Saturday, June 04, 2011

A fair deal in our mining industry is possible

COMMENT - " But who is to blame? The tax regime that the mining companies are operating under has been created by our government. " The mining companies did not luck into the abolition of the windfall tax. They BRIBED the government, which is illegal. If not in Zambia, then it certainly is in the USA, if they are US citizens. And they must not profit from their crimes.

A fair deal in our mining industry is possible
By The Post
Sat 04 June 2011, 04:00 CAT

What Emmanuel Mutati, the chief executive officer of Mopani Copper Mines, has said gives us great confidence that a fair deal is possible. Mutati says mining companies must provide a framework in which inequalities in the industry can be addressed for the benefit of all the people.

And Mutati adds: “Our objective ought not to be to create prosperity for some by impoverishing others. Our purpose must be to provide a framework in which all could benefit, in which inequalities could be addressed and in which all our people and industries can prosper.”

Truly, this should be the objective of our mining companies, and all other businesses in our country. We say this because the roles of business owners and management have a central importance from the viewpoint of society. This is so because they are at the heart of that network of technical, commercial, financial and cultural bonds that characterises the modern business reality.

For this reason, the exercise of responsibility by business owners and management requires constant reflection on the moral motivations that should guide the personal choices of those to whom these tasks fall. The motives of mining companies and all other businesses in our country should be not only to make profit but even more to contribute to the common good of society.

Businesses should be characterised by their capacity to serve the common good of society. The sense of responsibility in economic initiative should demonstrate the individual and social virtues necessary for the development of our country. Mining, by its very nature, must be a community of solidarity.

Foreign investment in our mines is an objective reality underpinning the fact that no country can exploit all its natural resources by itself, no country can survive and develop on its own.

All our countries need foreign investment. And this reality underlines the fact that we are all passengers on the same vessel – this planet where we all live. But passengers on this vessel are travelling in very different conditions. A trifling minority is travelling in luxurious cabins furnished with all sorts of gadgets.

They enjoy a nutritional, abundant and balanced diet as well as clean water supplies. They have access to sophisticated medical care and culture.

The overwhelming and suffering majority is travelling in conditions that resemble the terrible slave trade of our past – they are overcrowded together in its dirty hold, suffering hunger, disease and helplessness.

Obviously, this vessel is carrying too much injustice to remain afloat, pursuing such an irrational and senseless route. It is our duty to take our rightful place at the helm and ensure that all passengers can travel in conditions of solidarity, equity and justice. This, in our view and understanding, is what Mutati is calling for.

His may appear to be a strange voice, but the message is extremely important. A fair deal has to be found in our mining industry, and indeed in all the other sectors of our economy so that we make every business enterprise in our country a community of solidarity.

It will not be a fair deal if the copper and other minerals that are mined from the belly of our country only go to benefit the owners and managers of the mining enterprises. This copper, these minerals belong to all our people and as such, all should benefit. They have got a value that is probably higher than the capital invested by foreign enterprises to mine them.

There has been a lot of talk and displeasure about the low taxes and benefits that our people are getting from the mining industry. This may be justifiable.

But again it may be necessary for us to listen more carefully to what Mutati is saying. Mutati is telling us that now is the time to act boldly and fully revive the country’s economy for lasting prosperity owing to high copper prices on the international market.

And Mutati warns us that the current metal prices will not last forever and we should take advantage of them. But how? Under Levy Mwanawasa’s government, we had windfall taxes that were put in place specifically for this purpose – to take advantage of high copper prices on the international markets when and as they arose.

But this government, the government of Rupiah Banda, corruptly gave away all that – they did away with windfall taxes for no justifiable reasons. And one cannot be wrong to conclude that for the little personal benefits they were getting from the owners and managers of these mines, they gave away windfall taxes.

As a result of this, we are not getting much as a nation from our country’s minerals that are being exploited by transnational corporations. But who is to blame? The tax regime that the mining companies are operating under has been created by our government. The mining industry is simply taking advantage of what has been given to them by our government.

And every company is entitled, if it can, to arrange its business affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If they succeed in ordering them so as to secure that result, then however unappreciative we may be of their ingenuity, they cannot be compelled to pay an increased tax.

And probably this is what Mopani and others in the mining industry are doing. They are not under the smallest obligation to arrange their tax affairs so as to enable the Zambia Revenue Authority to put the largest possible shovel into their income.

Of course, as Mutati has correctly observed, a framework within which all could benefit, in which equity could be addressed and in which all our people and industries can prosper, is still possible.

The mining companies may be acting within their legal rights to reduce the taxes they pay and the benefits they extend to our people, but this is no reason why their efforts, or those of the people who assist them in the matter, should be regarded as a commendable exercise of ingenuity or as a discharge of the duties of good citizenship.

Laws must be put in place to ensure that our people benefit from the minerals of their country. There is need to revisit the entire tax regime concerning our mining industry and more so that of windfall taxes. A fair deal in our mining industry is possible.

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