Maravi

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At 10:40 PM ,  MrK said...

More good advice from the IMF - no minimum wage?

(DAILY MAIL ZM) Minimum wage puts Zambia under pressure
Written by Online Editor
By NANCY MWAPE in Livingstone

GOVERNMENT is under pressure from the International Monetary Fund (IMF) and the World Bank over why workers should be given a minimum wage of K3,000.

Labour and Social Security Minister Fackson Shamenda said for the first time in history, Government wants to lead by example by giving workers a minimum wage of K3,000 but this has raised pressure from international institutions.

“The IMF and World Bank are putting pressure on Government wanting to know where Zambia will get the money to pay workers the minimum wage.
“We are trying to improve the wages for workers to that above the food basket and poverty datum line,” he said.

Mr Shamenda said this when he opened the Mineworkers Union of Zambia (MUZ) 13th quadrennial conference in Livingstone yesterday.

He said Government is open to dialogue with all investors to ensure that a conducive environment is created for business to thrive.

The minister said Government is committed to attracting credible investors that will create decent jobs for the skilled Zambians coming out of colleges and universities.

Mr Shamenda urged the workers to be productive by ensuring efficient and effective use of resources and a positive attitude to work.

“If we are to see Zambians paid better across the board, it should be in tandem with increased productivity. The answer is to ensure that businesses and mining companies are productive and more profitable for them to pay better wages,” he said.

Mr Shamenda urged mines to continue playing an important role in the socio-economic development of Zambia and assured MUZ that Government will not interfere in trade unions’ activities such as elections of office-bearers.

Speaking at the same event, Zambia Congress of Trade Unions (ZCTU) secretary general Roy Mwaba said ZCTU wants to see a strong and united MUZ with mineworkers speaking with one voice.

Earlier, MUZ president Chishimba Nkole commended Government for raising the personal tax exemption threshold to K3,200 which is a fulfilment of its promise of being pro-worker.

Mr Nkole also commended Government for embarking on labour reforms and domesticating all International Labour Organisation conventions such as protecting women’s maternity rights.

 

At 1:26 PM ,  MrK said...

Agarwal a crook, crazy man - Dipak
By Chiwoyu Sinyangwe
Fri 16 May 2014, 14:01 CAT

DIPAK Patel says Konkola Copper Mines owner Anil Agarwal is a crook and crazy man.

Commenting on revelations by Agarwal that he bought KCM for a paltry US$25 million despite the Zambian government asking for US$ 400 million, Patel said it was shocking to hear Agarwal ridiculing late president Levy Mwanawasa and Zambians in general.

On March 22 - 23 during the Jain International Trade Organisation connect conference in India, Agarwal, the owner of Vedanta Resources, which is the majority shareholder in KCM, mocked the Zambian government over the US$25 million he paid to buy the mine, which is now giving him hundreds of millions of dollars in profit.

In a video released by activists from Foil Vedanta, Agarwal boasts of raking a minimum of US$500 million per year from the country's biggest mining operation, which he bought in 2005.

But Patel, who is former commerce minister said it was time the government acted on the daylight robbery by KCM, over which its crooked owner openly ridicules Zambian.

"KCM continues to claim that they are making losses whilst their owner Anil Agarwal disputes this in public," Patel said.

" He is crazy. It is shocking to hear Anil Agarwal ridicule late president Mwanawasa and Zambians in general. He infers that the 'promise' of better lives, schools, hospitals were but a hallucination by the government under president Mwanawasa. He Agarwal talks about the size of this delegation that met with president Mwanawasa and generally suggests how he fooled the government."

Patel said the Zambian government should not remain quiet over this issue.

He said inasmuch as most key government officials, including Vice-President Dr Guy Scott, have openly revealed that acts of cheating were going on at KCM, none of them had taken actions to protect the interests of Zambia and its mineral resource.

 

At 1:27 PM ,  MrK said...

Continued...

"What better proof does our government need, when one can see and hear Anil Agarwal speak and confirm himself the profits he makes out of KCM as recently as March 2014?" Patel asked.

He said the authenticity of the translation of Agarwal's 'motivational talk' from Hindi into English could not be disputed.

