THE World Bank has said the mining industry in Zambia is expected to account for 3.8 per cent of the Gross Domestic Product (GDP) in 2012, despite a decline in the mining output.
The Zambia's Economic Brief produced by the World Bank indicates that despite the decline in mining output, revenues from the mining industry were expected to be 3.8 per cent of GDP in 2012, partly due to increase in royalty taxes.
The report which was launched on Monday in Lusaka states that from 2008 to 2011 mining revenues averaged around 2.6 per cent of Gross Domestic Product (GDP), a sharp increase from the previous range of 1.0 to 1.4 per cent for 2003 to 2008.
The brief notes that the Government was making efforts to further rationalise the fiscal regime and improve mining tax compliance, while keeping the regime predictable.
"Mining revenues are expected to be 3.8 per cent of GDP in 2012 partly due to an increase in royalty rates, the Government is making efforts to further rationalise the fiscal regime and improve mining tax compliance while keeping the regime predictable,"
Mining revenues are expected to continue growing in the medium term, as carryover losses of mining companies are exhausted and tax compliance is strengthened, while non-mining revenues could also grow given their fairly low current levels.
Zambia's economic growth medium term growth prospects remain strong but are subject to considerable downside risks emanating from global uncertainties.
Despite the ongoing slowdown in China's economy which is Zambia's largest trading partner, international metal and mineral prices including that of copper are expected to remain fairly high over the medium term.
Premised on the expected soft landing of China, copper prices are expected to recover from US$7,900 per tonne in 2012 to $8,500 in 2013 before falling back to $8,000 in 2014.
It reports that as a result, the strong Foreign Director Investments (FDI) flows in the mining sector in recent years are expected to continue supporting the expansion of existing mines such as the Kansanshi, Lumwana, and Konkola as well as the construction of new mines like the First Quantum Mineral's Trident Mine and Smelter project.