(STICKY) (ZAMBIAN-ECONOMIST) Copper Colonialism
Foil Vedanta have today released a report (embedded below) on the operations of Konkola Copper Mines (KCM) in Zambia. The report reveals that, contrary to popular opinion in Zambia, Vedanta (KCM's parent company) is not Indian but wholly British owned and controlled, and is making large profits at KCM. The report demonstrates Vedanta's pattern of buying undervalued state companies, polluting, and operating without permission all over the world. It also reveals how investment companies like Blackrock have controlling interests in Zambian copper as key shareholders behind Zambia's biggest mining companies.
Foil Vedanta's(1) report 'Copper Colonialism – Vedanta KCM and the copper loot of Zambia'is a groundbreaking study of copper mining in Zambia, focusing on British mining company Vedanta, KCM's parent company. The report reveals that Vedanta made approximately $362 million, or 12.9% of their total group revenue, from KCM in 2013 (according to the company itself and analyst reports)(2). The authors, who visited Zambia in December, note the number of misconceptions about this company in Zambia – where Vedanta has created the perception that they are an Indian company, and are making such a loss at KCM that they may need to be rescued by the state. In fact KCM are one of the highest profit making subsidiaries of the parent company.
The report details how Vedanta, a FTSE 250 London based company which is 67.99% owned by Chairman Anil Agarwal via tax havens, bought KCM for a fraction of its true value, possibly losing the Zambian exchequer up to $1.4bn in total.(3) It goes on to record some of the environmental and social abuses of the company in Zambia – including pollution of the river Kafue in 2006 and 2010 which have led to ongoing health problems as extreme as deformed births and miscarriages in the Chingola area, as well as poor workers conditions and low pay. Vedanta's tax contributions in Zambia are close to zero, and they even brag that 50% of tax paid is via employees Pay As You Earn (PAYE). Vedanta hide these truths in Zambia by paying former journalists as PR agents to keep their image clean.
The authors demonstrate that this style of operation is a pattern for Vedanta across India and elsewhere, where they are consistently opposed by people's movements and under investigation by authorities for corruption and legal violations. In Chhattisgarh, India, they bought BALCO's bauxite refinery, smelter and mines for $89 million in 2001 when it was worth around $800 million. Vedanta Chairman Anil Agarwal is currently under investigation by the Central Bureau of Investigations in India over the original disinvestment of 51% of Hindustan Zinc Ltd (HZL) to Vedanta for only $72 million, claiming the deal was considerably undervalued, and may have lost the exchequer hundreds of millions of dollars in revenue.
Vedanta's subsidiary Sesa Goa are accused of exporting 150 million tonnes of iron ore from Goa, India in 2010/11 while only declaring 7.6 million, their agreed export allowance. The report suggests that Vedanta may also be exporting considerably more copper than they claim in Zambia, as well as cobalt and other minerals, and recommends citizens monitoring of trucks leaving their facilities to estimate the true amounts.
The report also looks at the real interests behind mining companies in Zambia. Using shareholder information it shows that secretive investment company Blackrock have high percentages of shares in Vedanta, Glencore and First Quantum, Zambia's three biggest miners. Blackrock and JP Morgan are currently buying the majority of the worlds available copper to launch a futures market which will control the price of copper, giving them high returns on their investments while leaving copper producing nations in poverty.(4) The report also draws attention to foreign governments such as Norway and the UK, who play a duplicitous game of funding transparency and accountability projects on mining via NGOs and the Zambian government, while also profiting from the abuses of the very same mining companies.(5)
Author Samarendra Das says, "We were shocked to discover how little information Zambian authorities and communities have about their own resource and the companies exploiting it. Despite its role in the economy, copper is the elephant in the room in Zambia. This report aims to expose the real interests controlling Zambia's copper industry - from banks and investment firms to foreign governments and NGOs."
Co-author Miriam Rose states, "Mining companies are commonly called 'investors' in Zambia, but what they are doing is far from investment, it is short lived extraction and loot of resources, leaving behind only environmental and social damage which will be paid for by future generations. There is limited time left for Zambians to change the course of history, make links with peoples' movements opposing these policies elsewhere, and truly profit from this resource before it is all gone."
Notes :
1.
Foil Vedanta are a London based international solidarity group focusing on the activities of British mining company Vedanta. We link up global communities affected by Vedanta, and hold them to account in London. We are currently aiming to make the case for Vedanta to be de-listed from the London Stock Exchange for their human rights and corporate governance abuses.
2.
Excerpt from report (p.12):
KCM and other mining companies in Zambia don't publish their profits, even though the Zambian taxpayer has a share in most of them via ZCCM-IH. However Vedanta's 2013 annual report claims KCM produced 216,000 tonnes of copper in 2013. In the same year costs of production were valued at 255.1 US cents/lb, putting the total cost of production that year at $1.2 billion, which would constitute a profit of $362 million (at a current copper price of $7,300). Analysts reports from Global Data reveal that KCM made 12.19% of revenue for the entire Vedanta group in 2012 so they are certainly not doing too badly.
3.
Excerpt from report (p.6):
A 51% share in KCM was sold to Vedanta Resources for just $25 million, paid in cash, and $23million in deferred payments, in 200412. The deal was facilitated by Clifford Chance and Standard Chartered Bank13 (one of the main bookrunners and lenders to Vedanta Resources). Within three months Vedanta had already recouperated its initial investment, making $26 million. The banks also helped Vedanta secretly negotiate a call option allowing them the right to purchase Zambia Copper Investments' 28.4% share14, which they exercised in November 2005 (a year after their initial purchase), giving them the 79.4% monopoly they currently hold on KCM, while the Zambian government - via ZCCM-IH (their mining investment wing), own the remaining 20.6%. The Competition Commission was even rendered irrelevant by the Zambian government to allow Vedanta such a large majority share.