"The government can always ask the Indian High Commission in Lusaka to have the Youtube video translated into English so they know themselves what is being said. We have had many cabinet ministers and the Vice-President say that KCM has been cheating Zambians and yet that's all they have done - talk! It's time that our government walked the talk and not just talk the talk and do something about this daylight robbery by KCM," said Patel.

In the 3:58 minute video released by activists from Foil Vedanta on Monday, Agarwal told the cheering crowd how he bought KCM for just US $25 million, rather than the US$400 million asking price.

The bragging Agarwal describes his surprise at receiving a VIP welcome in the Zambian Parliament, and ridicules the late Mwanawasa for claiming that Vedanta would improve the lives of Zambians, especially those in Chingola and Chililabombwe.

Agarwal reveals how he duped the late Mwanawasa on their first meeting that 30 members of his delegation missed the connecting flight out of Johannesburg into Lusaka, when in fact he had only travelled with one engineer from his firm.

Agarwal claims KCM is giving him US$500 million every year in profit plus an extra US$1 billion. In recent years, KCM has touted to dismiss close to 2,000 workers from its mining units to cut down on labour costs and improve its profitability. Vedanta had continued to claim that they were making losses or a minimal profit at KCM.

The mining unit claims declining ore grades at its mining units and high operational costs on the backdrop of high labour and energy costs was hurting the country's second-largest copper producer.

Agarwal's 'motivational talk angered Foil Vedanta, which had previously released figures from Vedanta's annual reports showing that the company made US$362 million in 2013.

 

At 7:51 PM ,  MrK said...

Do we deserve to be mocked by Agarwal?
By Editor
Fri 16 May 2014, 14:00 CAT

Anil Agarwal's story about how he has dribbled the Zambian people and their government to make a fortune is annoying.

But the anger should not be wholly directed at him. A greater part of it should be directed at ourselves, our leaders and our government. Agarwal knew what he was doing and we should also have known what we were doing. In fact, the Zambian government and the Zambian people were warned about how poor this deal was. On November 9, 2004, we carried an editorial comment titled 'Zambia's careless privatisation'. And in that comment, we stated the following:

"Zambians cannot in any way claim to have benefitted from the privatisation programme started by Frederick Chiluba's administration in the 1990s.

The Zambian people have, in fact, suffered the adverse effects of what is clearly a failed privatisation programme which was heralded - and stupidly so - as the fastest privatisation programme in the world. There were even some careless statements to the effect that there would be no sacred cows in the privatisation programme.

Sadly, we seem to have continued on the same path. The government seems to have learnt no lessons even with over a decade of implementing the disastrous programme.

The most notable results of the fastest privatisation programme in the world had certainly been the huge job losses and the countless collapse of companies, some of whom were stripped of equipment and relocated. This has been the 'benefit' to the Zambians.

We are certainly concerned that there appears to be no worrying about the continuing trend to just give away our treasured national resources, especially in the mining sector, for almost nothing. And a classical case is the just signed deal with Sterlite's Vedanta. Through this deal, government has given away a 51 per cent stake in Konkola Copper Mines for US$25 million, a mining venture that just recorded US$60 million in its half year results this year.

Government has certainly continued to play its father Christmas role and managed yet again to offer a gift to foreign investors.

The deal is certainly equivalent to selling KCM's 51 per cent for the mine's own 2004 half year profit.

The sale is almost giving away KCM to Vedanta unless there are other hidden benefits which are yet to be disclosed. Zambians should start to question the government on the continuing practice of giving away national assets even if there is pressure from the International Monetary Fund and the World Bank.

It is indeed difficult to understand why mines minister Kaunda Lembalemba had welcomed and vehemently defended the Vedanta deal as a good one. For the government to consider US$25 million as a worthwhile amount for Sterlite to have a majority stake in our largest assets, may be an indicator that things are very bad in the country. We really cannot accept the argument that there were no alternatives to the Vedanta deal.

We did raise similar sentiments over the sale of Baluba mine to J &W Investments. We still maintain that the two deals have merely been gifts and definitely not sales. And it is time the Zambian people started to question the justification of the father Christmas attitude by the government leaders.

It is not long ago that government sealed a US$7.5 million deal with J&W for Baluba mine. To make it worse, J&W Investment group only paid the Zambian government US$750,000 as a 10 per cent down payment.

 

At 7:52 PM ,  MrK said...

Continued...

We regret that our government has again hastily signed another poor deal which would sadly not benefit the Zambian people and indeed the country as a whole.

