On Wednesday, June 10, 2020, the Zambian government announced that officials from its mines ministry are set to begin the direct collection of samples from mine sites across the country. The new policy will commence from July 1, 2020. This new strategy aims to curb the bad practices among mining companies who undervalue their production to pay fewer taxes.
The mines ministry has alleged that some mineral exporters deliberately submit low-grade samples to the state laboratory. This has resulted in an undervaluation of mineral exports and deprived the government of generating substantial revenue from mineral royalty tax.
In a statement, Barnaby Mulenga, the Permanent Secretary of Zambia’s Ministry of Mines, said that “the loss of revenue could amount to hundreds of thousands, or even millions of dollars per export, depending on the discrepancy in mineral grade between the sample and the consignment being exported.”
The impoverished East African country, as the second-largest copper producer in Africa, and the 7th global producer. It generates about 70 percent of its foreign earnings from copper production. Even in the face of extreme wealth, it is reported in one research that 74 percent of the Zambian population live on less than $1.25 a day and six million people (43percent of the population) are undernourished.
The research further reveals that the country loses a staggering sum of about $3 billion yearly to tax avoidance and tax evasion by multinationals. However, overly generous tax incentives provided to companies by the Zambian government have also played a role.
In a bid to diversify its revenue base from copper, the Zambian government is making moves to boost its gold production in the country. With the new system in place, copper mining companies will now account for the gold they produce as a by-product.
There are several mining multinationals operating in the country, with the largest including Glencore (a Swiss-based company listed on the London Stock Exchange), British-Indian company Vedanta, and Canadian companies First Quantum and African Barrick Gold.