The price negotiated for the buyout of ZCI's remaining shares is not reported, but analysts at the time valued it between $250 million and $550 million, putting Vedanta's original 51% share at between $455 and $910 million, nine to eighteen times what Vedanta paid! This means the Zambian exchequer lost between $155 and $340 million in from the sale of 21.4% of ZCCMIH's shares alone. In response, ZCI's 33% French shareholders (grouped into a company called Sicovam SA) called the deal 'the most outrageous and scandalous ever seen in Africa for decades'.
This puts the value of the entire 79.4% share held by Vedanta at between $705 and $1460 million, losing the Zambian exchequer between $600 and $1400 million in undervalued assets.
4.
Excerpt from report (p.26):
Blackrock is the world's biggest asset management company, in charge of $4.1 trillion of assets (including much of Zambia's copper via its shares). It is bigger than any bank, insurance company or government fund, and is the majority shareholder in half of the world's 30 largest companies. It was set up by Larry Fink - a Washington insider who was named as a potential treasury secretary in the US. Blackrock, JP Morgan and Goldman Sachs are currently working together in an attempt to buy up 80% of available copper on behalf of investors, and hold it in warehouses. This will create a copper futures market enabling speculation, futures trading, and backing of new loans and funds.
In 2010 JP Morgan bought more than half of the available warehoused copper in a few weeks, leading to a spike in copper prices. Manufacturers and copper wholesalers warned the Securities and Exchange Commission (SEC) that such a monopoly on copper would squeeze the market and send prices skyrocketing but under pressure from Blackrock and the banks the SEC approved their proposal.1 The aluminium futures market set up by Goldman Sachs, on which the copper takeover is modelled, is estimated to have cost consumers billions of dollars in price hikes, as market manipulations sent prices soaring.2
(5) See section on NGOs and civil society, p.30 of report.
1 The New York Times, July 21st 2013, 'Next up Copper.'
2 David Kocieniewski, New York Times, July 20, 2013. 'The House Edge: A Shuffle of Aluminum, but to Banks, Pure Gold'
Report dismisses claims that KCM is loss-making
ReplyDeleteBy Kabanda Chulu
Thu 13 Feb. 2014, 14:00 CAT
THE Zambian government must not believe the perception created by Vedanta Resources that KCM is a loss-making company that needs to be rescued by the state, says a UK-based civil society group.
But Vedanta Resources' subsidiary Konkola Copper Mines public relations manager Joy Sata says the mining company does not want to discuss any aspect of the report as it is inaccurate and misleading.
In its report titled 'Copper colonialism - Vedanta KCM and the copper loot of Zambia' Foil Vedanta, whose representatives visited Chingola recently, stated that Vedanta Resources made approximately K2 billion (US$362 million) or 12.9 per cent of their total group revenue from KCM in 2013.
"This is according to the company itself and analyst reports. Vedanta has created the perception that they are an Indian company, and is making such a loss at KCM that they may need to be rescued by the state. In fact, KCM is one of the highest profit-making subsidiaries of the parent company," it stated.
The report compiled by Miriam Rose and Samarendra Das stated that Vedanta bought KCM for a fraction of its true value that resulted in Zambia losing up to US$1.4 billion in total.
"But this is the company which has recorded some of the environmental and social abuses in Zambia including pollution of the river Kafue in 2006 and 2010..." it stated.
"Vedanta's tax contributions in Zambia are close to zero, and they even brag that 50 per cent of tax paid is through employees' Pay As You Earn (PAYE). Vedanta hide these truths in Zambia by paying former journalists as PR agents to keep their image clean."
The authors demonstrate that this style of operation is a pattern for Vedanta across India and elsewhere, where they are consistently opposed by people's movements and were under investigation by authorities for corruption and legal violations.
"In Chhattisgarh, India, they bought BALCO's bauxite refinery, smelter and mines for US$89 million in 2001 when it was worth around US$800 million," it stated. "Vedanta Chairman Anil Agarwal is currently under investigation by the Central Bureau of Investigations in India over the original disinvestment of 51 per cent of Hindustan Zinc Ltd (HZL) to Vedanta for only US$72 million, claiming the deal was considerably undervalued, and may have lost the government hundreds of millions of dollars in revenue."
The report suggests that Vedanta might also be exporting considerably more copper than they claim in Zambia as well as cobalt and other minerals.
"Citizens must enhance the monitoring of trucks leaving their facilities to estimate the true amounts," it stated.
Continued...
ReplyDeleteThe report also looks at the real interests behind mining companies in Zambia.
"There is also need to question foreign governments such as Norway and the UK, who play a duplicitous game of funding transparency and accountability projects on mining through NGOs and the Zambian government, while also profiting from the abuses of the very same mining companies."
Commenting on the report, Das stated that it was shocking to discover how little information Zambian authorities and communities had about their own resource and the companies exploiting it.
"Despite its role in the economy, copper is the elephant in the room in Zambia. This report aims to expose the real interests controlling Zambia's copper industry, from banks and investment firms to foreign governments and NGOs," Das stated.
And Rose stated that mining companies were commonly called 'investors' in Zambia but what they were doing was far from investment.
"It is short-lived extraction and loot of resources, leaving behind only environmental and social damage which will be paid for by future generations. There is limited time left for Zambians to change the course of history, make links with peoples' movements opposing these policies elsewhere and truly profit from this resource before it is all gone," she stated.
When asked to respond to the allegations raised in the report, Sata said Vedanta, through KCM, had invested more than US$2.8 billion in its mines in 10 years while paying out US$68 million in dividends to shareholders and had extended the mine life substantially.
"We have read the report published in January 2014 and do not wish to discuss any aspect of it; their report is inaccurate and misleading. KCM has increased jobs from 13,000 to 18,000, doubling wages in real terms, and has provided technical training to many thousands of Zambians," Sata stated in an email response.
"KCM has paid US$120 million into social investment programmes across the country; investing in schools, hospitals, agricultural and educational schemes, as well as sports and recreation.
