ZAMBIA’S struggling finances have been dented further by a decline in mining revenue during the three months to April owing to the COVID-19 pandemic, Reuters reported.
The newswire quoted the country’s Chamber of Mines as saying the sector had suffered a 30% drop in revenue over the period. Furthermore, the economic fall out from the COVID-19 pandemic could last for 12 months.
Severe global restrictions on movement have hit mining supply chains and hindered the export and sale of copper, the mining industry association said, hurting company revenues and government coffers.
The metal is Zambia’s main foreign exchange earner and a key driver of tax revenues.
“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.
Royalty payments are estimated to have come in at $60m to $65m over the three months from February to April, around two-thirds of the $90m that was expected.
A plunge in copper prices has also dented companies’ revenues.
Mining companies have also seen costs increase as they implement COVID-19 prevention measures to ensure the safety of workers and surrounding communities, said Reuters citing the Chamber of Mines.
“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,” it said.
The chamber said mining firms would likely be grappling with revenue pressures due to the pandemic for at least 12 months. Mining companies operating in Zambia include First Quantum Minerals, Glencore, Barrick Gold Corp and Vedanta Resources, said Reuters.