was ascribed with the injection of US$5 billion Foreign Direct Investment (FDI) which followed between 1996 and 2011.

In terms of new entrants, the policy accounts for Lumwana Copper Mine, Kansanshi, Muliashi and the closed Munali Hills Nickel Mine.

It accounts for various other developments in the sector including the new smelters, increase in production and exploration works.

While the production indeed rose by an average of 16 per cent between 2000 and 2011 from 250,000 tonnes to 819 574 tonnes per year for copper, the sector’s contribution to the Government coffers in terms of revenue was insignificant.                                            LATE President Mwanawasa
 

For instance, while the sector contributes about nine per cent to the GDP its tax input into the government treasury is a paltry 1.1 per cent of the GDP.
In my view, this is chiefly due to the incentives in tax holidays which were given to the large-scale mining firm through the Development Agreements (DAs), which also resulted in feeble fiscal and regulatory frameworks.

It is for this and many other reasons that the Government chose to revise the 1995 Mining Policy to come up with another which will, hopefully, address the emerging challenges well after the privatisation of the sector.

The low contribution of the sector to the local treasury had in 2008 led to the introduction of the windfall tax by late President Levy Mwanawasa which was, however, removed by former President Rupiah Banda.                                                                                  
“The minimal contribution of the mining sector to the treasury despite high metal prices and increasing production is one of the major challenges the MRDP has addressed,” partly reads the 12-page policy.

Under the policy the Government needs to achieve a strategic repositioning of the mining sector to balance between the interests of Zambians as natural stakeholders and those of the investors.

I notice that this policy seems to rely deeply on the Vision 2030 for Zambia.

It will contribute towards the creation of a sustainable and organised mining industry which will be more beneficial to the country by attracting more investments, integrating the sector into local economy and ensure high standards of health, safety and environment protection.

I think all these are key to the running of a modern economy.
Among the guiding principles for the implementation of the new policy include government’s commitment to ensuring sustainable exploitation of mineral resources and commitment of a free-market enterprise economy.

Others are the application of modern tenets of transparency, checks and balances and accountability as well as adherence to international conventions and the promotion of Citizens Economic Empowerment (CEE).

In all these, the government aims at attracting private sector participation in exploration works, attracting the empowerment of Zambians to become shareholders in the mining sector and promoting the integration of the mining sector into the local economy.

To meet these aspirations, the Government will enhance the ability of the sector growth and create wealth through exploration and actual mining while maintaining an efficient computerised mining cadastre system for the mining rights administration.

Further, the Government will regularly update the legal framework for the mining sector in line with the ever-changing environment and promote large scale mining in the country.

The small scale mining, which is currently performing below par, will be developed by, among many other things, facilitating access to finances to ensure the players blossom into large scale entities.

To move the sector relevant and responsive the local needs, the Government will integrate the mining sector into the local financial system by enhancing the contribution of the sector to the national economy.

This will be done through the encouragement of the cluster development to link the sector with broader economy while also promoting linkages between the sector and other economic areas like agriculture.
 

Other strategies under the policy include the improvement of the institutional framework, enrichment of value addition, local auctioning of the gemstones, human resources development, research and development.
             FORMER President Banda

The accountability and transparency in the management of mineral resources will be bettered by strengthening the country’s membership to such bodies like the Extractive Industry Transparency Initiative (EITI).

To promote the CEE in the sector, the government will encourage major big mines to float their shares on the Lusaka Stock Exchange for citizens to buy the shares while further ownership will be created through the CEE Act.

Interestingly, some legislation will be reviewed to reserve certain categories of mining and  mineral rights for Zambians while at the same time reserving a portion of mineral royalty for the development of host communities.

This is as should be and the policy should be supported by all well-meaning citizens.

For comments/other contributions call: 0955 431442, 0977 246099, 0964
742506 or e-mail:
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