She stated that Vedanta was committed to Zambia and was contributing to the country's wealth and the continued development of natural and human resources.
"The company aims to produce over 400,000 tonnes of copper per annum, upon completion of its flagship, Konkola Deep Mining Project (KDMP), and aspires to play a leading role in making Zambia one of the leading copper producers in the world," stated Sata.
From the Lusaka Times:
ReplyDelete(LUSAKATIMES) Foil Vedanta responds to Tom Albanese’s refute of evidence against Vedanta in Zambia
Time Posted: February 13, 2014 6:56 am
Tom Albanese, Chairman of Vedanta Resources Holdings
Foil Vedanta responds to Tom Albanese’s refute of evidence against Vedanta in Zambia
10th February 2014
Last week several articles were published in the Zambian media reporting on a press briefing held by Vedanta executive Tom Albanese following a ‘closed door meeting’ he held with Labour and Social Security Minister Fackson Shamenda in Lusaka, Zambia, on the 7th February. Mr Albanese met with the Minister to refute claims made in Foil Vedanta’s report ‘Copper Colonialism: Vedanta-KCM and the copper loot of Zambia’, released to the Zambian press on January 31st. The report demonstrated that, contrary to their claims, Vedanta’s subsidiary Konkola Copper Mines (KCM) are making considerable profit in Zambia and are guilty of casualising the labour force as well as causing severe environmental damage.
We want to respond to some of the claims made by Mr Albanese, and present more evidence of Vedanta’s campaign of misinformation here.
An article published on the 7th February in the Zambian Daily Mail states that:
..Mr Albanese said the profit and loss accounts of KCM are transparent. He said audit reports which are thoroughly scrutinised are made available within the country and outside.
“On behalf of the shareholders and subsidiaries of Vedanta, the reports are prepared according to Zambia, United Kingdom and United States (US) financial regulations,” Mr Albanese said.
He said despite KCM making profit, most of it is lost to taxes and operational costs.
“I can assure you I have a responsibility to ensure that those reports are transparent. I will be happy to have face-to-face discussions with any NGOs that feel the company is externalising its profits,” Mr Albanese said.
He disclosed that Vedanta has over the past nine years invested over US$2.3 billion into Zambian economy through KCM.1
It is very hard to find out exactly how much profit Vedanta is making from KCM as KCM’s annual reports are not made public in Zambia or elsewhere, contrary to Mr Albanese’s claims of transparency. Lacking this figure, our report uses figures from Vedanta’s 2013 annual report to calculate profit.2 Page 187 of the report clearly states that production costs at KCM were 255.1 cents/lb in 2013, while 216,000 tonnes of copper were mined. At a copper price of $7,300 (the average during 2013) this would constitute a profit of $362 million (tonnes of copper produced x value of copper per tonne – cost of production). We also reported that financial analysts from Global Data suggested that KCM made 12.19% of revenue for the entire Vedanta group (18 subsidiaries) in 2012.3
If the production costs and volumes recorded in Vedanta’s own annual reports are incorrect we would welcome Vedanta to amend them and make KCM’s annual reports available to the public.
We do not know how much Vedanta paid in tax in 2013, but it is unlikely to add up to $362 million. In our report we noted Vedanta’s 2007 brag to investors in a presentation that PAYE (Pay As You Earn) deductions from worker’s wages made up nearly 50% of their tax contributions to the Zambian Government4, and that their 2013 Annual Report states that they have ‘US$1,263.4 million of unutilised tax losses’ at KCM which will minimise tax payments and ‘generate economic benefits for the company’.5 These two claims suggest that tax and royalty payments are fairly minimal.
We would welcome Vedanta and the Zambian government to reveal the actual tax payments from Vedanta-KCM to the Zambian exchequer over recent years.
Continued 1...
ReplyDeleteSecondly, Vedanta often repeat the mantra that they have invested $2.3 billion in KCM. This ‘investment’ is not a charitable gift to the Zambian state, but capital input to help them increase their profit from mining and processing activities, such as the new Nchanga smelter and the Konkola Deep Mining Project. It is not the Zambian state who will gain from these ‘investments’ but Vedanta itself, through increased profits and production. In fact the Development Agreements Vedanta signed with the government in 2004 allow them to deduct 100% of capital allowance from any investments made – such as prospecting, buildings and equipment, so these ‘investments’ benefit the company twice – through increased production and tax breaks. Vedanta’s secret Development Agreement for KCM can be read at the website of Mine Watch Zambia, to whom they were leaked a few years ago.6
On 6th February the Lusaka Times also reported that following the closed door meeting between Tom Albanese and Labour and Social Security Minister Fackson Shamenda,
‘Government and Vedanta Resources Plc have amicably resolved all differences surrounding the retention of workers at the mining giant’, and agreed ‘on the need to reduce the number of workers being employed as casual employees as well as engaging them on contractual basis.’ 7
It is wonderful for KCM employees to know that the planned 2000 redundancies may not go ahead, and that the 11,000 strong (out of 18,000 total) casual labour force may be given contracts and security. However, there is an irony in this announcement coming from Tom Albanese, the six year CEO of Rio Tinto, who retired in 2013 and became Chair of one of Vedanta’s investment holdings subsidiaries Vedanta Resources Holdings Ltd (NOT Chair of Vedanta Resources as the two articles claimed). From 2007 until 2013 Albanese presided over a number of major workers rights violations at Rio Tinto, a global mining company famed for their ‘company wide de-unionisation policy’.8
Just a few days ago 200 people marched against Rio Tinto’s ill treatment of mineworkers outside the international conference, Mining Indaba, in Cape Town. News reports claimed ‘a labour movement that represents workers in some 142 countries claims Rio Tinto is one of the most aggressive anti-union companies in the sector.”9
Rio Tinto as well as Vedanta have been removed from the Norwegian Government Pension Fund’s Global Investments for ‘severe environmental damages’ and unethical behaviour following investigations. The Norwegian government divested its shares in Rio Tinto in 2008, while it divested from Vedanta Resources in 2007, and also excluded Vedanta’s new major subsidiary Sesa Sterlite from its portfolio just a few weeks ago in January 2014. 10
It is alarming that Tom Albanese would be praised for his promise of workers rights and security by the Zambian papers without a mention of his history of presiding over well documented human rights abuses. The Zambian authorities should keep a close eye on workers’ rights standards at KCM to ensure recent promises are enforced. The Lusaka Times article quotes Labour Minister Mr Shamenda’s statement that:
“With new management at Vedanta and PF [Patriotic Front] being new in power, we have agreed to bring on table the new approach to business to have a win, win situation as we bury all our past differences and looking forward to cordial working relations.“11
Who are the new management at Vedanta Resources? The management structure has not changed recently, and Anil Agarwal remains the Chairman and 68% owner of Vedanta (as of 7th February). Has Tom Albanese misled the Zambian media that he is in fact the Chairman of the company (rather than the Chairman of a little known investment holding subsidiary), or is this an error in printing?
