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Monday, 22 October 2007

Lumwana mine presentation, revisited

You would have seen the Lumwana video presentation, now you can enjoy the latest Equinox presentation on Lumwana released last week. You can access it here. I regard the latest presentation as superior to the video presentation because the combination of text and fantastic pictures outweigh video without sound!

9 comments:

  1. Cho-
    It's good, to finally see an investment of such magnitude in Zambia, at last. However I wonder though, why ZCCM with so much mining experience and expertise, failed to identify this huge copper reserve. They could have prevented what will now, be the biggest heist of a resource whose exploitation should have benefited Zambians a 100%, instead of the crumbs, desperate and unemployed Zambians will get in this arrangement.
    I note that more than half of the funding for this project, is debt financed by international banks and lending agencies, I believe if ZCCM had gone to these institutions with a similar Lumwana mine presentation they too would have been allocated the funding.
    There's no point crying over spilled milk, this was just my thoughts of another opportunity Zambians have missed in the past.
    Any investment at this point is of course welcome, I just wish the mining royalties reform had kicked in before Eqinox got away with 100% ownership of the prize!

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  2. I am not giving the mining companies the benefit of the doubt.

    There are a hundred ways in which these deals could be illegal.

    Zambia's OECD obligations have been mentioned.

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  3. It's a pity that when considering foreign investment we always tend to look at the glass as half empty rather than half full. Talk of what might have been done by ZCCM is unrealistic. For one thing, no banks would have lent Lumwana scale money to a state owned and almost bankrupt ZCCM, especially after the mess it had made of the healthy and prosperous mining industry it took over. Secondly, just imagine how much corruption would have been involved in he massive purchases of capital equipment.

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  4. Murray,

    But that is omitting the massive corruption that took place when signing away the mines themselves.

    Zambia is not benefiting from this deal at all. And whatever benefit it is getting, will disappear when the copper prices go down again.

    Think of how different things would be if the state owned even 51% of Lumwana. Or even 25%.

    Instead, there are all kinds of ways of getting out of properly declaring income, they aren't required to use local suppliers, and even turnover tax is weaseled out of - 0.6%.

    So what is the purpose? That someone in government can say 'we brought development'?

    I would rather see Lumwana in Zambian hands and undeveloped, than watch foreign multinationals take everything away. Including the profits.

    Is there even a glass to call half empty or half full? :)

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  5. Mr. K's talk of "the massive corruption that took place when signing away the mines" needs supporting evidence. There is, of course, general agreement about Luanshya. And there is evidence that Francis Kaunda had a close pre-sale link to the buyers of Chibuluma. But any suspicions about Bwana Mkubwa, Nkana, Mufulira, Chingola, Solwezi or Lumwana are, so far as I know, mere surmise.

    Mr. K continues to stare at the empty half of the glass. I would refer him to Fred Bantubonse's article 'Taxation of Zambia's mining sector" in ZIPPA's October 2007 Journal on 'Taxation'.

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  6. Having referred Mr. K to an article on ZIPPA's October 2007 Journal, I now find that the Journal is not yet on the ZIPPA website!! Sincere apologies. It will be posted today.

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  7. Murray,

    When I mention massive corruption, I am referring to the signing away of billions of dollars in profit, at the stroke of a pen.

    I understand there was coercion from the WB and IMF, but corruption still cannot be ruled out.

    I think there are rules against signing contracts under duress, and that this affects the contract's legality. So the WB/IMF's pressure itself is a form of corruption.

    At the same time, you have to be surprised at the number of officials who will defend these agreements as if there is nothing wrong with them.

    Knowing how they and the mining companies have done business in the past, I think it is a clear show that money has changed hands.

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  8. I can appreciate the reason Mr. Murray is getting nostalgic at the mention of ZCCM. The way state entities have been managed in Zambia, will surely bring up this reaction.
    However Mr Murray may want to reflect on what is at stake here, we are not talking about McDonald's setting up a bugger shop in Lumwana- this is exploitation of natural resource which will at some point run out. The benefit from the exploitation of this copper is an entitlement only Zambians are fully entiltled to have by reason of it's current location. That Zambians currently lacks the means to extract this copper should not be basis for forfeiture of their entitlement nor is it an open invitation for abuse.
    It is also necessary to have in mind that some international banks such as the World Bank -if it has a hand in this is a multi state owned institution with management challenges though the US gov would not have it go bankcrupt.
    If all Zambians will get is a salary less than $1/Hr and the Zambian Gov no tax for 5yrs and 0.3% in mining royalties, would Zambia not be better off is that copper is left in the ground until Zambians can find a better business partners or develop the means to exploit or mine the copper themselves. At least then, our great grand children will have a resource to fall back on as they grapple with the debt we are passing on to them!
    Am only playing the devils advocate here, I mean is it not in order to ask why these Muzungu's are in Lumwana, why would a Muzungu get his money and fly all the way to remote Lumwana! surely Mr. Murray does not believe Equinox is merely in Lumwana to create employment for poor Zambians- The are there to maxmize their investment, watch how much money they will make in 5yrs then perhaps you will join Kashikulu mourning by the rivers of Zambezi,when he remembers ZCCM.

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  9. Kashikulu,

    If all Zambians will get is a salary less than $1/Hr and the Zambian Gov no tax for 5yrs and 0.3% in mining royalties, would Zambia not be better off is that copper is left in the ground until Zambians can find a better business partners or develop the means to exploit or mine the copper themselves.

    Absolutely. The current development agreements make no sense, they are treated as secret for a reason, and they are probably illegal, or at least in contravention of international agreements against exploitation.

    Am only playing the devils advocate here, I mean is it not in order to ask why these Muzungu's are in Lumwana, why would a Muzungu get his money and fly all the way to remote Lumwana! surely Mr. Murray does not believe Equinox is merely in Lumwana to create employment for poor Zambians- The are there to maxmize their investment, watch how much money they will make in 5yrs then perhaps you will join Kashikulu mourning by the rivers of Zambezi,when he remembers ZCCM.

    Absolutely. The idea that mining companies have to be lured to Zambia to exploit some of the world's richest sources of copper ore is insane. It is a lie, and a poor one. They would come to Zambia if they really had to pay 25% income tax, 5% turnover tax and pay their employees a minimum wage.

    Where else would they go?

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