When one takes a critical look at the manner the privatisation process is being handled and the clear hurry to bring on board foreign investors to take over our national assets, one could simply conclude that there seems to be a misconception about privatisation. A common argument advanced for privatisation is that this is a means to mobilise private sector investment, including foreign investment, for developmental goals. This argument is not necessarily wrong. Where it is wrong is when it assumes that this is the only possible way to mobilise capital resources.

The privatisation route must always be weighed against the advantages and disadvantages of other possibilities of raising investments. Governments are able to access major relatively low interest loans on foreign capital markets, of course ignoring the International Monetary Fund and World Bank restrictions. While this will increase the public debt, it may well prove to be financially more prudent in the medium and long term. International examples abound of privatisation projects designed to relieve governments of financial burdens that have back-fired.

A common argument for privatisation is that government should best occupy its time and resources with setting strategic objectives, leaving management and ownership to the private sector. This might, in many cases, be the most feasible option, not least in a national and global economy that is dominated by capitalism.

Attempting to regulate the private sector might prove to be more complicated than actually owning and managing an entity - numerous international examples of concessions, and other restructuring projects raise questions about the complexity of regulating private entities, and of ensuring that they do indeed deliver efficiently and that they do effectively carry risk, the ostensible reason for being 'rewarded' with profits. All too often, private entities nominally carry risk, until there are losses, then they expect to be bailed out with public subsidies.

It is true that we often lack capacity and resources in the public sector and parastatals, but it might, in the medium term, prove to be more reliable building such capacity and resources. The task of regulating major transnationals might be more daunting than improving your own public service capacity."

This is what we stated in 2004 when the Levy Mwanawasa government was giving away KCM to Agarwal for a song. And throughout that period, the government defended whatever KCM did. When there were industrial disputes, the government always took the side of Agarwal. Even when KCM polluted the Kafue River, they literally got away with it.

Today, Agarwal is mocking the Zambian people and their government. And these are the same people and government that still want to extend more concessions, favours and subsidies to KCM. As it was in 2004, there are still people today speaking for Agarwal and his company. They have hired literally every known expert in mining, business and economics, law and politics in this country to speak for them, to defend their interests. And the people don't seem to have such experts to speak for them, to defend their interests. The few who attempt to defend the people and their interests are dismissed as charlatans who know very little, if not nothing.

We hope there will be a national awakening in the light of these experiences and that we will start to do things in the right way and act in the best interest of the people.

 

At 11:09 PM ,  MrK said...

(LUSAKATIMES) ActionAid Zambia calls for shut down of KCM to pave way for investigation, demands President Sata comments on KCM
Time Posted: May 16, 2014 6:39 pm

Action Aid Zambia has demanded that KCM be shut to allow investigations take place so as ensure that Zambians know how much the mine makes.

Action Aid country director Pamela Chisanga observed that there is need for people to be told the truth about how much the mine makes in profits hence government should consider shutting the mine down for investigation if it does not know what is obtaining at the mine.

And Ms Chisanga demanded that President Micheal Sata gives the government’s position on the matter.

She said it was disheartening to see the government remain mute on the KCM saga.

Chisanga said the statement by KCM owner Anil Agarwal is serious and should be investigated.

Meanwhile Ms. Chisanga said the Police and the Anti Corruption Commission should come in to investigate the matter.

She said the matter is criminal and Police should not just be quick to arrest opposition leaders when they hold meetings.

Agarwal is on video saying he bought KCM for a paltry US$25 million and reaps US$500 million per year.

She has since given the PF government 7 days to give a conclusive position.

 

At 11:10 PM ,  MrK said...

(LUSAKATIMES) Opposition leaders demand the re-introduction of windfall tax following Anil Agarwal video
Time Posted: May 16, 2014 6:44 pm

Opposition political parties have demanded that government re-introduces windfall tax in view of revelations by Vedanta Chairman Anil Agarwal that Konkola Copper Mines (KCM) makes a minimum profit of $500 million profit per year.

A YouTube video taken in March 2014 Mr. Agarwal mockingly tells of how he bought Konkola Copper Mines for only US$25 million and how the mine has continuously been making a minimum of $500 million profit per year plus $1 billion.

