I love to hear people talk about value addition in the mining sector. There is a smooth flow of joy with that topic. Why?
Value addition will entail we export the products of the mines at high value. We then get good returns on the produce. This is compared to the current situation where we export "soil" or concentrates at very low value and get little to no return at all. So value addition is the way to go.
But what shocks me is the famous "value addition" direction we have. Seriously, smelting and refining to me is not value addition to sing songs about. There is a value that has been added in the process, but for that to lead to no export duty is a miss-placed thought. If our export duty is to gain returns on the items being export, we should maintain an amount of export duty on these items since they are products of the mining sector which in all fairness, is a wasting asset. In addition, we should now look at the idea of encouraging and developing manufacturing or fabricating industries/ infrastructure that will move that cathode, copper blister or anode to a wire, a circuit, a electronic component, etc. These are the items that we can produce and gain meaningful returns on.
What good will the export of anodes and cathodes bring to us when we can do so much better?
Infrastructure Development
Few years ago it seemed impossible to embark on serious infrastructure development that was worth talking about. The few years that I have looked at the plans and money involved in road development through Link Zambia 8000 and Lusaka L400 projects has just brought one idea that every Zambian should now embrace, we can develop any infrastructure if we have the desire to do it. So the fabrication and mining related industries can be done. We need the money of course, but ultimately, we need the desire to do it.
We have to be frank in our thinking, mines don't employ people any more. The whole process is constantly becoming mechanized. But on the other hand, forward linked industries will employ more people as the products from those industries have higher value. This is a sustainable way of using our natural resources and get the benefits from such.
A deliberate policy to develop value addition sectors (not merely smelting), will see this country increase its take from the mining sector. Such sectors have also high growth potential compared to many other sectors. Moreover, the fact that our products will eliminate the cost of transportation of the copper, they will be produced cheaply compared to any other country that will get the copper from Zambia and put it on a truck/train or ship. That mere transport cost will be an advantage to Zambia.
A full scale infrastructure development of mining sector "support" industries in the forward linkage should be Zambia's priority after the roads development have been completed. We need to setup a full scale mining infrastructure support project.
Loss Making Position
I have always had problems with companies which are in loss making positions for years and years, yet taxes are paid elsewhere (ok maybe I watched too much stealing Africa but that does not change the facts). If people can own a company and not get any profits from it for years, whats wrong with us doing the same? Its such a perspective which makes me want to have my hands on the mines and run it myself and see for sure if I will enjoy the "loss making position" seriously.
We need to work on our own issues and find a way to deal with this particular element of loss making. We made a lot of mistakes in selling the mines that we will continuously suffer the problems associated with the sell.
Real Value Addition
The only possible real value addition is reach a level of fabrication and manufacturing products with high returns that the mining products we export. I believe all mining products should be taxed and taxed it should be in a way to encourage value addition. The value addition being referred to here is 'real' value addition. I don't think producing copper anodes/ cathodes/ blisters is real value addition as it will be exported to be processed further. So why don't we work on that element of ensuring we also process "further". That is the real value addition and its returns to the country will be more than what we currently.
We should look at mines as a source of an opportunity to reach that "further" processing cheaper than anywhere in the world as transportation costs will be lower than any one - with the exception of other mineral producers. That is the direction we need to be looking at.
This value addition will bring in employment and profits. We should face the fact that mines will never bring in employment as the whole sector will have to be more and more mechanized. But support sectors will need skilled labour to be able to handle and produce a variety of goods on the market. We should aim at moving from cable production to circuit boards or computer mother boards which may only need addition of other elements to be complete. The copper we have will do much of the work.
We need to identify products that can easily be produced here and find a way to encourage that production. Who ever thought China would be the Hi-tech hub of the world? All hi-tech items where produced in the west. Now we look to the east. So lets aim at making it come from the South, after all, we own the ingredients!
True value addition! Lets forget about the anodes, cathodes and copper blisters. Lets move and progress!
Loss Making Position
I have always had problems with companies which are in loss making positions for years and years, yet taxes are paid elsewhere (ok maybe I watched too much stealing Africa but that does not change the facts). If people can own a company and not get any profits from it for years, whats wrong with us doing the same? Its such a perspective which makes me want to have my hands on the mines and run it myself and see for sure if I will enjoy the "loss making position" seriously.
We need to work on our own issues and find a way to deal with this particular element of loss making. We made a lot of mistakes in selling the mines that we will continuously suffer the problems associated with the sell.
Real Value Addition
The only possible real value addition is reach a level of fabrication and manufacturing products with high returns that the mining products we export. I believe all mining products should be taxed and taxed it should be in a way to encourage value addition. The value addition being referred to here is 'real' value addition. I don't think producing copper anodes/ cathodes/ blisters is real value addition as it will be exported to be processed further. So why don't we work on that element of ensuring we also process "further". That is the real value addition and its returns to the country will be more than what we currently.
We should look at mines as a source of an opportunity to reach that "further" processing cheaper than anywhere in the world as transportation costs will be lower than any one - with the exception of other mineral producers. That is the direction we need to be looking at.
This value addition will bring in employment and profits. We should face the fact that mines will never bring in employment as the whole sector will have to be more and more mechanized. But support sectors will need skilled labour to be able to handle and produce a variety of goods on the market. We should aim at moving from cable production to circuit boards or computer mother boards which may only need addition of other elements to be complete. The copper we have will do much of the work.
We need to identify products that can easily be produced here and find a way to encourage that production. Who ever thought China would be the Hi-tech hub of the world? All hi-tech items where produced in the west. Now we look to the east. So lets aim at making it come from the South, after all, we own the ingredients!
True value addition! Lets forget about the anodes, cathodes and copper blisters. Lets move and progress!
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