Continued 2...
ReplyDeleteFinally, our press release on our recent report highlighted the fact that Vedanta have created misconceptions in Zambia, such as the predominant idea that they are an Indian company when they are in fact British. We want to highlight the importance of this distinction here.
Vedanta are registered and domiciled in Britain, where majority owner and Chairman Anil Agarwal is also a resident and lives in a $20 million mansion in Mayfair, London. It is the British authorities which regulate Vedanta, and British tax laws and ethical standards which they must abide by. The London registration is important to Vedanta for attracting investment, and because it allows them unrestricted use of the UK’s many tax haven territories, such as the Bahamas islands – where Anil Agarwal keeps the enormous profits from his 68% share in Vedanta, via his holding company Volcan Investments, avoiding paying any tax in the UK or elsewhere. Vedanta’s British registration is also important because any grievances with Vedanta in Zambia should be taken to the British, not Indian, authorities.
For more information on Vedanta’s management of KCM in Zambia, including its undervalued sale to them in 2004, and their environmental and workers rights violations, as well as their pattern of abuses in other countries where they operate, and an analysis of the global interests controlling Zambia’s important copper resource, please read the full report ‘Copper Colonialism: Vedanta-KCM and the copper loot of Zambia’ on our website.
Foil Vedanta is not an NGO, as media reports have claimed, but a grassroots international solidarity group linking communities affected by Vedanta and carrying out cutting edge research on the company and related issues.
www.foilvedanta.org
1 Zambian Daily Mail, 7th Feb 2014. ‘Govt assures of permanent jobs at KCM.’ http://daily-mail.co.zm/blog/2014/02/07/govt-assures-of-permanent-jobs-at-kcm/
2 See Samarendra Das and Miriam Rose, Copper Colonialism: Vedanta KCM and the copper loot of Zambia. p.12.
3 Global Data, Vedanta Resources plc (VED) – Financial and Strategic Analysis Review, 18th July 2013.
4 KCM, a presentation for investors on Vedanta and KCM, 2007; – the presentation states that PAYE totalled up to US$35million out of a total of US$75-80 million. – quoted in Aby Diamond et al, October 2007, Undermining Development:Copper in Zambia. ACTSA, SCIAF and Christian Aid.
5 Vedanta Resources, Annual Report 2013, p.158
6 See http://minewatchzambia.blogspot.co.uk/
7 Lusaka Times, 6th Feb 2014. ‘Vedanta Resources dismisses reports that KCM has been reporting false profits and loses’. http://www.lusakatimes.com/2014/02/06/vedanta-resources-dismisses-reports-kcm-reporting-false-profits-loses/
8 Corporate Watch, Rio Tinto Labour rights violations. http://www.corporatewatch.org/?lid=3594
9 Rahima Essop, 7th Feb 2014. Eye Witness News South Africa. ‘Protests against Rio Tinto at Mining Indaba.’ http://ewn.co.za/2014/02/07/Protests-against-Rio-Tinto-at-Mining-Indaba
10 http://www.regjeringen.no/en/dep/fin/Selected-topics/the-government-pension-fund/responsible-investments/companies-excluded-from-the-investment-u.html?id=447122
11 Lusaka Times, 6th Feb 2014. ‘Vedanta Resources dismisses reports that KCM has been reporting false profits and loses’. http://www.lusakatimes.com/2014/02/06/vedanta-resources-dismisses-reports-kcm-reporting-false-profits-loses/
Milupi calls for effective mine tax regime
ReplyDeleteBy Kabanda Chulu
Mon 17 Feb. 2014, 14:01 CAT
THE government's failure to put in place an effective tax regime such as windfall tax will continue costing the country billions of dollars being made by the mines, says Alliance for Democracy and Development president Charles Milupi.
Commenting on the report compiled by UK-based civil society group, Foil Vedanta, that the Zambian government must not believe the perception created by Vedanta Resources that Konkola Copper Mines (KCM) was a loss-making company that needed to be rescued by the state, Milupi yesterday said there were various ways in which mining companies hide their profits.
He said the report was a clear manifestation of what was obtaining on the ground.
"I have more than 30 years working in the mining industry rising through the ranks to become a manager. So, when I and others say windfall tax is best, we know what we mean because it is one way of getting a fair share from the mines," Milupi said.
"The mines are sophisticated and ZRA has no capacity to capture what they do. Why, is it that total company tax is always lower than PAYE? Windfall tax is not complicated and relies solely on what has been produced and the prevailing price at London Metal Exchange, at least Levy Mwanawasa had foresight and implemented it, but Rupiah Banda did away with it and the PF have refused to reintroduce it."
He said various reports have been documented stating that Zambia is losing over US$ 1 billion per annum from the mines for failing to implement the windfall tax.