United Party for National Development (UPND) President Hakainde Hichilema has told QFM News in an interview that if government had reintroduced windfall tax the money could have been channeled to infrastructure development in the country.

Mr. Hichilema says the PF government should not wait for the opposition and other relevant stakeholders to remind them of the need to re-introduce windfall tax in view of such revelations.

The UPND leader adds that if the PF government is a descent government, it would not to wait for the revelation by the Vedanta Chairman of huge profits KCM is making but would have introduced the windfall tax when it took over office in 2011 as they promised.

And National Movement for Progress (NMP) President, Ng’andu Magande, says when he reminded the PF government of the need to reintroduce the windfall tax he was called him a lunatic.

Mr. Magande who introduced windfall tax during the time he served as Finance Minister before it was scrapped off by his predecessor Situmbeko Musokotwane says the PF have now seen the result of failing to reintroduce the tax.

Mr. Magande says it is common knowledge that many developing countries such as Zambia are losing billions of dollars in the extractive industry owing to poor policies.

Speaking in a separate interview, Alliance for Better Zambia (ABZ) President Father Frank Bwalya says the information coming from the Vedanta boss should not surprise Zambians because it was expected when the PF government refused to re-introduce the windfall tax.

Father Bwalya says remarks by the Vedanta Chairman confirm what various stakeholders have always said about the privatization of some of the country’s assets.

And the Zambia Revenue Authority is checking to establish whether claims by Vendanta Chairman that Konkola Copper Mines makes a minimum of $500 million in profit per year is at variance with profits declared.

Reliable sources at ZRA have told QFM News that if need be, tax adjustments with possible resultant penalties and interest will be made

 

At 3:04 PM ,  MrK said...

" "It might not necessarily be windfall tax, it can be any form of tax and the only entity which has the responsibility to tax any business is the government of a country. So what is this government of this country doing and saying about this? We have seen that KCM is raking in billions of dollars and so the mine should be rightly taxed," he said. "

Oh no no no, Minister Magande. It cannot be 'any form of tax'. We already know that the mines want a 'windfall tax' on profits, because they can cheat on declaring profits to their hearts content. They have already been declaring losses for years, while using price transfers and other tax evasion methods.

You sold the mine to this individual, you are responsible for this mess, and you don't get to make recommendations on future policy. This alone should disqualify you from even being in politics, let alone heading a political party. Where is President Sata? Where is VP Guy Scott? I'm not even waiting for Finance Minister Chikwanda's insulting lies that protect the mining industry from taxation, while people are dying of preventable diseases in hospitals.

Govt is sleeping over KCM fraud - Magande
By Chiwoyu Sinyangwe, Abel Mbozi and Gift Chanda
Sat 17 May 2014, 14:01 CAT

THE government is sleeping over the fraud at KCM being perpetuated by its owner Anil Agarwal, says former finance minister Ng'andu Magande.
And KCM has revealed that it has declared US$14.6 million dividend to Zambia over the last nine years while Agarwal has been getting US$500 million annually out of the mine.

Meanwhile, civil society organisations have demanded that Zambian authorities scrap tax incentives and other favours to Vedanta Resources immediately.

Magande said the government was making a mistake by watching KCM exploit Zambia's mineral wealth without charging them proper taxes.
On March 22-23 during the JITO connect conference in Bangalore India, Agarwal, the owner of Vedanta Resources, the majority owner of Konkola Copper Mines (KCM), mocked the Zambian government over the paltry US$25 million he paid to buy the mine, which is now giving him hundreds of millions of dollars in profit.

In video released by activists from Foil Vedanta, Agarwal boasts of raking a minimum of US$500 million per year from the country's biggest mining operation which he bought in 2005.

But Magande, who signed the deal to dispose of the country's biggest mining unit, said there was no recklessness on the part of the late president Levy Mwanawasa's regime.

Magande said the government had powers to impose taxes that would ensure that Zambians rightly benefitted from their mineral wealth.

 

At 3:08 PM ,  MrK said...

Continued 1...

"The sale was based on the value of shares. It's like when you sell a plot to somebody and instead of them building a school, they choose to build a hotel and they start making more money out of it. You can't say this plot I sold it at K2 billion, when somebody put something on top of what you sold him," Magande said.

