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Thursday, 17 December 2009

On aid and economic justice..

A bit of shameless self-promotion :

A shorter version of the Dead Aid review appears in the latest DFID Development Insights Magazine - see page 19. [Full version here].

The review of Economic Justice in A Fair World appears in the Business Economist Magazine.


  1. Not even the IMF and World Bank can keep these corrupt politicians from 'protecting their friends'. They are costing the country billions of dollars, when people are dying because of lack of medical care and children are spilling out into the street because no money is made available for education. Each and every one of them should be brought up on charges, and the mines should be charge a super tax to recoup all the money they stole from the people, plus interest, plus an extra fine to make sure they will never try this again.

    Zambia to keep low mine taxes despite pressure
    By Chris Mfula
    Tue 29 Dec. 2009, 09:00 CAT

    LUSAKA (Reuters) - Zambia, Africa's top copper producer, reiterated on Monday it will maintain existing mining taxes despite growing internal pressure on authorities to raise them in 2010 following a rally in metal prices.

    Chief government spokesman Ronnie Shikapwasha said Zambia would maintain the existing tax regime introduced in 2008 as the global economy was just starting to recover from recession.

    The International Monetary Fund and World Bank have said Zambia should further raise mining taxes and should not have abolished a 25 per cent mineral windfall tax this year.

    "We need to allow the mines to develop and re-create employment for our people and that is why we (provided) existing tax concessions. We may revisit the agreements in future as the mines pick up," Shikapwasha told Reuters.

    Foreign owned mining companies are currently expected to pay a 15 per cent profit variable tax, 30 corporate tax and 3.0 per cent mineral royalty.

    But last year, Zambia signed an agreement with Lumwana Mining Co., a unit of Equinox Minerals, granting it tax waivers up to 2017 to enable the company to pay back its debts and also still provides exemptions to other firms investing in established economic zones.

    Senior mining economics and engineering lecturer at the University of Zambia (UNZA), Mathias Mpande told Reuters the country should scrap the tax breaks in order to raise more revenue following a rally in metals prices in 2009.

    "The colonial government used mining to create industrialisation elsewhere and we cannot continue mining in that pattern. The revival of mining is being based on the false concept that the state does not tax the mines," Mpande said.

    Mpande said apart from the lengthy tax breaks, mining companies were paying lower power tariffs to the state power utility, Zesco Ltd, compared with other industry.

    Economic analyst, Oliver Saasa said the agreements with the mines should quickly be renegotiated because the tax regime was more favourable to the foreign investors than the country.

    "The government must sit down and renegotiate with the mining houses because the tax holidays given to the mines appear not to take into consideration development needs of the country," Saasa told Reuters.

    Foreign mining companies operating in Zambia include Canada's First Quantum Minerals, London-listed Vedanta Resources Plc, Glencore International AG of Switzerland and Metorex of South Africa.

  2. Of course MrK that there is a big problem with politicians and mining groups.

    I talk often about zccm-ih but it is incredible that GRZ, and ZCCM-IH never asked dividends from theirs assets !

    This summer the CEO of First quantum minerals said that GRZ and ZCCM-IH never asked dividends from kansanshi mining !

    when you know that kansanshi mining have a benefit more than two billion US$ in the last 4 years and that zccm received only 3 M US $ while zccm have 20 % in kansanshi mining !!!

    you can be angry !

    87 % of zccm is for the people of zambia and no receive dividends from these mining groups who have benefits several billions of US$ $ !

    why the GRZ and ZCCM-IH never talk about it ?

    dividends is a legal situation !

    zccm-ih have between 15 and 20 % in all mining groups for that people of zambia receive a part of his copper who is used by foreign groups !

    the FMI and world bank pushed zambia to privatise zccm in this vue !

    zccm-ih no received big dividends, who receive money .???

    member of GRZ ? member of parliament ? member of board of zccm-ih ?

    why a acting CEO since 3 yars ???

    why nobody angry about these situations in zambia ?

    a lot of questions but never answer !

    this situation push the investors to be afraid about zambia, only investors with corrupt want to come

    the message for investors is clear !

    - invest directly in the mining ,
    - take all the money,
    - give a part of this money to some politicians
    and your life will easy...

    no taxe, no dividends, you welcome in zambia

  3. Philip,

    It seems to be obvious that some law could have been broken somewhere. Crooked deals between the mines and politicians are usually not that well covered in the West, but defrauding shareholders is serious business. There are all kinds of laws on the books that obligate corporations to maximize profits, specifically for the purpose of them not defrauding shareholders by making cozy deals and overpaying suppliers. And that is just one example.

    It could be very possible that for instance EQUINOX's non-declaration of dividends is part of their tax avoidance (or is that tax evasion) program.

    And these mining companies are listed on many western exchanges that have very strict investment rules.

    Have you tried taking the issue up with the London Stock Exchange, New York Stock Exchange, SEC, NASD, etc?

    You could collect a lot of money and do the public a huge favour.

    From the Equinox website:

    Equinox is an international mining company, dual listed on the Canadian (Toronto) and Australian stock exchanges (Symbol: 'EQN').

    ASX's supervisory role

    The Australian Securities Exchange (ASX) is often referred to as one of 'the regulators' of financial market activity in Australia. It is more accurate to describe ASX as a regulated commercial organisation that monitors specific aspects of the businesses of other organisations (for example, the governance of listed companies and the on-exchange or on-market trade execution by brokers). ASX does so as a condition of the licences it has been granted by Government to conduct its own commercial undertakings.

    …the authority of the ASX over listed companies is limited to ensuring that they comply with the Listing Rules and to this end the range of actions available to ASX is limited to questioning companies and, where appropriate, taking the enforcement actions discussed later in this paper.

    Australian Prudential Regulatory Authority

    Diagram of the ASX's monitoring role

  4. Mr K

    For me the problem is not equinox, the big problem for ZAMBIA and for ZCCM-IH are fIRST QUANTUM MINERALS AND VEDANTA.

    First Quantum minerals is shareholder for 80 % in KANSANSHI Mining and ZCCM-IH is shareholder for 20 % in this mine.

    The last four years KANSANSHI MINING had a lot of profits.. a total more than 2 billions of US $... But..FQM decided that Kansanshi mining give ridiculous dividends for ZCCM-IH.. only 3 M US$ ( for FQM 20 % of 2 billion US$ = 3 M US$ !! FQM is very good in mathematic) !!

    In the same time FIRST Quantum MINERALS used the money of KANSANSHI Mining to developp its business in australia (Ravensthorpe Nickel Operation) and in finland (Kevitsa Project)...

    FQM used the Money of ZCCM-IH for its business and in the same time ZAMBIA asked money to world bank or FMI...and erase the windfalls taxes...

    The problem is the same with VEDANTA and the other "partner" of zccm-ih...

    For EQUINOX i think that it won't be a problem because zccm-ih have share directly in equinox...

    I think that the GRZ have to take 51 % in all these mines or exchange its take in mine with share in partner...

    For example the 20 % in kansanshi could exchange for 600 MUS $ of FQM shares...

    it will be better for GRZ to have shares directly in majoritary shareholders that in mines


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