Zambia is fortunate to be blessed by nature in several ways and has rich mineral and gemstone reserves, which, if harnessed and developed properly, can go a long way in enhancing the economic wealth of the country.

The government of Zambia is committed to making strides towards paving the way for economic progress of the people of Zambia.

The expected boom in the gemstone sector following the government’s move to suspend the 15% export duty will help promote Zambia as an attractive destination for foreign gemstone investors from all over the world.

AUTHOR: Boniface Mutale, director on the Board of Kagem Mining representing government

Importantly, small scale miners, who would have been wiped out had the export duty remained, now stand a good chance to survive and flourish, leading to the overall prosperity of the country.

Kagem Mining takes pride in supporting the Government’s goal of uplifting the country’s people and welcomes the recent suspension of the 15% export duty.

Read more about diamonds and gemstones

Last month Kagem Mining set a new benchmark in negotiations between the mining sector and unions, agreeing a 10% increase in basic salaries for unionised workers for 2020, with a further 10% for 2021.

The collective agreement followed successful negotiations between management and representatives of the National Union of Miners & Allied Workers (NUMAW) and the Mine Workers Union of Zambia (MUZ), in which it was also agreed to enhance the company pension contribution from 15% to 20% of basic pay, bringing the effective salary increase to 15% for 2020 and 2021, and the overall increase to 22.5% over the next two years.

Read more about mining in central Africa

The parties further agreed to enhance repatriation allowance by 11% and raise the education allowance by 125%, recognising the importance of education of employees’ children. Transport allowance has also been increased.

The agreement was hailed as a win-win situation by unions and management.

Tellingly, it came just a month after the Government agreed to suspend a 15% export tax on gemstones imposed in the 2019 Budget.

During discussions on tax, companies often argue that taxes hamper investor confidence and make them less inclined to invest in production for the long term.

It follows that if taxes are reduced, they should be more inclined to invest.

Last month’s successful wage negotiations are a demonstration of exactly that principle in practice, with Kagem putting its money where its mouth is.

That’s not to say that there was a direct quid pro quo, but it is an illustration that when the private sector feels it is being listened to, and its business is backed by an enabling environment, then the knock-on effect does indeed take root.

The suspension of export tax directly affected Kagem’s bottom line, freeing up cash for reinvestment that will boost production, grow the industry and continue to put Zambia’s emerald sector at the top of the international market.

Kagem is 25% owned by the Zambian Government through the Industrial Development Corporation (IDC), so the people of Zambia also stand to benefit from the potential for increased dividends.

The Government’s action in rescinding the tax was the catalyst that stimulated the sector, providing a much-needed shot in the arm that has created a virtuous circle of benefit.

The move also paves the way for Kagem – of which Government is a shareholder – to expand its footprint in the emerald industry by bringing additional emerald mining licences under Kagem’s operation, increasing still further the country’s gemstone production and generating additional dividends, royalties and corporate tax.

The expansion of Kagem’s licence portfolio allows Government to become a direct shareholder in the wider emerald sector, rather than only a single licence.

Since acquiring 75% of Kagem in 2008, Gemfields has been meticulous in transparently declaring revenue, which has reached approximately US$635 million over 12 years from the sale of emeralds at auctions both locally and internationally, and which are monitored by representatives from the Ministry of Mines and Zambia Revenue Authority (ZRA).

Proceeds from the auctions are repatriated in full to Zambia, generating valuable foreign exchange for the nation.

While the majority of revenue is spent on mining costs and salaries, Kagem has contributed approximately US$120 million to the Zambian Government in cumulative corporation taxes, mineral royalties and dividends since 2008.

This means that, up to and including the financial year ending 30 June 2019, around 19 percent of Kagem’s revenues have flowed to the Zambian government in the last decade.

Over the same period, Kagem has declared US$50 million of dividends, with US$37.5 million thereof paid to Gemfields in its capacity as the 75% shareholder in Kagem.

Read: Gemfields lists on the London Stock Exchange

In order to promote greater transparency surrounding our natural resources, more mining companies in Zambia should be encouraged to publish the percentage of their revenues that are paid to Government as taxes.

This would help Zambians better understand how much of the value realised from their natural resources ends up in Government coffers.

In addition to the direct taxes paid to Government, increased investment in wages and production will boost the revenue, profit, and the final amount of tax collected by the Government, not only directly from Kagem but also from the other businesses that benefit from the miners’ increased wages: local shops, extended families, farms, consumer goods manufacturers and the like.

Economists estimate that the economic value of salary payments is around six times the actual amount paid when multiplier effects are considered.

In other words, for every kwacha paid to an employee, the wider economy of Zambia benefits by K6.

Kagem provides more than 1,150 direct jobs, so their salaries, and the recent increment, are a direct economic benefit to the nation.

That is truly something worth celebrating.

Source: Mining Review Africa

Kalumbila Minerals, a subsidiary of First Quantum Minerals (FQM), has signed a new collective agreement with three unions giving workers an enhanced package of benefits for 2020.

The agreement between Kalumbila Minerals and the National Union of Miners and Allied Workers (NUMAW), Mines Workers Union of Zambia (MUZ) and United Mine Workers Union of Zambia (UMUZ) was signed this week in Lusaka following successful negotiations held last month to reinforce working conditions for mine workers.

Speaking at the signing ceremony, Kalumbila Minerals General Manager Morris Rowe said the agreement was an important part of ensuring fair play, quality employment and equal treatment of employees in the mine.

“As Kalumbila and First Quantum Minerals, we always honour the documents that we sign. I have seen over the last few years I have been the leader at Kalumbila Minerals that our relationship between management and workers has improved substantially, by means of dialogue; by means of tabling of issues; how we resolve them, and most of all the union leaders at the mine are prepared to come, meet, discuss and implement what we decide at those meetings,” said Mr Rowe.

