Mining deals should be done away with - Milupi
By Joan Chirwa
Thursday November 29, 2007 [03:01]
Mining development agreements should be done away with instead of making any improvements to them, Luena independent member of parliament Charles Milupi has said. And United Liberal Party president Sakwiba Sikota has advised the government not to engage foreign experts to renegotiate mining agreements, saying the country had adequate professionals to do the job.
Milupi, who once served as an electrical and mechanical consulting engineer for the privatised Zambia Consolidated Copper Mines (ZCCM), said Zambia’s current economic position did not require any development agreement with the mines or an improvement to the existing ones.
“We have already finished the privatisation of the mines because the development agreements signed between 1997 and 2000 were put in place to serve that purpose. Investor confidence is not compelled by the development agreements, but this is determined by the country’s political and economic stability,” Milupi said. “We don’t need any improvement to the existing development agreements; they should just be cancelled after talking to these mining companies.
Even marriages are terminated and I don’t think we can fail as a country to agree on this issue surrounding the development agreements and just the amount of money the country has been losing through the collection of low mineral royalties.”
Milupi estimated that the government is losing an average of US $500,000 every day from the mines as a result of the 0.6 per cent mineral royalty charged on mining houses.
“That is the reason why the issue of royalties and proper taxes for the mining companies needs to be tackled to ensure that the country gets appropriate revenue from the mineral resources,” Milupi said. “I am also very disappointed with the government’s delays to adjust mineral royalties to the proposed three per cent. This everybody has agreed to have the mineral royalties adjusted but I wonder why it has taken so long to make changes.”
Milupi noted that an adequate collection of mineral royalties from the mining companies could assist in financing the country’s annual budgets.
“And this idea of engaging foreign experts to come and help us out is not going to work out,” Milupi said. “We have enough well educated people here in Zambia who can do that job.”
But Chamber of Mines chief executive officer Frederick Bantubonse said his institution would not change its position as mining companies have agreed to renegotiate the development agreements with the government.
“The position of the Chamber of Mines is that the mines have agreed to renegotiate. So we can’t be changing positions all the time,” said Bantubonse.
And Sikota said Zambia should not entrust foreign experts to properly re-negotiate development agreements with the mines.
“In October, we had raised questions about government’s intentions to use foreigners to renegotiate mining agreements,” Sikota said. “The first query was on the qualifications of the foreign experts.
There is no system to prove the validity of their documents and experience. Are the foreign negotiators genuinely well qualified and experienced than our own Zambian experts to renegotiate mining agreements?”
While the government has opted for a procedure in the renegotiation process which entails instituting a team of experts – mostly from foreign countries – a number of people view this as a means of exempting mining companies from paying higher royalties in the short term.
There was also a proposal from former finance minister Edith Nawakwi, who signed the development agreements, that the government could table a proposal in Parliament for approval in order to start collecting royalties at three per cent.
In response to Nawakwi’s suggestion, mines minister Dr Kalombo Mwansa agreed that a change to mineral royalties through parliamentary approval was possible, but said that could not happen now because the current agreements were binding based on the old legislation.
University of Zambia development studies lecturer Dr Francis Chigunta said there was no justification for the delay in the renegotiation of the mining agreements if changes to royalty taxes could be made in Parliament.
- The government is losing half a million per day, just from the low mineral royalties of 0.6%
ReplyDeleteThat is $182.5 million per year. Remember the uproar because the Vulture Fund wanted to claim $40 million from the state? And that the advisor to the president stated that half the children in the country could be put in school for $40 million?
Well this is 4.5 times that much.
And that is just from the royalty payments. The state should be collecting 25% corporate tax on profits, which should net it another $600 million per year (at $2.4 billion of profits in the mining undustry).
Even better, they should increase corporate tax for the mines, like something of the 37.5% in Bolivia - and collect. Now how is that for harmonizing the tax regime to international standards. :)
- Obviously, Bantubonse is as corrupt as Magande
He won't leave an opportunity unused to represent the interests of the mining companies, instead of his own government. That alone is a neglect of his duties. Enough said.
- This is what it is all about
The government of Zambia is losing hundreds of millions of dollars that they, under the existing laws, can collect from the mining companies. They have used every excuse in the books for not doing so.
* mining agreements were cast in stone
* mining companies will be scared off and leave the country
* mining company lawyers were 'too smart' and 'too well educated' to leave loopholes (never underestimate the effect of greed on intelligence though)
* the country might be invaded
All nonsense, all lies, all attempts to appeal to fear.
The Mwanawasa administration is as corrupt as hell - that is the truth. Magande, Bantubonse, are bending over backwards to represent the interests of the mining companies, because they have been bought and paid for. They have been bribed.
They have also refused their obligation to represent the interests of the people of Zambia and the Zambian economy.
As such, they should resign.