"When in opposition, the PF championed the cause to have windfall tax back, but how they have changed, no one knows. As long as the PF government continues burying its head in the sand about having a windfall tax in place, then this country will continue losing a fortune because government has closed its eyes from taxing the mines effectively," Milupi said.
"With this failure to properly tax the mines, KCM and others have seen a loophole and will continue pretending that profits are not being made but the money is going elsewhere to support development and yet government is borrowing heavily to finance infrastructural projects such as the Link Zambia 8,000 when resources from the mines can be used to fund these projects."
The report titled 'Copper colonialism-Vedanta KCM and the copper loot of Zambia', revealed that Vedanta Resources made approximately K2 billion (US$ 362 million) or 12.9 per cent of their total group revenue from KCM in 2013.
But Vedanta Resources' subsidiary KCM's public relations manager, Joy Sata, said the mining company doesn't want to discuss any aspect of the report because it was inaccurate and misleading.
And Vice-President Guy Scott on Friday told parliament that government would not be taken for a ride by KCM which has planned to retrench over 1,500 miners by next month.
Vice-President Scott also disclosed that KCM seemed to have taken a lot of money out of the country, resulting in the company having liabilities in excess of over US$ 1 billion.
"They have not paid loans to banks; they owe a lot of money to companies. So, there are a lot of these strange things happening and government is keeping a careful eye on KCM which is hiding a lot of information from the government," he said.
Magande reminds govt of its windfall tax promise
ReplyDeleteBy Abel Mboozi and Misheck Wangwe
Wed 19 Feb. 2014, 14:01 CAT
THE change of government policies in the management of Zambia's natural resources will enable the country earn more from its God-given mineral wealth, says Ng'andu Magande.
Commenting on the "Vedanta Konkola Copper Mines (KCM) and copper loot of Zambia" report, Magande, a former finance minister under the Mwanawasa regime said it was common knowledge that many developing countries such as Zambia were losing billions of dollars in the extractive industry owing to poor policies.
Magande said the government prior to the 2011 elections promised to reintroduce the windfall tax, which was a sure way of ensuring that Zambia maximises benefits from mineral wealth.
"The PF, towards the September 2011 elections promised to re-introduce the windfall tax if elected into office. This was one issue which received massive support from all opposition parties and citizens. The PF won the elections and we all know what has happened to the promise….thrown away. We also know how little of the mineral revenues the country is earning and we know who is benefitting and who is not benefitting," Magande, who is also National Movement for Progress party president said.
"In 2008, as minister of finance, I had proposed a special account in which the revenues earned from the newly-introduced windfall tax would be deposited. I had already been dealing with mining taxation for 26 years," he said.
"Windfall tax and special account were agreed to and established at the Bank of Zambia. In the same year, the fund received about US$485 million."
Magande said unfortunately, the implementation was stopped after he left the Ministry of Finance.
"The US$485 million was used to start the massive road construction programme by the government of the day," he said.
Magande noted, therefore that the revelations in the report by Vedanta Foil Group were therefore not a big surprise to him because they were following a known trend or pattern in the operations of many companies in the extractive industries. In its report titled 'Copper colonialism-Vedanta KCM and the copper loot of Zambia', Foil Vedanta, whose representatives visited Chingola recently, stated that Vedanta Resources made approximately K2 billion (U$362 million) or 12.9 per cent of their total group revenue in 2013.
"This is according to the company itself and analyst reports. Vedanta has created the perception that they are an Indian company, and is making such a loss at KCM that they may need to be rescued by the state. In fact, KCM is one of the highest profit-making subsidiaries of the parent company," it stated.
Continued 1...
ReplyDeleteHowever, Magande noted that Zambia had continued to lose billions of money in the extractive industry.
"Since 1926, millions of tonnes of Zambia's minerals have been extracted out of the ground and shipped away for billions of dollars. The dollars have not come into Zambia. The minerals will not come back into Zambia. Zambia has a history of mining since 1926. Thousands of Zambians were sent to the best mining schools in the world and are experts on this subject. What then do we not know about our minerals and how they are mined and sold and how Zambians are not getting value for their asset?" Magande wondered.
He said the arithmetic of mining operations was complicated and that was the reason for trying to use the simplest method of taxation.
"It is difficult to know when a company is operating on an overdraft and whether or not it is not being serviced regularly. All these numbers and hidden operations determine the profit and loss account," Magande said.
He noted that in his 2005 book, "Capitalism's Achilles Hell", Raymond Baker writes of activities through corruption, criminal and commercial activities.
"These include tax havens, and trade mispricing, transfers pricing and fake transactions. Corruption would be mostly by government officials, criminal would be by special agents and commercial is by lawful transactions by investors," he said.
Magande said in 1981, as director of budget, he had proposed a special development fund in which the revenues from a newly-introduced mineral export tax would be deposited.
He said the tax and special fund were agreed to and established by the Dr Kenneth Kaunda government and the mining operations at the time were being managed by the Zambia Consolidated Copper Mines (ZCCM), a state organisation.
He said, like former secretary general of the United Nations Koffi Annan had observed, that resource wealth could bring millions out of poverty and it was eminently possible…but it would take bold leadership. "Zambia too needs bold leadership to ensure that citizens benefit adequately from their God-given mineral wealth," said Magande.
No mine can claim to be making losses - Mwansa
ReplyDeleteBy Gift Chanda
Sun 23 Feb. 2014, 14:00 CAT
DR KALOMBO Mwansa says there is no mining company which currently can claim to be making losses. And Dr Mwansa, a former mines minister, has challenged Konkola Copper Mines to produce evidence to back its claims that the findings in the "Vedanta KCM and the copper loot of Zambia" report were inaccurate.
Meanwhile, shareholders in KCM's parent company, Vedanta Resources, have arrived in the country to try and resolve issues with the government on KCM.