"These people KCM when they were buying, nobody had a value of the minerals in Konkola Deep. It was a project which was even there for nearly 20 years as people that were there and as Zambians, we didn't have the money to go three, four kilometres in the ground to get the copper. So when we were selling, we were not selling copper which is in the ground but we sold a company and KCM came and brought their own equipment; the shaft at Konkola Deep now is between three and four kilometres."'

Magande said it was a mistake for the current government not to collect money out of KCM on behalf of the citizens.

"So why should people say the person who sold made a mistake? No, it's the current government that is making a mistake by watching KCM exploit our mineral wealth without charging them proper taxes and so where is the issue here now? There was nothing wrong with the sale of KCM by president Levy Mwanawasa," said Magande.

"Therefore, the people making so much money from this mine must be taxed properly for Zambians to gain since we didn't know how much copper was in the ground. Anything else, we are just wasting time."

Magande said he and Mwanawasa were not part of the negotiating team for the sale of KCM to Vedanta Sterlite of India.

"The Minister of Finance under Cap 349 is the custodian of all government assets, anything to do with getting rid of or acquiring any asset of Zambia," Magande said. "He is not part of the negotiations."

And Magande said the government had powers to impose taxes on the mines that would ensure that Zambians rightly earned revenue from their mineral wealth.

"Mwanawasa sold KCM because the company outlined what it wanted to do which was within his Mwanawasa's developmental programme of Zambia," Magande said.

"Mwanawasa at that time noted that whoever was going to buy KCM must start building schools, hospitals and he even said he made such promises in Parliament to undertake developmental projects. So what's the current relationship between KCM and the government and the people of Zambia? Government has powers today to say all mining companies in Zambia. We have increased income or corporate tax to 50 per cent and no one will say no as long as the 50 per cent is profit before tax because at that point they mines have already taken out their expenditure, consultancy, labour costs and what remains, government should share half with the mines."

He called for proper taxation of the mining sector in the country for the benefit of Zambia.

"It might not necessarily be windfall tax, it can be any form of tax and the only entity which has the responsibility to tax any business is the government of a country. So what is this government of this
country doing and saying about this? We have seen that KCM is raking in billions of dollars and so the mine should be rightly taxed," he said.

In the 3:58 minute video released by activists from Foil Vedanta on Monday, Agarwal told a cheering crowd how he bought KCM for just US$25 million, rather than the US$400 million asking price.

The bragging Agarwal revealed his surprise at receiving a VIP welcome in the Zambian Parliament, and ridicules then president Mwanawasa for claiming that Vedanta would improve the lives of Zambians, especially those in Chingola and Chililabombwe.

 

At 3:09 PM ,  MrK said...

Continued 2...


Agarwal reveals how he duped Mwanawasa, on their first meeting, that 30 members of his delegation missed the connecting flight out of Johannesburg into Lusaka, when in fact he had only travelled with one engineer from his firm.

Agarwal said KCM is giving him US$500 million every year in profit.
In the last few years, KCM had planned to dismiss close to 2,000 workers from its mining units to cut down on labour costs and improve its profitability.

Vedanta had continued to claim that they are making losses at KCM.
The mining unit claims declining ore grades at its mining units and high operational costs on the backdrop of high labour and energy costs were hurting the country's second largest copper producer.

Agarwal's 'motivational talk' angered Foil Vedanta which had previously released figures from Vedanta's annual reports showing that the company made US$362 million in 2013.

And according to its official statement yesterday, Vedanta claimed that it had "taken very little out" of KCM.

"...over the nine years of ownership by Vedanta Resources, KCM has made US $2.9 billion capital investment and made just US$73 million in dividend payments - a fifth of which is to the Zambian government," claimed Vedanta in a statement by executive vice-president for group communication and corporate social investment, Roma Balwani.

"With that investment, the company has dramatically increased mine life, dramatically increased employment, doubled real salaries there, provided technical and management training to thousands of Zambians, reduced the number of expatriates and continued to be Zambia's second-biggest mining taxpayer. Furthermore, KCM has invested US$120 million in local communities, providing schools, educational programmes..."

And the CSOs, under the auspices of the Zambia Tax Platform, have challenged Vedanta Resources to pay up its fair tax contribution to Zambia since its owner is boasting of raking up to US$500 million per year from KCM.

 

At 3:09 PM ,  MrK said...

Continued 3...

