Mining and Sept 20

Mining and Sept 20
By The Post
Fri 02 Sep. 2011, 14:00 CAT

Our country is endowed with immense mineral wealth. But while other countries with lesser mineral endowments have lifted their people's living standards to very high levels by profitably exploiting their natural resources, our people are wallowing in abject poverty next to the mining pits.

The question is: why are we failing to exploit the mineral blessings God has given our nation to lift the living standards of our people to higher heights? The exploitation of our mineral wealth should be characterised by desire and capacity to serve the common good of our society.

The sense of responsibility in economic initiative should demonstrate the individual and social virtues necessary for the development. The exploitation of our mineral wealth should benefit all, it must be a community of solidarity.

And the government is the instrument by which people cooperate together in order to achieve the common good.

An authority is needed to guide the energies of all towards the common good. And this month's elections should give us that authority, a political leadership that is honest, that has ability, concern and dedication and concern for the welfare of all. We must be responsible in the exploitation of the mineral wealth God has made available to us.

Economic justice requires that the earnings from mining are fairly shared to ensure that each individual has adequate resources to survive, to develop and thrive. We say this because economic growth depends in the very first place on social progress. And the political power that will arise from these elections must have as its aim the achievement of the common good.

Mining should therefore be firmly placed on the agenda of important campaign issues for these elections. Candidates should, in some way, be evaluated on their ability and capacity to make the exploitation of our country's mineral resources beneficial to our people. Those who are offering themselves for re-election ought to be evaluated against the record of what they have or have not achieved.

Did they offer and implement sound mining policies? Did their policies benefit all our people and not only themselves and the mining companies? Those who have not yet held office should be carefully evaluated in terms of what policies they are coming up with, their ability and capacity to implement them and their reputation for honesty and selfless dedication to the common good.

We know very well that incompetence, dishonesty, lack of transparency and corruption has led to a situation where elements of state capture, collusion, misinformation, lopsided contract conditionalities, under-valuation of assets and incomplete reporting arrangements have tended to characterise mining contracts and concessions.

And transparency around the awarding of mining contracts and agreements has been an area of concern for some time. We say this because there is very little involvement of the local people and community organisations in negotiations for investment in mining by foreign companies.

Major stakeholders such as the trade unions, professional bodies and networks, civil society organisations, the relevant international cooperating partners and many others feel left out during the critical moments when their expertise would have been required.

And once these investors are allowed entry into our country's economy, everything is let loose; our people who are the owners of the natural resources are at the mercy of these investors whose main preoccupation becomes the maximisation of profits without due consideration for the people in areas where they operate.

We know very well that the global projections for base metal prices are quite positive in the short and medium term. According to analysts, there is a good chance of the prices remaining relatively high over the years to come. As we have stated before, a window of opportunity therefore still exists for Zambia to gain from its vast mineral deposits.

But what are our politicians in government doing about this? Does their behaviour demonstrate any concern for the welfare of the poor majority?

The answer is a categorical no. We say so because Rupiah Banda's government was so desperate to undo everything that Levy Mwanawasa had put in place immediately they came into power.

When many countries in the region are moving towards having reasonable taxes for the mines owing to the increasing prices on the international market, this government was busy trying to please the investors in all sorts of ways in the name of attracting foreign direct investments. But we know this was not for nothing to themselves.

We saw how this government hurriedly scrapped off the windfall tax on copper which could benefit this economy a great deal. This is why we agree with Sylvia Masebo's observations that Rupiah and his friends quickly turned around to change some laws as soon as Levy died without giving proper reasons to the people.

To date, no reasonable explanation has been put across to justify the removal of the windfall tax introduced by Levy's government in 2008. All we have been told is that maintaining the windfall tax would have scared away investors in mining. But we know that this is a blatant lie. We say so because these mines are making super profits at current prices of copper.

A proper policy in mining, coupled with a government that has the interests of the people at heart, is needed if we have to harbour the possibility of reducing poverty and raising our people's living standards to higher heights.

In April this year, an Oxford policy management consultant, Dr Dan Haglund, noted that Zambia has failed to implement an effective mining tax policy due to the direct influence by the presidency and other senior government officials.

We agreed with Dr Haglund's observations made in his research findings. And this went to confirm a widely shared consensus among most commentators and experts on the Zambian mining tax regime.

It cannot be denied that due to this unhealthy relationship, the government is captive and denies itself the much needed administrative, political and fiscal space to effectively regulate and tax the mining companies. We cannot afford to be so reckless, wasteful with an exhaustible national resource. Very soon, all these minerals will be gone.

What will the Zambian people be left with? Nothing but pits that are being created in the mining areas, damaged roads and a polluted environment! The citizens of this country definitely deserve a better deal from the investments being made in mining.

And the mining companies themselves have often pointed to the need for any new tax regime to consider the complexity and differences in the mining methods; especially between deep shafts and open cast mining; wetter and dry mines; old mines and green-fields and the overall impact on production cost and profitability. They have also raised concerns on whether the tax regime should be revenue based or profit based. These are indeed critical issues not to be overlooked.

This is why a new mining policy and taxation model is urgently required.