A UK-based civil society group, Foil Vedanta, recently stated that the Zambian government must not believe the perception created by Vedanta Resources that KCM is a loss-making company needs to be rescued by the state.
But KCM public relations manager, Joy Sata, said the mining company did not want to discuss any aspect of the report as it was inaccurate and misleading.
In its report titled 'Copper colonialism - Vedanta KCM and the copper loot of Zambia', Foil Vedanta, whose representatives visited Chingola recently, stated that Vedanta Resources made approximately K2 billion (US$362 million) or 12.9 per cent of their total group revenue from KCM in 2013.
Commenting on the report, Dr Mwansa, who also served as foreign affairs minister under the MMD government, said KCM was not being truthful about its operations in Zambia.
"…because at this stage, there is no mining company which can claim to be making losses. It is not just true because the prices are good and the labour costs are always low, especially in Zambia. The wages are relatively low compared to other countries, so there is no way any company can claim to be making losses at this stage, it is not true," he said in an interview yesterday.
"They must be made to account, they must disclose what it is they are giving to the government other than saying they have put a road there or done this and that in terms of corporate social responsibility because corporate social responsibility cannot be a substitute for taxes. These are two different things, they should pay tax because there is no substitute for that."
The report compiled by Miriam Rose and Samarendra Das stated that mining companies were commonly called 'investors' in Zambia but what they were doing was far from investment.
"KCM is saying that the report is inaccurate but they are not telling us how inaccurate it is. Let them produce their own figures because these people have produced figures," Dr Mwansa said.
"KCM must come out and explain by giving us the figures of what is really inaccurate about the report."
He also urged the government to enhance Zambia's capacity to understand what goes on in the copper mining industry.
"We don't have the capacity to understand what goes on beyond board decisions, beyond management decisions," Dr Mwansa said.
Continued...
ReplyDelete"For us to do that, we have to build capacity at ZRA, capacity at Ministry of Finance, and capacity at the Ministry of Mines so that we can understand the mining industry better than we do now. We need to invest in training staff to understand issues. But beyond that, we need to work with other countries. I know that there was a time when Namibia, DRC and Zambia used to meet to discuss issues of common interest in the mining industry but I don't know if that is still going on. But beyond that, we need to involve everyone anywhere in the world so that we can understand this industry better and be able to come up with common policies and regulation so that we can prevent what we call foreign shopping within the mining industry."
The report stated that Vedanta bought KCM for a fraction of its true value that resulted in Zambia losing up to US$1.4 billion in total.
It also suggests that Vedanta might also be exporting considerably more copper than they claim in Zambia as well as cobalt and other minerals.
While the report has brought the mining giant in the lime light, mines minister, Christopher Yaluma, yesterday disclosed that Vedanta resources' shareholders were in the country.
Yaluma, who declined to discuss any particular aspect of the report, said the shareholders arrived on Thursday night.
He said the shareholder would discuss with the government findings of the independent team that Yaluma last year tasked to audit KCM operations.
"We are having a final meeting. We have to share with them the findings before we make them public," Yaluma said without giving further details.
But sources said the report was much in line with what Vice-President Guy Scott said last week concerning KCM likely to be externalising profits.
During the Vice-President's question and answer session, Vice-President Scott, in his response to Bwacha PF member of parliament, Sydney Mushanga, who wanted to know what the government was doing about the plight of KCM workers, said there were a lot of strange things happening at KCM.
"We are keeping a careful eye on KCM. It seems a lot of money was taken out and the firm now has a lot of liabilities which are in excess of US$1 billion. They have not paid loans to banks, they are owing a lot of money to companies. So there are a lot of all these strange things happening," Vice-President Scott said.
He said KCM was hiding a lot of information from the government something he described as sad.
The source said the Vice-President's revelations were "a tip of an iceberg."
Hamududu calls for national consensus on mine taxes
ReplyDeleteBy Henry Sinyangwe
Mon 24 Feb. 2014, 14:00 CAT
BWEENGWA UPND member of parliament Highvie Hamududu says there is need for a national consensus on mining taxes. Hamududu, who is also an economist, said Zambia risks going down as a powerful mining country with nothing to show for issues in the mining sector are not addressed.
Various stakeholders including former finance ministers Ngandu Magande and Edith Nawakwi have accused the government of failing to negotiate better deals from foreign investors in the mining sector.
Last Friday, Vice-President Guy Scott told Parliament that Konkola Copper Mines (KCM) seemed to have taken a lot of money out of the country resulting in the company having liabilities in excess of US$1 billion.
In an interview, Hamududu said the issue of mining taxes was bigger than partisan interests.
"Our mining tax needs serious revision taking into account the experience that we have gone through so far. If there was a way, we should call for national dialogue on mining which should involve all stakeholders. There are many experts in this country who know what is supposed to be done, but they are not consulted. This issue should not be seen from a partisan point of view, it is bigger than partisan interest because if these minerals continue going out, tomorrow there will be no minerals and we will be talking about Zambia having been a very powerful mining country with nothing to show for it," Hamududu said.
He said there was need to get the biggest value from mining which was the mainstay of Zambia's economy.
"On the mining taxes, we need a national consensus in this country. Mining being a mainstay of our economy, we must get the biggest value. The economy will only be leveraged from mining; we can only develop agriculture, tourism from the main source, from the main revenue earner now, from the valuable asset which is mining. We need money to kick start all the other sustainable economic sectors. We need a national consensus. We need an inter-party national consensus where we all agree so that tomorrow, when there is a new government, we would have set a threshold on our mining taxes and that represents the aspirations of all the Zambian people," Hamududu said.
He said there was national concern at the levels of impunity in the country.
Continued...
ReplyDelete"What we need is a good constitution than anything else so that tomorrow when I am not MP, I should also feel protected that the institutions are strong enough to promote the common good for every Zambian. I think we have had this mining taxes problem for a long time. What is wrong in the constitution? We need a constitution that will improve governance, not on what an individual thinks. I think the country cannot develop through personal views. It can develop on principles that we agree as a country, which means the aspirations of everybody," Hamududu said.
