“One of our greatest contributors is the mining sector and when it shines, we collect more,” BURS Customs Services commissioner, Segolo Lekau told BusinessWeek at a briefing on Tuesday.
“When the industry does well, we tend to do well. “Other efforts have also assisted, such as the improvements in audits and we are going to be heavy on compliance.”
Lekau singled out the contributions of Khoemacau Copper Mining, the Kalahari Copperbelt operation built at a cost of $412 million, which produced its first concentrate last June.
Khoemacau is ramping up to its full production of 65,000 tonnes per annum, which it expects to reach by year-end.
The mining sector this year has also been helped by Russia’s invasion of Ukraine and the subsequent sanctions on Moscow which have boosted rough diamond prices and output from Debswana, while local collieries have also reported a spike in demand from the European Union.
Morupule Coal Mine and Minergy’s Masama Coal Mine have both opened up rail exports through the Maputo port and have reported strong demand, as countries around the world restart or boost their coal-fired power stations in response to the drop in supplies from Russia.
The recovery in mining is welcome news for fiscal authorities, as the sector contracted by nearly 27% in 2020 due to travel bans and loss of market demand associated with COVID-19. That contraction led the economy into a recession, shrinking by a historic 8.9 percent in 2020, while the budget deficit jumped to P16.4 billion in the same year.
The removal of global and local travel restrictions as well as the recovery of market demand saw the mining sector rebound by 29.9% last year, led by diamonds where exports by Debswana reached P38.1 billion, the highest since 2016.
The BURS’s receipts of P8.6 billion over just two months are nearly 11% above the target set for the period. The collections also set the tax agency on course to meet or exceed its target for 2022–2023 of P46.4 billion, with the recovery of the local economy expected to help tax revenues.
“This is an indication that BURS is heading towards the right direction and believe me you, more is yet to come,” the agency’s commissioner-general, Jeanette Makgolo told journalists. “We are mindful that we have to do our level best to collect revenue to ensure the recovery of the economy and the replenishment of the government savings depleted during the COVID-19 pandemic.”
She added that a review of the BURS’s ICT tax administration systems is due for completion by September, which would enhance collections by improving the organisation’s functional efficacy.
