Zambia suspends mineral import duty as means to curtail the impact of COVID-19

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  • Suspension of import duty on mineral concentrates
  • This follows SA’s lockdown which will disrupt copper supply
  • Zambia’s mining sector dipped by 12.3% in 2019

Harare – Zambia will suspend import duty on mineral concentrates and value added tax on imported spare parts to support the economy amid the global coronavirus pandemic.

This comes at a time when South Africa announced that bulk terminals that is ports that process imports and exports of minerals will be closed throughout the lockdown duration, disrupting copper supply form major copper producer Zambia.

The port closures will likely affect chrome and cobalt exporters.

Miners in the African Copperbelt (Zambia), which accounts for more than a tenth of global production, typically transport copper overland to South Africa’s ports, where it is exported mainly to China, the world’s biggest consumer of the metal.

The move by the government to tighten and restrict borders resulted in Toronto listed copper miner First Quantum exporting copper from its Zambian mines through alternate routes.

The South African mining sector is expected to suffer losses of circa 8% of annual output on the backdrop of the 21-day lockdown.

Zambia, Africa’s second-largest copper producer also cut its 2020 economic growth forecast to 2% from an earlier forecast of 3.2%.

Copper output for 2019 dropped by up to 100,000mt to around 750,00mt in Zambia due to smelter shutdowns coupled with low power supply that forced the mining sector to downgrade copper output.

Last year in September, the Zambian government implemented a 1.5% increase in minerals royalty taxes, with current tax rates ranging from 4-6% in relation to the copper price, with a 10% ceiling when copper prices go above $7,500/mt, while additionally, copper concentrate imports incurred a 5% levy.

Mines in Zambia account for about half of the southern African nation’s power consumption, and contribute about 70% of export earnings, so any disruption in supply can have a massive impact on the economy. The government’s foreign exchange reserves are already near a record low, and economic growth last year was the slowest in more than two decades.

Meanwhile Zimbabwe’s mining sector plunged by 12.3% in 2019.

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