He said there was need to raise the bar on governance.
"We need a long-term solution, because there will be many issues that will arise on mining. But we must set the threshold in terms of setting the bar for the demand of governance from the citizens, set up in the constitution, that getting into office should make someone think very seriously because it must be an issue of serious responsibility," said Hamududu.
ReplyDelete(YOUTUBE) Vedanta KCM's Anil Agarwal, March 2014, Bangalore, India.
Please click the CAPTION symbol on the video menu bar to see the English translation!
"That (KCM) company is giving us 500 million for the last nine years and a billion on top of it!"-This is an excerpt of the speech of Anil Agarwal about his experience in Zambia and how he got the copper mines with a paltry sum!! The event was organised by the Jain International Trade Organisation's (JITO) titled as"JITO Connect-2014" held from 22nd to 23rd March, 2014 at Bengaluru, India.
(LUSAKATIMES) Video of Vedanta Boss Saying KCM makes $500 million profit per year
Time Posted: May 13, 2014 6:46 am
VEDANTA BOSS CLAIMS $500 MILLION PROFIT PER YEAR AT KCM!
Video of Anil Agarwal speaking in March 2014 reveals how he bought KCM for just $25 million. Agarwal claims KCM is giving him $500 million every year in profit, plus an extra $1 billion. Meanwhile Vedanta have continued to claim that they are making a loss, or a minimal profit at KCM.
A video(1), released by activists from Foil Vedanta(2) yesterday , shows Vedanta boss, and 69% owner, Anil Agarwal, telling a large audience how he bought Konkola Copper Mines for just $25 million, rather than the $400 million asking price, and receiving loud cheers when he states that the company brings in $500 million in profit each year.
Foil Vedanta had previously released figures from Vedanta’s annual reports showing that the company made $362 million in 2013(3), but Vedanta CEO Tom Albanese(4) had disputed this during his visits to Zambia in February, repeating the previous claim that KCM was making a very low profit or a loss due to high operational costs and taxes.(5)
In the video, Agarwal, speaking to the Jain International Trade Organisation(6) in Bangalore, India, March 22 – 23 this year, states about KCM:
“Its been 9 years [since we've owned the company], and since then every year it is giving us a minimum of 500 million dollar, plus 1 billion dollar, every year it has been continuously giving back.”
Anil Agarwal also explains in detail how he came to buy ‘the largest copper mine in Africa’ at Konkola, describing how he took a chance by offering only $25 million rather than the $400 millionasking price.
He describes his surprise at receiving a VIP welcome in the Zambian parliament, and ridicules the then Zambian President Levy Mwanawasa for claiming that Vedanta would improve the lives of Zambians, saying:
“He told the entire parliament that what great people we are, and our empire, and that they will make our lives gorgeous. And they will make schools, make hospitals and blah blah …”
A few weeks ago a protest at the Zambian High Commission in London next called for Vedanta and the Zambian government to release KCM’sannual reports, containing the official figures on profits and tax payment, which are currently kept secret.
They also suggested that Vedanta should be forced to pay the fine of $2 million served by Zambian courts in 2011 as compensation to 2000 claimants poisoned by major pollution of the river Kafue in 2006, and stop ongoing spills affecting Chingola residents. (7)
In addition they joined the calls of KCM employees and former employees in Zambia, who are demanding that retrenched workers are properly compensated for taking redundancy, and existing contract labourers are unionised.(8)
Meanwhile Vedanta’s Lisheen mine in Ireland, which they bought from Anglo American in 2011, is facing trouble, as a High Court judgement has ruled that three senior managers should be paid 6 months sick pay after leaving the company due to ‘bullying, harassment and intimidation since Vedanta took control’. Local councillors, as well as the aggrieved managers, are also questioning Vedanta’s decision not to wind the mine down by 2015, as they had originally planned.(9)
(GUARDIAN UK) Zambian villagers take mining giant Vedanta to court in UK over toxic leaks
ReplyDeleteFears of environmental catastrophe as report finds ‘constant contamination’ of streams around copper mine while locals report health problems and failed crops
Shimulala village borehole
Water from a borehole drilled by KCM at Shimulala village, Zambia.
Photograph: John Vidal for the Observer
Guardian Global development is supported by:
About this content
John Vidal Chingola, Zambia
Saturday 1 August 2015 22.35 BST
Last modified on Sunday 2 August 2015 00.30 BST
A London-listed mining giant has been polluting the drinking water of villages in Zambia and threatening a wider health disaster, the Observer has found.
Leaked documents and a confidential internal report commissioned from Canadian pollution control experts show that Vedanta Resources’ giant mine in Zambia’s Copperbelt region has been spilling sulphuric acid and other toxic chemicals into rivers, streams and underground aquifers used for drinking water near the mining town of Chingola.
‘I drank the water and ate the fish. We all did. The acid has damaged me permanently’
Read more
The result, say people in four villages living near the giant 12 sq mile mine owned by Vedanta subsidiary KCM, is stomach pains and illnesses, devastated crops, loss of earnings and permanent injuries. The claims of villagers living near one of the largest copper mines in Africa are backed by a leaked letter from a KCM doctor stating that water collected for testing from Shimulala village in 2011 was unfit for human consumption. “The water is acidic and the copper and iron levels exceed permitted levels,” the doctor wrote. “The impurities … can cause cancer in the bloodstream and unhealthy conditions in internal organs. The people in that village should be advised to stop using the same water.”
Continued...
ReplyDeleteLondon law firm Leigh Day has issued proceedings in the high court in London on behalf of 1,800 people who claim to have been affected by the company’s pollution. “The case could take three years to resolve,” said Leigh Day senior partner Martyn Day, recently returned from Zambia, where lawyers and paralegals have been taking witness statements from people living near the rivers and the company’s operations.
