Zambia Mines Say Proposed Copper Import Duty Will Hurt Smelters

(Bloomberg) -- The Zambian Chamber of Mines said a proposed import duty on copper concentrates will harm smelters in Africa’s second-biggest producer of the metal and asked the government to waive it.

The country doesn’t produce enough concentrates, a mixture of crushed rock that contains about 40 percent copper, to meet its smelting capacity and needs to import extra material from the Democratic Republic of Congo, the industry group said. Zambian smelters also need the higher-grade and specific type of concentrates that come from mines in the Congo to operate optimally, the chamber said.

“Zambia has an immense deficit in terms of concentrates produced locally compared to the existing capacity to process,” it said in a submission to a parliamentary committee dated Nov. 22. “If there is insufficient supply of concentrates, finished copper output will be affected, in addition to employment and contributions to government revenue.”

Smelters owned by Glencore Plc, First Quantum Minerals Ltd. and Vedanta Resources Plc stand to lose if the government goes ahead with the proposed 7.5 percent concentrate import duty. Mining companies in the Congo, where there aren’t large processing plants, would resort to processing material in the east as the duty would make smelting it in Zambia unprofitable, the chamber said.

Zambia has capacity to smelt 3.6 million metric tons of concentrates yearly, while mines in the country only produce around 2.9 million tons, according to the industry group.

Finance Minister Felix Mutati proposed the import duty to boost government revenues in his Nov. 11 budget speech. The tax would come into effect from Jan. 1.

To contact the reporters on this story: Matthew Hill in Lusaka at mhill58@bloomberg.net, Taonga Clifford Mitimingi in Johannesburg at tmitimingi@bloomberg.net. To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Lynn Thomasson, Nicholas Larkin