Editor's Comment

Mine job layoffs unjustified

MINERS processing copper at one of the mines on the Copperbelt.

WE ARE always perturbed by tactics some mine companies usually resort to when Government makes a major policy shift on tax.
It has now become clear that their actions do not take into consideration the good that Government intends for the whole country.
And it is also clear that the mine companies are only interested in what they get out of the business ventures and not what they offer the country in return for the profits they accrue.
In an effort to prevent the confusion over the previous taxation of the mines, Government introduced the sales tax, a new tax regime, which comes into effect this June.
Furthermore, royalties which range between 4 to 6 percent have been increased by 1.5 percent across the board and a 10 percent tax if the price of copper exceeds US$7,500 per tonne.
This is the information which has not been well received by the mine companies.
In response, we are seeing the mine companies resorting to these arm-twisting methods of laying off employees claiming they would become unprofitable when the new tax measures come into effect.
Mopani Copper Mines has decided to let go of over 600 jobs due to the company’s intention to suspend operations at Mindola North and Central shafts in Kitwe.
Additionally, 1,500 miners employed by contractors stand to lose their jobs if the plan to close down the two shafts is implemented.
In the case of Konkola Copper Mines (KCM), it has laid off more than 400 miners belonging to Elioyoni, Lukoria and Mpelembe drilling companies at its Nchanga underground mine in Chingola.
Before Government comes up with new tax measures, it engages in a consultation process which we believe the mine companies operating in Zambia are usually a part of.
And we believe they made submissions to the budget proposals as demanded by Government before it comes up with a budget for the following year.
In any case, Government always engages the mines on any issue so that none of the parties goes away a loser.
The mines know fully well that their contribution to the economy is enormous and for a long time, the proceeds from copper have driven the wheels of our economy.
By moving from VAT to sales tax, Government aims to remove any misunderstandings which were prevalent over the previous tax regime.
It is unfair for mine companies to always resort to arm-twisting tactics every time Government introduces a new tax.
We remember how the mine companies complained over Government’s intentions to introduce windfall tax a few years ago.
It is worth noting that these complaints come without the mine companies’ effort to justify how they would be negatively affected by the implementation of the intended taxes.
Their complaints over any intended tax increment would make more sense if they are backed with figures which show how they would be disadvantaged if the intended tax measure is implemented.
In the absence of such justification, it becomes hard to see how the mines would be disadvantaged while it is easy to conclude that they do not have the interests of the nation at heart.
What is even more perturbing is that some of these companies operate in countries where similar taxes have been introduced and they have continued with their operations without any complaints.
When Government introduces new tax measures, we believe it takes care not to disadvantage any of its stakeholders by working towards a win-win situation.
The mine companies should be real and move alongside Government so that together they develop the nation.

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