The new collective agreement includes upward adjustments and improvements in benefits such as holiday allowances, medical scheme, education allowances, shift differential, pension scheme contribution and repatriation, as well as a 6.5 percent basic salary increment across the board.

“What we do at Kalumbila is mine copper. And as a subsidiary of First Quantum, we are proud at Sentinel to have the best mine in the country, we have the best people, we have the biggest equipment. And with that mix, we will be the top producer in Zambia,” he added.

Speaking on behalf of three unions, National Union of Miners and Allied Workers president, James Chansa, said the unions were happy with Kalumbila management for their support towards union members.

“We have agreed to go the route of dialogue, because we believe that out of dialogue, the best results are achieved. And even as we talk about dialogue, we have emphasised that no one must take advantage of this, because much as we may say we have run away from the spirit of fighting, we have in us teeth to bite in case someone oversteps the boundary,” he said.

Mr. Chansa said the unions will respect the content of the new collective agreement, and that it is only through dialogue that the best results can be achieved.

“It is for this reason that we want to pledge with you as well as the government, that we will do everything possible to help shape the economy of Zambia, which largely hinges on mining activities,” he added.

He said it was the duty of unions to ensure that workers’ rights were protected and decisions were made in the best interest of workers.

And NUMAW Kalumbila Branch Chairperson Teddy Mwasha said unions played a role in ensuring that there was harmony in the workplace between management and employees.

“Without that proper relationship between the management and the union, we may not have the wonderful relationship in the place of work,” he said.

Copyright © 2020 ZR.

Source: Mining Review Africa

The move by Gemfields Group Limited to list its shares on the AIM market of the London Stock Exchange demonstrates the company’s ethos of transparency, legitimacy and integrity.

Gemfields owns the Kagem emerald mine in Lufwanyama in partnership with the Zambian government.

The listing enables a wider reach of international investors to take a direct stake in Gemfields, which owns 75% of the Kagem emerald concession in Lufwanyama, with 25% owned by the government through the Industrial Development Corporation (IDC).

Gemfields CEO Sean Gilbertson lauded the move and said it’s a milestone achievement.

“The admission to the London market is an important milestone for Gemfields after a decade of growth in the demand and prices for precious coloured gemstones. The AIM listing seeks to provide the UK, European and international investors with more expedient entry into the precious coloured gemstone market, to improve share trading liquidity and to widen Gemfields’ current investor base. Our team looks forward immensely to this next phase in Gemfields’ development and to delivering value for all our stakeholders,” he said.

Gemfields has maintained its primary listing on the Johannesburg Stock Exchange (JSE).

Source: Zambia Reports

FNB Zambia has partnered with North Western Energy Corporation to finance the management of electricity distribution in non-mining areas of three districts.

First National Bank (FNB) Zambia acting head of business and commercial banking Lubasi Katundu disclosed that the financial institution has invested US$20 million in the partnership.

Katundu said the three-year partnership and investment would go towards helping to manage electricity distribution in the non-mining areas of Lumwana, Kalumbila and Solwezi.

“Being part of the $20 million overall investment demonstrates FNB’s ability and ambition to enable our clients’ visions for the future,” said Katundu in a statement. “We believe that this venture serves as another clear example of FNB Zambia’s commitment to playing a pivotal part in driving growth and development by securing current and future infrastructure and local job creation demands in North-Western Province and beyond.”

North Western Energy Corporation (NWEC) has supported the supply of power to over 4,000 households the last 13 years.

The company has also enabled the connection of commercial entities supporting the population in the area such as banks, filling stations, schools and clinics.

The financing partnership will ensure the continuation and extension of power supply to nearly 10,000 households and businesses.

And welcoming the partnership, NWEC chairman Kenneth Kamanga expressed great pleasure.

“Our organisation is thrilled to have a banking partner that recognises pressing topical challenges and is prepared to invest in impactful and workable initiatives to address them,” said Kamanga.

Source: The Must

Minister of Mines and Mineral Development Hon. Richard Musukwa says the government is working on introducing a steady and predictable fiscal system in the mining sector to facilitate trade and sustainable growth in the industry.

“As a country, we would like to operate a fiscal regime that is simple, predictable and stable so that investors are able to plan. We are alive to the fact that businesses need a long reach to plan their operations effectively, hence we are working on a fiscal regime that will provide you with the necessary stability to plan,” he said as he officially opened Kagem’s 35th emerald auction at the Intercontinental Hotel in Lusaka on February 18, 2020.

Hon. Musukwa said his ministry was open to dialogue with sector players, adding that government had demonstrated its willingness to listen to concerns when it suspended the export tax levied on gemstones in the 2019 Budget.

“When you made representations through Kagem that the measures that government had put were not supportive of the industry’s growth, we were quick to listen to the industry,” he said. “Our goal has always been to strike a workable balance between revenue collection and industry growth. What government would like to see is a thriving sector and more visits from international gemstone traders. We would also like to help our industry grow on a local scale by bringing new technology that would support this growth,” he said.

And speaking at the same event, Kagem chairman Dr Sixtus Mulenga commended government’s efforts to introduce a stable fiscal plan, adding that the move would boost investor confidence.

He explained that the government’s decision to suspend the 15% export tax on gemstones had created a positive sentiment in the sector that had resulted in increased interest from foreign buyers.

“The move is supporting capital investment and making the local gemstone sector competitive on the international market,” he said. This will result in accelerated sector growth and improved Forex generation through increased export earnings. And when you combine this with a stable fiscal system, you have a good business environment that will encourage further investment,” he said.

Source: Zambian Mining Magazine