Lawyers Leigh Day: troublemakers who are a thorn in the side of multinationals
Read more
A Vedanta spokesman said: “All Vedanta’s operating subsidiaries take the health of their employees, the wellbeing of surrounding communities and the environment very seriously. Our subsidiaries are committed to ensuring they operate in a safe and sustainable way.”
But a scientist who worked for more than 15 years with KCM said there has been little maintenance of critical equipment since Vedanta bought the mine, despite production of some 10,000 tonnes of copper and 300 tonnes of cobalt a year. He accused Vedanta of releasing more acid than it has authority for. “There have been heavy spillages and massive leakages. Acid has been leaking all over the place. The pollution control pond is handling too much material. No effort has been made to correct this scenario. Only one of four [waste] pipelines is running – the rest are in disrepair.
“Degraded equipment, leaking pumps, pipes, thickeners and settling ponds have [resulted in] excessive spillages. Water overflowing into the Mushushima river and subsequently the Kafue river poses a possible environmental catastrophe downstream,” he said.
“The company has very good plans on paper that have not materialised on the ground for the last 10 years. It is absolutely clear that there is a massive problem. Because the river Kafue feeds into the Zambezi river, which provides drinking water for much of Zambia, the pollution could affect hundreds of thousands of people downstream, he said. “A disaster is very likely. It has the potential of affecting people hundreds of miles away. Water supplies could be damaged and aquatic life would die.”
A leaked report by the Canadian engineering company SNC-Lavalin, which in 2010 was employed to advise Vedanta/ KCM on how to control continuing pollution, says that solids, dissolved copper and acids are being spilled. It refers to “constant contamination” of streams, and says the main pollution control dam is often full to capacity. It adds that reservoirs overflow and there are leakages from pipes and a lack of spare parts. The engineers’ report calls for 17 major and minor actions to stop the spillage of polluted water into the environment.
(TIMES OF ZAMBIA, ALLAFRICA) Zambia: Villagers Sue Vedanta
ReplyDelete23 August 2015
MORE than 1,800 Zambian villagers in Chingola have taken mining giant Vedanta to court in the United Kingdom over toxic leaks.
The London-listed mining giant has been polluting the drinking water of villages in Zambia and threatening a wider health disaster, the Observer has found.
This is according to the Guardian.
An environmental catastrophe report found 'constant contamination' of streams
around the copper mine while locals reported health problems and failed crops.
The result, say people in four villages living near the giant 12 square mile mine owned by Vedanta subsidiary Konkola Copper Mine, is stomach pains and illnesses, devastated crops, loss of earnings and permanent injuries.
The claims of villagers living near one of the largest copper mines in Africa are backed by a leaked letter from a KCM doctor stating that water collected for testing from Shimulala Village in 2011 was unfit for human consumption.
London law firm Leigh Day has issued proceedings in the high court in London on behalf of 1,800 people who claim to have been affected by the company's pollution.
"The case could take three years to resolve," said Leigh Day senior partner Martyn Day, who recently returned from Zambia, where lawyers and paralegals have been taking witness statements from people living near the rivers and the company's operations.
A Vedanta spokesperson said "All Vedanta's operating subsidiaries take the health of their employees, the wellbeing of surrounding communities and the environment very seriously. Our subsidiaries are committed to ensuring they operate in a safe and sustainable way."
But a scientist who worked for more than 15 years with KCM said there has been little maintenance of critical equipment since Vedanta bought the mine, despite production of some 10,000 tonnes of copper and 300 tonnes of cobalt a year. He accused Vedanta of releasing more acid than it has authority for.
Continued...
ReplyDelete"There have been heavy spillages and massive leakages. Acid has been leaking all over the place. The pollution control pond is handling too much material.
No effort has been made to correct this scenario. Only one of four [waste] pipelines is running - the rest are in disrepair.
"The company has very good plans on paper that have not materialised on the ground for the last 10 years. It is absolutely clear that there is a massive problem," he said.
"Because the Kafue River feeds into the Zambezi River, which provides drinking water for many Zambians, the pollution could affect hundreds of thousands of people downstream, he said. "A disaster is very likely. It has the potential of affecting people hundreds of miles away. Water supplies could be damaged and aquatic life would die."
A leaked report by the Canadian engineering company SNC-Lavalin, which in 2010 was employed to advise Vedanta/ KCM on how to control continuing pollution, says that solids, dissolved copper and acids are being spilled. It refers to "constant contamination" of streams, and says the main pollution control dam is often full to capacity.
It adds that reservoirs overflow and there are leakages from pipes and a lack of spare parts. The engineers' report calls for 17 major and minor actions to stop the spillage of polluted water into the environment.
Anil Agarwal-led Vedanta Resources Plc has not sent any 'substantial' response regarding the legal proceedings UK-based legal firm Leigh Day has initiated on behalf of 1,800 Zambian villagers affected by water, soil and sediment pollution caused by the mining company's copper operations in the region.
Leigh Day said they had initiated proceedings at the UK court on Friday on behalf of the residents of four affected villages in Zambia.
"The company was aware of this action as 'Letter before claim' was already sent to Vedanta by end of June," he added.
Vedanta Resources said in a statement: "The company has not been served with the proceedings and is therefore unable to comment on the content of those proceedings."
Vedanta confirmed it has received a letter from Leigh Day making certain allegations about Konkola mining activities in Zambia.
"We would prefer settling this issue with the company outside the court since court procedure is lengthy, but if the company fails to approach us for negotiations, we will go ahead with the court procedure," said Holland.
"Negotiations will include compensation for affected villagers, the cost of clean-up of pollution and plan to stop pollution in the region," he added.
"The pollution issue at Zambia's Konkola Copper Mines is a 10-year-old one.
The villagers all these years were approaching the company directly to solve this issue.
The company, however, did nothing to stop pollution and so the villagers finally came to the UK to seek legal help," said Holland.