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Wednesday, 27 April 2011

The Mining Lobby

Leslie Cannold on Australia's "billionaire liberation front" :
Why did the government's bid to replace the current royalties regime with the resource rent tax proposed by the Henry Review fail? Mainly, because profitable international companies don't like paying tax, and have few qualms about setting up complex legal structures, stone-walling tax authorities and otherwise fighting dirty to shell out as little as possible....I firmly believe that if Australians had understood that the tax international super-profiting mining companies didn't pay on their windfall profits would be clawed back by the Gillard government through attacks on life-saving cures, childcare centre rebates and middle-income jobs, they'd have insisted the Billionaire Liberation Front – a term coined by Lindsay Tanner – pay up. The reason they didn't requires a book to fully explain but boils down to political and communication nous and – you guessed it – finance. Background Briefing reports that the big mining companies spent $22million to defeat the super profits tax by way of a PR campaign that made the government's communications efforts – to use an analogy offered by legal expert Michael Kobetsky – look like the football under-10s. These days big business dirty tricks are the rule, not the exception. Politicians must be armed and ready.
You can read the rest of the piece here. A useful reminder to those gullible enough to believe that mining tax policies anywhere are settled by rational arguments. Taxation policy nearly always is an outworking of the power struggle - and in that access to money is everything. Unfortunately, unlike in Australia where they even hope that "policians must be armed and ready", Zambian politicians are directly armed with American dollars  in their campaign finance pockets by mining companies. 

6 comments:

  1. It is unfortunate for Zambia that the people who have been running the country since 1964 together with their chosen 'technocrats' have been nothing more than economic illiterates. It doesnt matter whether it was during Kaunda's 'socialist' leaning years or the current neo-liberal era; the ignorance has just been disgusting. In both periods the govts have been unable to calculate the worth of the assets they were either buying or selling. Kaunda in his hurry to take control of the so called 'commanding heights' of the economy was paying more than three times the value of the assets making global multinationals of the Anglo-Americans.
    Then we have the MMD selling stuff whose value they didnt know. The most insulting thing is the claims by people like Nawakwi that they were told by the IMF and World Bank that the mines were worthless and that copper would 'runout' in 7 years. Then for God's why did you sign 'Development Agreements' for 10 years or more? Note also that the ex-Chairman and CEO of ZCCM Francis Kaunda, was the Chairman of the 'Special Team' on the privatisation of ZCCM and the dude didnt have a clue as to the lifespan of the mines he used to run!

    I just hope that the Zambian govt will learn something from the sale of Equinox Minerals to Barrick Gold for $7.3bn. If the govt is serious they should ask themselves why a company with one operating mine in Zambia (Lumwana) should be worth that much. The govt shouldnt be surprised when they find out that the $7.3bn is just a tiny fraction of the riches that Equinox unearthed under the Lumwana prospecting area.

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  2. it is worse than ever
    After the decad of plunder (1991-2001), there is always scheming...
    Thieves and crooks run Zed
    They are bought and paid for by the foreign mining companies
    “The Zambian government has declined to investigate Mopani's tax affairs despite calls from development charities. "We are disappointed with the government's lukewarm reaction," said Savior Mwambwa, executive director of the Centre for Trade Policy and Development, Zambia. "They need to take action and change the whole taxation system.”
    “The auditors found that MCM resisted the pilot audit at every stage. The company’s book-keeping was incomplete, several legally required documents were lacking and the general ledger analysis showed several loopholes and couldn’t be matched with the trial balance,” the organisations stated. “The auditors also found an inexplicable doubling in the costs of the company between 2005 to 2007, which shows that the company has been artificially inflating its costs to minimise the profits shown in their books so that they could pay less taxes. Despite the fact that the audit was finished in the fall of 2009, it was kept secret.”

