Magande quiet on mine contracts

Magande quiet on mine contracts
By Kingsley Kaswende
Friday March 30, 2007 [02:00]

Finance minister Ng'andu Magande yesterday remained mute on whether the government will proceed to renegotiate the contracts with mining firms. When contacted over the issue, Magande, through his secretary said he had a “busy schedule” and could not attend to any questions. This was after he had earlier agreed to give an interview to this reporter on this issue.

There have been mounting calls for the government to renegotiate the mining contracts to allow the country benefit from high copper prices. The recent call is from the visiting special advisor to the Norwegian Minister of Development Cooperation on anti-corruption and money laundering, Eva Jolly, who said on Wednesday that she was very shocked to see Zambia being deprived of rent from its land through the mining contracts.

Jolly said time was up for Zambia to renegotiate the mining contracts. “Looking at them (mining firms), I am very shocked that Zambia is being deprived of rent of its land. I think maybe time has come to renegotiate these contracts. These contracts are depriving you of too much,” she told parliamentarians. Jolly is likely to meet with Magande next Monday.

While presenting the national budget last month, Magande said the government would seek negotiations with mining companies “so that there is mutual consent by contracting parties to revise the tax regime.” In the budget speech, Magande proposed to increase the country’s royalty tax on copper mining from 0.6 per cent to three per cent. However, the taxes’ increase would not affect the current mining operations, Magande later said, because most of them had entered into long-term contracts with the government.

On the other hand, mining firms are not prepared to renegotiate, the Chamber of Mines of
Zambia (CMZ) recently said. CMZ general manager Fred Bantubonse said development agreements were legal documents which both parties entered into voluntarily. “If authorities come up with a harsh fiscal regime, the impact may come later than now when investors decide not to invest,” Bantubonse said.

Last week justice minister George Kunda told Parliament that the development agreements entered into with mining companies were above the law. Kunda warned that the consequences of breaching the development agreements would lead to harsh penalties and that Zambia could be taken for international arbitration. He, however, said the development agreements provided for re-negotiations and the government would like to re-negotiate.