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Thursday, 4 October 2012

Zambia : Good Copper, Bad Copper

A powerful documentary on the economic plunder of copper mining in Zambia and the associated environmental damage. These are issues we have discussed many times on this website but it is good to see them brought together in this video. The video was produced April 2012. Sadly, it takes non-Zambian journalists to put a documentary like this together. Where are our investigative journalists? 

8 comments:

  1. Sad indeed!! I have watched this documentary and am more determined than ever to help my country come out of this misery, nomatter the cost. Thank you Saviour for the courage and i envy you and the other colleagues-Lawyers, Civil Society who set out to want to help this rich but poor country.

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  2. Glencore has looted at leat $500 million (175 million in tax revenue between 2003 and 2008 from tax avoidance practices and $300 million lost on dividend payments from its 10% stake in Mopani)

    The former govt was rotten to the core because it had been corrupted by foreign mining companies and the PF govt seems to be an impostor...

    In 2011 MP Mukanga said Mopani should be punished for tax evasion but in 2012 Mines Minister Mukanga does nothing...

    ENOUGH HOT AIR !!

    ---------
    Mopani should be punished for tax evasion - Mukanga
    By Chibaula Silwamba and Mutale Kapekele
    Wed 16 Feb. 2011


    MOPANI Copper Mines must be punished for evading tax, says a member of parliament in whose constituency the mining firm operates.

    But finance minister Situmbeko Musokotwane says the government will wait for the complete mining audit report for the mines before taking action.

    And Musokotwane says former finance minister Ng'andu Magande should outgrow his sadness and stop issuing statements against his ministry.

    Yamfwa Mukanga, who is member of parliament for Kantanshi Constituency in Mufulira district, was commenting on the pilot audit on Mopani Copper Mines, which revealed glaring inconsistencies in production and revenue figures the mine submits to the Zambia Revenue Authority for tax administration, figures which the report indicated might not be trustworthy.

    Mukanga said no government official must protect Mopani Copper Mines for violating the law by evading tax.

    "I want to see the law taking its course. Let the law visit Mopani and we see what is going to happen. I believe they are not just evading tax, I believe that there are people in government benefiting from this," Mukanga said. "I am disappointed that the government has been crying every day and yet it is letting Mopani go scot-free. I want to go to Mopani and talk to management."

    Mukanga said the decision by the government, through ZRA, to protect Mopani and underpaying the mining firm's evasion of taxes raised suspicion.

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  3. continued

    "I know there is something fishy. I am sure they government officials are not underplaying it for nothing. They are underplaying it at a cost and the cost is in their pockets. There is someone getting money from this evasion of tax," Mukanga said.
    He said Mopani was not undertaking any corporate social responsibility.

    "For Mopani to be evading tax, I am very disappointed because Mufulira, where the mine is, is in a deplorable state; the roads are so bad," he said. "If they Mopani were evading tax but were ploughing into the community they operate from, maybe people could be saying it channels money into the community but look at how bad Mufulira is. It's terrible. Mopani is not ploughing back into the community."

    Mukanga demanded that the government reintroduce windfall tax to ensure that all Zambians benefit from the minerals.

    He said the copper, which is currently trading at over US$10, 000 per tonne, was not benefiting the people.

    He said Zambians and investors must share the gains from the minerals equally.
    "This government is not providing enough tax regime. I am condemning the investors for failing to even pay what is due to Zambians," Mukanga said. "This high price of copper at US$10, 000 per tonne will only be there for a short time and after that the Zambians will have nothing to show what they benefited from it. We need to have something to show to our children when copper is gone that this is what we built from the copper taxes."

    According to the audit, which covered activities of the mine between 2006 and 2008, including trial balances from 2003, conducted by tax specialists Grant Thornton and Econ Pˆyry of Nordic region, irregularities at Mopani hinge on its relationship with its parent company, Glecore AG, of Switzerland and cover practices such as alleged transfer pricing, inflated operation costs, outright under-pricing of copper for exports and irregular hedging.

    Mopani which operates mining units in Kitwe and Mufulira is 73.1 per cent owned by the Swiss commodity trader, Glencore AG, and the firm received a 48 euros million loan from the European Investment Bank.

    ZRA regretted the leaking of the audit report.

    And Mukanga demanded the removal of Mwansa Mbulakulima from Copperbelt as provincial minister after he said the region would not receive development if it continued to vote for the opposition.

    "Rupiah Banda was supposed to have removed Mbulakulima from here," said Mukanga. "The under-development we have seen on the Copperbelt are as a result of such utterances."

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  4. continued

    But Dr Musokotwane said the government would wait for the complete report before taking action against the mine, which is majority owned by Glecore AG of Switzerland.

    Musokotwane said the government had nothing to hide concerning mining revenue and that it had ordered the mining sector audit to satisfy itself that the mines were paying what was due to the ZRA as the country's biggest industry.

