Coronavirus causes 30% drop in Zambian mining revenues
Mining companies in Zambia are reeling from a 30% drop in revenues as the COVID-19 outbreak continues to pose challenges
The fallout from COVID-19 is causing mining companies and the government of Zambia to lose huge revenues.
The Zambia Chamber of Mines said on Thursday that revenues dropped 30% over the three months to April.
This follows worldwide restrictions on movement which have led to a suspension of mineral exports and sales.
Zambia is Africa’s second-largest producer of copper but the coronavirus pandemic has been hurting supply chains.
Drop in royalty payments
Both companies and the government’s coffers are suffering, following a drop in mineral royalty payments.
Copper is not only Zambia’s main foreign exchange earner, but also a key driver of tax revenues.
However, the outbreak of the COVID-19 pandemic has caused royalty payments, which at the beginning of the year were forecast to earn Zambia $90 million, to drop to between $60 million and $65 million.
In a statement, the Chamber of Mines said copper prices have also nosedived, further denting revenues for mining firms.
“The fall in mining revenues is mirrored exactly in the fall in mineral royalty payments, as royalties are levied on each tonne of copper that is sold,” the chamber said.
Extra costs
Zambia has recorded over 1,000 cases of COVID-19 but the country’s recoveries have equally been impressive.
This, however, has not prevented mining companies from incurring high costs because of the need to implement COVID-19 safety measures.
In addition to the drop in revenues, companies are spending huge sums to ensure the safety of workers and surrounding communities.
“Zambia’s miners have been battling ever higher costs for years, and we are concerned about the potential consequences of such a big hit to earnings occurring now,” the chamber said.
E A Alanore
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