WINNING HEARTS AND MINES

Zambia 2014 | MINING, ENERGY & INDUSTRY | INTERVIEW

TBY talks to Maureen Jangulo Dlamini, CEO of the Chamber of Mines on its interaction with the government and the public, the implementation of policies conducive to investment, and the effective utilization of tax revenue.

Maureen Jangulo Dlamini
BIOGRAPHY
Maureen Dlamini is the Chief Executive Officer of the Chamber of Mines of Zambia. She has over 10 years experience in the financial services sector at executive level and has acquired vast technical and business experience in strategic planning and business development, including product and project management. Her work experience includes being Executive Committee member at the Lion of Africa Insurance Company Limited as Executive Head of Corporate Affairs, Executive Member at Johannesburg Stock Exchange responsible for Investor Education, and Africa Board CEO of Zambezi Airlines. Dlamini serves on the Board of Proflight Zambia Limited, and the Board of Nyiombo Investments Limited, which is the largest distributor of farming inputs in Zambia.

What is the role that the Chamber of Mines (CoM) has played since its establishment in 2000?

We are there to balance the interests of the mining sector with the developmental needs of the government. We advocate in terms of policy, and make submissions to the government. In terms of the country's foreign exchange earnings, about 70% comes from the mining sector. We play a central role in terms of the economic development of this country. We are also managing the general perception of the public as to the contribution of the mining sector. That is a huge issue we are currently dealing with.

What strategies do you follow to change that perception?

We utilize education to get the public to understand what the sector is all about. People need to understand that it takes a long time for a mine to become profitable. We are trying to take people through the whole life cycle of a mine. Investors can drill and find nothing after they have spent millions of dollars. When an investor comes in, it is not a guarantee that they will make money. Mining is a seriously risky business. As the CoM is leading those discussions, the public is beginning to understand what the mining sector is about. We are trying to improve our data management, so we are revising our website so it can be a repository for mining sector information.

What challenges do you face in terms of educating the population about the sector?

Perception is a major challenge. There is a general perception that we are not open, and we are now having discussions with the general public through various forums. We are working together with the Ministry of Mines and the Zambia Revenue Authority to compile a template for production figures. That will be a good source of production data for all the minerals, so that there are no discrepancies in the figures/numbers reported.

Since the late 1990s production in the mining sector has tripled. What have been the factors behind this growth?

There is huge mineral potential in this country and policies at that time were conducive to investment. The government in the 1990s had entered into development agreements with various companies to provide incentives for investment. These development agreements are no longer in force. We now have the mines regulated by the Mines and Minerals Development Act, which has put policies in place that are conducive to investment. We are seeing now that the investment that came in the last decade or so has come to fruition. Within the coming decade we are looking to produce 1.5 million tons of copper per annum. In order to achieve that, there has to be continued stability in the policy environment.

How has mining supported the growth of the Zambian economy?

Growth in the mining sector has increased employment, and in the same way, reduced poverty. There are supporting industries that have developed because of the mining sector, so trading has increased. Infrastructure has improved. We have a lot of locals who are supplying goods and services to the mining sector. Social services such as schools, hospitals, and clinics have been built in mining communities leading to better health and education for the locals.

How will the infrastructure that the government is building help the mining industry?

Obviously it will help a great deal. The infrastructure was not good 10 to 15 years ago. Good transport infrastructure makes it easier and cheaper to do business. The government has done a great deal in terms of infrastructure development to support the mining sector, and there is a huge drive to increase energy production. The number of substations and power stations that have been opened up by now will hopefully be able to support the sector. We consume almost 50% of the energy that is produced in the country. There is a lot that can be achieved with collaboration between the sector and the government in terms of enhancing the power sector. We project that within the coming five to 10 years copper production should double.

What is the CoM's position on the current tax dispute between the mines and the government?

We have had several discussions. We have completed research and have noted that this is one of the most highly taxed jurisdictions. According to a study by McKinsey, our effective tax rate is about 45%, which is relatively high. Our corporate taxes are 30%, and we pay a mineral tax of 6%, amongst other taxes. If you look at the last EITI report for Zambia, in 2011 we contributed almost ZMW7 billion in taxes, while the previous year it was ZMW3 billion. Our question is how effectively this revenue is being utilized. It is really not a matter of just increasing taxes, as we must improve the tax collection process first. We also need to become more transparent and accountable in how these revenues are being utilized, to make sure that the money is being invested in local communities. Local communities are saying they are not seeing the developmental benefits. But if you go to Northwestern province now, the most developed area is where the mines are operating, but the towns themselves are in a sorry state. In terms of revenue, we contribute 30%.

What opportunities do you see for foreign investors willing to enter the mining sector in Zambia?

There are great opportunities as there is still about 40% of the country that has not been geologically mapped. The government is aware of how critical the mining industry is for the nation, and recently we have heard more supportive sounds coming from government. The government is acknowledging that for Zambia to attract FDI there has to be policy consistency and stability.