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  3. Now Kansanshi Mining (FQM) owes ZCCM-ih $ 400 M but paid only crumbs ($ 20M)…
    Unfortunately money is kept in the mines and used by majority shareholders for new projects in which ZCCM-IH is not a shareholder
    but Minister of Mines and Minerals Development Mwale said he was not aware that First Quantum Minerals (FQM) had kept in its accounts about US$300 million unpaid dividends to ZCCM-IH, of which it owns itself a 20 percent stake in (FQM) during the Cape Town conference.
    Nevertheless Mwale knew that thanks to the MP Wylbur SIMUUSA who made a very interesting speech to parliament on Sept. 29
    http://www.parliament.gov.zm/index.php?option=com_content&task=view&id=1259&Itemid=86&limit=1&limitstart=6
    Therefore, Madam Speaker, if we want to boast about the increased production, as I have said before, the reckless policies of this Government must be reversed.
    Madam Speaker, I was one of the people who were against the complete privatisation of the mines. I advocated that we retain one unit, the Nchanga Mine. That way, it would have competed with the Kansanshi Mine, First Quantum Minerals and Fox Dodge. By working on a par with these mines, we would have assessed whether we can truly boast about increased production because, at least, that would have been our production.
    Madam Speaker, one of the countries we use as a benchmark is Chile. It has declared about US$30 billion as revenue from mining. Of that US$30 billion, US$15 billion, which is 50 per cent, came from the National Copper Corporation of Chile (CODELCO). For those who can remember, CODELCO was one of the mines that wanted to buy Nchanga Mine during the privatisation period, but it is State-owned. It is a parastatal owned by the Government, but it contributed US$15 billion to its country’s tax revenue. Therefore, Chile can boast about increased production and that is what we are talking about.
    Mr D. Mwila: Hear, hear!
    Mr Simuusa: These are the policies that this Government should implement if it wants to boast about increased production. I challenge it, although it is too late because it is on its way out, ...
    Laughter
    Mr Simuusa: Anyway, let me challenge it. Maybe, in the few remaining months …
    Laughter
    Mr Simuusa: … it can start an operation whose production it will compare with mines such as the Konkola Copper Mine (KCM) because only then can it boast about increased production.
    Madam Speaker, as it is, I join my colleagues in bemoaning the gross failure by this nation to acquire benefits from these mines because of its bad policies.

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  4. continued


    Madam Speaker, I will give you another example. If the Government wants to get benefits from the dividends, the vehicle that should be used is the Zambia Consolidated Copper Mine-Investment Holdings (ZCCM-IH). This is the vehicle that we have created to get dividends from all these mines in terms of share holdings. However, I have noticed that the ZCCM-IH has not produced annual reports for 2005 and 2006.
    Madam, are we serious as a nation? This is gross incompetence. How can we let a company that is supposed to be our watchdog and one that is supposed to be deriving benefit on our behalf not produce an annual report? This way, we do not even know our losses or profits. I would like the hon. Minister of Mines and Minerals Development to explain why that has been allowed. Why should we allow such a situation to prevail after it was said on the Floor of this House that if we are to benefit, the shareholding in the ZCCM-IH has to be increased?
    Madam Speaker, Zambians only own 1.2 per cent shares in Lumwana Mine. Thus, there is no need to boast about that. The Lumwana Mine, in the North-Western Province, will be the biggest mine in Africa, but we do not own it. Are we serious as a nation? I would like the hon. Minister of Mines and Minerals Development to state why we have not increased shareholding in the ZCCM-IH so that we get what is due to the nation.
    Madam Speaker, the Government is good at boasting and claiming glory. As a result, there was so much talk about the US$18 million that Kansanshi Mine paid to the ZCCM-IH as dividends.
    Madam Speaker, the accrued profits made by Kansanshi Mine, after taking care of all its accounts and expenses, was in excess of US$1.7 billion. Since, as a country, we only own 20 per cent shares in Kansanshi Mine, this works out in excess of US$350 million. The only amount of that US$350 million that came to the Government was US$18 million.
    Mr Lubinda: Where is the rest?
    Mr Simuusa: What happened to the rest?
    Mr Lubinda: Bamalukula!

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  5. The only question left is, how much of a bribe have these crooks, including the finance minister, taken to let the mining companies keep all the profits, and externalize their costs when it comes to not paying a minimum wage or polluting the economy.

    Does anyone remember the ridiculous amount that the mines paid for polluting the rivers?

    The MMD is a joke.

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  6. More than a joke

    MMD is a foreign mining companies's rip-off !!

    ReplyDelete

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