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The Zambian mining sector has been in a state of high tension since populist Michael Sata became the country’s president at the end of September 2011. During his election campaign, Sata promised to redistribute mining revenues, the biggest contributor to the country’s GDP, more fairly. Since his election, the country has been divided between supporters and opponents of his controversial 10% tax on exports of ores and concentrates. This tax is aimed principally at companies involved in copper production, for which Zambia is African leader.
The tax was introduced at the start of the presidential mandate of the Patriotic Front (PF) leader but was suspended in October 2013 by finance minister Alexander Chikwanda before being reintroduced a few weeks later on Michael Sata’s orders. It is dividing the government and even the close entourage of the president himself. Alexander Chikwanda, who is Sata’s uncle, has paid the price for his handling of the affair. He has fallen into disgrace, while mines permanent secretary Victor Mtambo, brother in law of First Lady Christine Kaseba, was sacked at the end of 2013 for having failed to defend the interests of the State.
In this climate of constant tension, mines minister Christopher Yaluma and his team need to keep the trust of the unpredictable head of state, while, at the same time, maintaining industrialists of the sector happy. As things stand, however, it cannot be excluded that the windfall tax on mining companies, which was suspended in 2009, will be reintroduced.
In these conditions, it is not surprising that the few local mining companies which venture into the public arena all belong to Michael Sata’s camp. At the same time, mining consultants are flourishing, offering their expertise to audit the revenues of the mining companies or to advise the State on the training of local manpower, which was the object of another key promise made by Michael Sata during his election campaign.