SI 89 cannot be justified - Mtesa
By Gift Chanda
Wed 06 Nov. 2013, 14:00 CAT

THERE is absolutely no justification in allowing mining firms to export copper concentrates tax-free 49 years after Zambia's independence, says Ambassador Love Mtesa.

Commenting on the revoked Statutory Instrument (SI) 89 which finance minister Alexander Chikwanda signed on October 4, Mutesa said the instrument was detrimental to the economic development of Zambia.

On Monday last week, President Michael Sata reversed SI 89, which was to be in force up to September 30, 2014.

The SI was to reverse the November 2011 decision of the PF government to impose a 10 per cent export levy on copper concentrates and ores to encourage value addition to copper exports and improve accountability in the vast mining sector.

"The cancellation of SI 89 by President Sata is something that is very commendable to many of us in the country," Mtesa, a former Consumer Trust Unit Trust (CUTS) international Zambia chairperson, said.

"The mines need to be pointed in the direction of utilising refineries in the country so that they add value to what they produce."

After revocation, the SI 89 has since been replaced with SI 99, which has reinstated the 10 per cent export duty on copper concentrates and ores, which Chikwanda briefly abolished after being lobbied by First Quantum Minerals and Lubambe Copper Mines.

"Allowing the mines to export copper ore or as the President put it, exporting soil, is unacceptable 49 after independence," Mtesa said.

"There is absolutely no justification at all why this SI should have passed. We have the refinery, why shouldn't we be adding value locally?" He said the SI 89, if anything, would have meant the country exporting jobs.

"This SI would have entailed throwing away revenue from those minerals such as gold, found in the copper ore or concentrates, and that is not justifiable," he said.

Mtesa said the government needed to create jobs and value addition is just one of the other many avenues to do so.

"When you look at where we are as an economy, we need to do everything possible to add value to whatever we produce so that we can make enough money not only for the companies exporting but for the government as well in terms of taxation and the employees' Pay as you earn tax," he said.

Chikwanda recently told the Parliamentary expanded committee on estimates that President Sata's reversal of SI 89 would see mining firms stockpiling ores and concentrates fail to export the unfinished resources and therefore raise no revenues to pay tax to treasury.