    He said the ZRA was "on top of things" and that it was too early to spell out specific action against the mine but promised that the government would act once the audit report was complete and submitted to them.

    But in an interview with The Post, former finance minister Ng'andu Magande said the government had been corrupted by foreign mining firms judging by the uncooperative attitude that mining investors took towards the auditors.

    "It is very clear that it can't be an ordinary investor who comes in and starts issuing instructions to somebody unless obviously he has been corrupted," Magande said. "That is the only thing some of us started suspecting that the people in government have been corrupted."

    In response to Magande's charge, Musokotwane said Magande should get over the fact that he was no longer a minister and allow him to work.

    "It is difficult to comment on him (Magande). There have been many ministers of finance in the past but you will never hear them commenting about the serving Minister of Finance. I have worked for Bank of Zambia as deputy governor, I have been Secretary to the Treasury before but do I have to comment about those offices? When you leave, you leave," Musokotwane said. "Outgrow your sadness and deal with it. That's what maturity is all about. He (Magande) wishes he was a minister. Maybe one of his agemates will advise him. He is older than me, so it's not good for me to talk about him. Let him leave the young man to do a better job. If he thinks we are compromised, he should go to ACC or anywhere in the world. He changed certain things when he was here but that's not the way we operate. We have a different approach for very good reason."

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  5. The Zambian government is not logical. He calls and leaves .... investors from profits in tax havens!
    These benefits continue to enrich with impunity, crooks International (Glencore) and does not even benefit the Zambian people.
    Under these conditions, how to restore confidence among investors New? :
    - Nationalize Mopani Copper Mine?
    - Affirming the authority of the state over the mines through investments (increased) ZCCM-IH,?
    -Maybe designate a representative charismatic and consensual shareholders / investors?

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  6. This is sad indeed! Whats wrong with us Africans?!!

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  7. Zambia Good Copper Bad Copper. Is showing at FRESH VIEW LEVY every Thursday 19:00hrs.  The documentary is shown FREE OF CHARGE - on a first come first serve basis!

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  8. How Copper Industry Leaves Zambia in Poverty

    By Hannah Osborne

    http://www.ibtimes.co.uk/articles/408563/20121126/stealing-africa-mining-zambia-poverty-glencore-mopani.htm

    Zambia has relied on the mining industry since the 1930s and it is the country's economic backbone.

    But privatisation of the mining industry in 2001 has denied much of the profit from the country's vast reserves of natural resources to the people, according to a report.

    Wylbur Simuusa, minister of mines, tells BBC 4 documentary Stealing Africa: "As a country, as a nation, God has blessed us with such an abundant natural resource. The paradox is that Zambia ranks among the 20 poorest countries.

    "We are wealthy yet we are poor."

    In the film, which forms part of the Why Poverty? season, filmmaker Christoffer Guldbrandsen looks at how Zambia has coped since mining was fully privatised over 10 years ago.

    Guldbrandsen looks at the way the tax system works so that multinationals escape paying tax to Zambia.

    In the documentary, the filmmakers note that if Zambia received the same price that Swizerland got for its copper exports, the African country's GDP would almost double.

    In Rushchlikon, a village in Switzerland, there is a low tax rate and a number of extremely wealthy residents - thanks largely to the contribution from Ivan Glasenberg, the chief executive of Glencore, which owns the Mopani Copper Mines.

    Last year, Glencore became the focus of media attention over allegations it was dodging taxes in Zambia.

    Below poverty line

    While two-thirds of people in Zambia live below the poverty line, mining companies make huge profits. A leaked Grant Thorton audit report on Glencore's Mopani mine accused the company of selling copper to Swizerland at below market prices.

    The auditors also found the operational costs had increased substantially. These artificial inflation costs, combined with undervaluing the copper, allowed Glencore to report overall losses, therefore avoid paying corporation taxes in Zambia.

    Savior Mwambwa, executive director of the Centre for Trade Policy and Development, Zambia, is calling for his government to reclaim the $200m in outstanding tax from the mining companies.

    Guldbrandsen asks how, with having the third largest copper reserves in the world, can 60 percent of the people in Zambia live on less than $1 per day, while 80 percent remain unemployed.

    In an interview with the Guardian, he said: "Zambia desperately needed foreign investment to develop their copper mines, but privatising the mines and selling them indiscriminately, with such a lack of regulation, was not the best way to go. It is almost ironic that they sold the Mopani copper mine, which I feature in the film, to a consortium led by Glencore, whose founder had to flee the US in what was at the time the biggest ever tax-evasion case in US history.

    "Those are the guys they're selling their family silver to. It questions the validity of the idea that the free hand of the market will sort it out, because it's not always free and it's not always playing by the book."

    Stealing Africa is on BBC 4 at 10pm tonight (Monday).

    To report problems or to leave feedback about this article, e-mail: h.osborne@ibtimes.co.uk
    To contact the editor, e-mail: editor@ibtimes.co.uk

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