Maravi

Mismanaging our mineral resources

Mismanaging our mineral resources
By Editor
Friday November 16, 2007 [03:00]

THE renegotiation of copper mining agreements is an important process which requires a lot of seriousness. And it is good that Levy Mwanawasa’s government has admitted that the copper mine deals were poorly handled and there is need to have another look at them. How we wish Levy and his government had paid attention to various stakeholders who raised alarm over the fact that the mining deals had not been carefully and fairly handled. However, the renegotiation process is a step in the right direction because this is the only way Zambians will be guaranteed some benefits from copper and other mineral resources.

However, looking at the recently released Medium Term Expenditure Framework (MTEF) or the Green Paper, we have some issues to raise with the government over the way it intends to deal with the mining renegotiations. Specifically, we are interested in the line which states: “In order to facilitate new large scale mining ventures, government’s focus will be developing capacities in geological and structural mapping including acquiring geological laboratory facilities and equipment.

In addition, more effort will be made in undertaking mineral exploration and resource surveys such as petroleum and uranium exploration. Government will also focus on small scale mining development and technical support by, among other things, providing revolving funds and technical services in geology”.

According to the MTEF, the Ministry of Mines and Mineral Development has been allocated K43 billion in 2008 of which K15 billion is for strengthening institutional capacity and K5 billion for personal emoluments. In 2007, royalties were budgeted for at K77.34 billion and projected by end of December 2007 at K72.76 billion. In 2008, royalties have been projected at K72 billion while K79 billion is for 2009 and K86 billion is the projection for 2010.

Looking at the MTEF projections, it is obvious that the government is not expecting much more royalties even with the expected re-negotiations with the mining companies.

To us, this is disgraceful and scandalous. Despite all this, the reality on mining and prospecting licensing management on the ground is appalling. In June 2007, the Minister of Mines and Mineral Development announced that his ministry was undertaking an audit of issued licences and that there were plans to cancel licences that were not used. In a speech read on behalf of Levy, the minister warned: “Use it or lose it”.

As we near the end of the year, we are yet to see any action on this. Surely, after six months, has the audit not been completed? If it has been completed, and in public interest, we need to know what the findings were. In our November 14, 2007 editorial we stated that there was total confusion in managing prospecting and mining licences at the Ministry of Mines and Mineral Development.

From the most recent prospecting maps, which we have had sight of, it will baffle any Zambian to know that almost the entire country mineral resources for prospecting and/or mining have been given away to a few foreign mining companies. Today, very few prospecting or mining licences are being held by Zambians.

And in a handful of these foreign companies which hold most of the licences, a few Zambian elite either hold honorary directorships, legal advisory or have been given negligible share options. Perhaps these few Zambians have been asked either to front the foreign mining companies’ local operations or to help them “facilitate” with the government bureaucracy.

As if to add insult to injury, most of these foreign mining companies have been holding on to prospecting or mining licences for years, and in some cases decades and this too, illegally! There are also many instances in which the same area has been allocated to more than one licence holder. Do the director of mines and his staff not know how to allocate areas and read maps? It is also not uncommon for application files to go missing. Perhaps the projected allocation of K15 billion in 2008 to strengthen institutional capacity will help the ministry remove this gross incompetence.

The current mining law clearly states that if no prospecting is undertaken in a two-year period, the holder of such a licence loses it. In some instances the foreign holders of prospecting and mining licenses have even sold their rights to other foreign companies. Then there is the incredible bureaucracy that is involved in applying and obtaining prospecting and mining licences, to a point where it is one of the most infuriating exercises which takes any investor juggling and cajoling the staff at the Ministry of Mines headquarters and their various departments.

This is why we said the other day that the MTEF Green Paper is full of rhetoric; it’s just words, words and more words. And words which mean nothing.

We therefore urge Levy and his government to get more serious about the copper mining renegotiations because this is a very serious matter for the nation. We want to see action from Levy’s government over the renegotiations. A lot has been said but we have not yet seen action. Levy and his government should take a leaf from what is happening in Tanzania, where President Jakaya Kikwete has even set up a committee to look at mining contracts and a clear time-table has been given to those who have been given the task.

Just like in the case of Tanzania, we believe that the terms of reference for renegotiation should include going through all mining contracts and all other documents involving large-scale mining, the tax regime and in the mining sector, including issues that border on the rights of both investors and the government. This has to be done because we need to start managing our mineral resources properly.

Labels: DEVELOPMENT AGREEMENTS, MINING CONTRACTS, MTEF

posted by MrK @ 3:42 AM