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Zambian Ministry of Mines on warpath against undervaluation of minerals

The Zambian mines ministry has disclosed that mineral exporters deliberately submit low-grade samples to the state laboratory, causing an undervaluation of mineral exports and depriving the government of mineral royalty tax revenue.

Mines ministry officials said starting next month, it will personally collect samples from mine sites around the country to prevent mining companies seeking to undervalue their production to pay less taxes.

“The loss of revenue could amount to hundreds of thousands, or even millions of dollars per export, depending on the discrepancy in mineral grade between the sample and the consignment being exported,” Barnaby Mulenga, permanent secretary at the ministry of mines, said in a statement.

The change, which takes effect on July 1, means the ministry will no longer accept samples submitted by exporters and is the latest push by Zambia’s government to squeeze more revenue from the mining sector.

Mining accounts for more than 70% of Zambia’s foreign exchange earnings, an income that has become even more critical as the Covid-19 pandemic hits the economy.

Africa’s second-largest copper producer, Zambia is also trying to diversify its revenue base by boosting its gold production, and making copper mining companies account for the gold they produce as a by-product.

Companies operating in Zambia include First Quantum Minerals, Glencore, Barrick Gold and Vedanta Resources.

However, they were not readily available for comment.

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