Lusaka - The government of Zambia is considering enacting a law that will bar foreign mining houses operating in the country from externalising their export earnings.

Under the existing Foreign Exchange Control Act (1998), foreign investors are allowed to retain 100 percent of their profits and bank them where they please provided they meet tax obligations as required by the Zambia Revenue Authority.

Finance Minister Alexander Chikwanda recently told lawmakers that the proposed changes would help spur local development.

He said allowing foreign investors ‑ especially in the mining sector ‑ to externalise all export earnings as this placed the country at an economic disadvantage.

The Finance Minister was responding to concerns raised in Parliament by opposition legislator Richwell Siamunene (UPND), on what measures the government was taking to ensure that not all profits were externalised.

Chikwanda replied, “We are in the process of enforcing a policy to ensure that export companies, including the mines, do not externalise all their export earnings.”

Government revenues from copper, cobalt and gold exports from March 2009 to February this year were about US$18.2 million - a figure many believe is far below what should be accruing to the state.

The state has already doubled the mineral royalty tax from three percent to six percent.

Other measures in place to ensure the country gets more benefits from its mineral wealth are greater monitoring of operations and tax payments.

Minister Chikwanda said the taxes would help Zambia improve its infrastructure, provision of social amenities and boost performance of other sectors such as manufacturing.

Before this, President Michael Sata had said copper exporters are misrepresenting the amount of metal leaving the country.

Investigations have shown a lot of underhand dealings in relation to copper destined for Switzerland, for example.

It is alleged that the figures declared for copper destined for Switzerland are different from those appearing in the customs data of the European country.

Mines Minister Christopher Yaluma subsequently said mining companies would have to provide the state with information on tonnage, type and grade of ore mined, quantities and the end product.

Mining companies would also submit annual reports on the recovery percentages and efficiency of all mining and metallurgical processes.

“We have reviewed legislation in order to independently monitor the production and export of minerals and failure to comply will result in revocation of licences and other punitive measures.” Yaluma said.

Mining companies will also be compelled to provide details of the quantities of minerals sold and their average selling price.

According to Yaluma, “Mineral production has been improving over the years but this improvement has not been matched with a corresponding increase in revenue to the government.”