Delay in negotiating mining deals unjustified - Dr Chigunta
Delay in negotiating mining deals unjustified - Dr ChiguntaBy Joan Chirwa
Wednesday November 28, 2007 [03:00]
THERE is no justification for the delay in renegotiating the development agreements of the mines if changes to royalty taxes can be made in Parliament, University of Zambia development studies lecturer, Dr Francis Chigunta has said. And a working group of parliamentarians and chiefs has observed that the mining development agreements are a tool for tax evasion and not necessary any more for Zambia’s economy.
Commenting on the debate surrounding mineral royalties and government’s attempt to review development agreements for mining companies, Dr Chigunta advised the government to put an end to the low royalties being paid by mining companies by adopting the changes to the mining tax system through Parliament.
“I wonder why there has been so much delay in the whole process of renegotiating mining agreements if it is possible for the changes to be made in Parliament,” Dr Chigunta said.
“Government should therefore quickly effect new royalty taxes the parliament way for mining companies to be adequately taxed as opposed to the 0.6 per cent royalties they are currently paying, even when prices of copper on the international market have gone up dramatically.”
Dr Chigunta suggested that a reasonable amount of pressure be put on government so that a proposal for a change in mineral royalties is presented to Parliament before the current sitting adjourns.
“It doesn’t make sense for experts to be engaged for this renegotiation process when we have got a Parliament that makes laws. I totally agree with what Forum for Democracy and Development president Edith Nawakwi said with regard to taking a proposal to Parliament for an increment to royalties,” Dr Chigunta said. “Our country should learn from what other countries such as Chile did for them to get higher mineral royalties.”
And the chiefs and parliamentarians observed during a workshop to discuss the review of the Mines and Minerals Act of 1995 that it was not necessary for the government to continue entering into development agreements considering that the country’s economy was now performing better than it was at the time the mines were being privatised.
“Development agreements were entered into that time to encourage investors to invest in the country because the economy was not doing very fine. But now that the economy is okay, we believe that the encouragement of investors is as a result of the stability the nation and not because of the development agreements,” the committee observed.
“You can have the best development agreements in the world but they will not attract the much needed investments if there is no stability in the country. No investor can put his or her money in a country where there is no political or economic stability.”
The committee also noted that Zambia was currently known to be one of the risk free investment destination in Africa; hence the need for the government to stop entering into development agreements as a way of offering incentives to the mining companies.
“We were in dire stress that time when we decided to enter into development agreements with the mines but now that copper prices are hitting over US $9,000 per tone, it is important for the country to strategically position itself to benefit from the mineral resources it has,” the committee stated.
“These development agreements were also put up to facilitate the privatisation process and now that there is no other mine to privatise, we don’t need to start entering into agreements with mining companies any more.”
And UPND Copperbelt Province chairman Joe Kalusa said Nawakwi should not be the only one explaining about the signing of bad development agreements with the mines since the decision was collectively made by cabinet at the time.
“There are a lot of people that need to explain and apologise to the Zambians for making the country come up with development agreements that have swindled the country out of millions of dollars,” Kalusa said.
“Actually, the whole cabinet of Frederick Chiluba’s administration needs to explain to us why they bowed down to the pressure of the International Monetary Fund and the World Bank for us to privatise the mines and later on offer unimaginable incentives to investors.”
Kalusa said the government should increase royalties in the same way that domestic and other taxes are raised whenever required.
“When government thinks of increasing domestic taxes, I don’t think we are consulted. All we hear is an announcement during the presentation of the budget that some taxes have been revised.
Why then should mineral royalties require experts to convene and discuss this whole thing?” Kalusa asked. “Is it because it is mainly the foreign investors involved in this that they want to use the other procedures of adjusting taxes than what government uses on its people?”
Mines and minerals development minister Dr Kalombo Mwansa on Monday said it was possible for the government to increase royalties to three per cent through parliamentary approval but could not do so because the current agreements were binding based on the old legislation.
Dr Mwansa was responding to Nawakwi’s suggestion that the renegotiation of development agreements be discontinued, but that government should instead take a proposal to parliament to increase royalties from the current 0.6 per cent to three per cent.
And the working group of parliamentarians and chiefs further recommended the strengthening of corporate social responsibility programmes undertaken by the mines for the investments to effectively benefit the local communities.
It was noted that as much as some mining houses were actively involved in assisting communities where they have invested, there was need for enhanced participation of investors in the welfare of Zambian citizens as a way of paying back the profits gained from copper resources.
Labels: DEVELOPMENT AGREEMENTS, MINING CONTRACTS
posted by MrK @ 9:40 AM
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