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Reopening of mines to stabilise employment, improve tax revenues

CONTRIBUTION TO DEVELOPMENT
The mining sector contributes to Zambia’s socioeconomic development through the creation of jobs and new business opportunities

CONTRIBUTION TO DEVELOPMENT The mining sector contributes to Zambia’s socioeconomic development through the creation of jobs and new business opportunities

15th September 2017

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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Zambia Chamber of Mines and its initiative Mining for Zambia (MFZ), is enthusiastic about the reopening of mining operations in Zambia, which it says will not only result in increased copper production but also translate into stabilised employment levels in the country and improved tax revenues for government.

However, the political environment in Zambia is sensitive, which, according to a recent opinion article by respected development practitioner Greg Mills writing for the Daily Maverick, may turn investors away.

MFZ does remain optimistic, though it cautions that several mines in Zambia scaled operations back, or stopped operation in various parts of a mine, in response to the global mining slowdown, adding that many of those that were able to maintain their operations had to curb costs – sometimes through layoffs.

However, with an improvement in the copper price, mines are now able to gear up for increased production. “The higher copper price will generate more revenue for the mines and help improve their cash flow and financial performance, which have been severely constrained by the recent mining downturn,” says MFZ.

Multiplier Effect

In the third edition of the ‘Role of mining in national economies’ report, published in 2016 by the International Council on Mining and Metals, policy adviser in extractive industries at the United Nations Development Programme Casper Sonesson highlights that mining plays an important role in the economies of many countries, providing a constant flow of money during the decades-long life cycles of mines.

MFZ points out that the copper mining industry in Zambia provides the greatest contribution to the local economy, generating about 80% of the country’s foreign export earnings and one-third of government tax revenue, and represents about 12% of the country’s gross domestic product.

In addition, the mining sector contributes to Zambia’s socioeconomic development through the creation of jobs and new business opportunities, which increases disposable income for the country’s citizens.

Mines also boost local economies by undertaking infrastructure projects, such as the development of roads, powerlines, homes, electrification infrastructure and water facilities, which reduces the cost of doing business in the country and attracts skilled people to the areas where they operate.

However, MFZ stresses that perhaps the sector’s most significant impact is its multiplier effect on employment levels in Zambia, with not only direct employment provided by mines but also indirect employment created through mines’ procurement of supplies from local businesses. Job opportunities are also created in other sectors in surrounding communities through the employees of mines and their suppliers spending their wages and salaries.

Thus, while the mining industry in Zambia directly employs about 60 000 people, indirect employment is significantly higher, owing to the multiplier effect. Although mining is becoming an increasingly “high-tech” business, which is increasingly relying on mechanisation and auto- mation, with mines in Zambia investing in these technologies since 2000, MFZ regards a growing, sophisticated mining industry as capable of still driving employment levels in the country.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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