Commenting on revelations by Konkola Copper Mines owner, Anil Agarwal, that he bought KCM for a paltry US$25 million despite the Zambian government asking for US$400 million, the CSOs said it was time the government ended all favours to Agarwal.

"It is saddening and at the same time annoying to see how foreigners are having it easy in our country and still remain ungrateful," Diana Ngula, Civil Society for Poverty Reduction programme officer, said on Thursday.

"Look at our poverty levels; it's so high especially in rural areas and these investors want to mock us despite the favours and tax incentives we give them. I think it is time the government seriously looked at ensuring these mines pay up. Let Vedanta pay up now. We have evidence on camera, we have seen it and it's not like we are assuming. He Agarwal has said it himself and we have the figures of how much he has made from the time he duped us and got away with it, so why not move in now? He is boasting of the profits and yet the mine claims they are in problems and making losses. So let him pay up what he needs to pay."

And Zambia Council for Social Development programme officer, Banji Munkana, said it was high time the government scrapped incentives to Vedanta.

She alleged that the multinational mining company was greedy and ungrateful.

"I think it is high time we reviewed some of these treaties we sign with these multinational companies which give them unnecessary incentives," she said.

"We need to do away with some of these incentives because it is clear they are not benefiting Zambians."

Meanwhile, Green Earth Zambia executive director Enala Chipungu said it was grossly unfair for Zambians to continue seeing their natural resources being plundered by greedy investors.

"These investors like Agarwal are literally leaving nothing for Zambians and ten years from now, they will leave trenches in our grounds," she said.

Zambia Youth Climate Forum projects coordinator, Clarence Moonde, described Agarwal's statement on KCM as mockery of the highest order.
He also demanded that officials from the team that negotiated the deal be rounded up to explain how a major asset like KCM was sold for a song.

 

At 2:33 PM ,  MrK said...

Milupi urges govt to act on Agarwal
By Gift Chanda and Noel Iyombwa
Sun 18 May 2014, 14:00 CAT

ZAMBIANS must not be taken as fools over their minerals by investors like KCM owner Anil Agarwal, says Charles Milupi. Meanwhile, Chingola residents have resolved to petition President Michael Sata over the happenings in Konkola Copper Mines.

Vedanta Resources, KCM's parent company and owned by Agarwal, revealed that over the nine years it has owned KCM, it had just declared US$75 million in dividend payments - of which a fifth was to the Zambian government.

KCM made the statement against revelations that Agarwal mocked the Zambian government over the paltry US$25 million he paid to buy the mine, which is now giving him US$500 million in profits every year.
Commenting on Agarwal's confession, Milupi, who is ADD leader, said it was not true that Vedanta had taken very little out of KCM.

"Agarwal has come out very clearly to say that in fact they are making a lot of money. Agarwal is the chairperson of the whole group. He knows what he is making. The statement that they have. Zambians must not be taken as fools. The chairman is the owner of the company, that is the one person who knows what is coming in and in this case Agarwal has told us he is very happy with what is coming out of KCM because of what he has done."

In a video released by activists from Foil Vedanta, Agarwal boasted of raking in US$500 million each year from Zambia's biggest mining operation which he bought in 2005.

But Milupi said the government owed Zambians a duty to recover the lost money from KCM.

"Agarwal is saying the mine was worth US$400 million and he only paid US$25 million. So they must immediately go back and get the US$375 million difference with interest. In addition, the US$500 million Agarwal says he is making per annum, the government should tax him. Let the government go and collect the windfall tax on that US$500 million," Milupi said.

"ZCCM-IH, on behalf of the Zambian people owns 20 per cent of KCM, so over those years, since KCM has been making that US$500 million, let them go and get 20 per cent share of that US$500 million. We are talking about US$100 million share per year to ZCCM-IH. We need to recover all that money."

[Why 20%? These are our resources. Why this timidity? If they are making $500 million a year, at least $400 million should go to the Zambian state. What risk did they take, to deserve taking half a billion dollars out of the Zambian economy? At his own admission, he only put up $25 million. What investor will be skared off, if he was allwed to keep $100 million a year from that? Or $25 million a year? And I never want to hear the phrase 'win-win situation' again. The likes of Vedanta NEVER, EVER look for a 'win-win situation'. For them, a 'win-win situation' is a loss, and it is more than time that any Zambian negotiators understood the same. MrK]

 

At 2:33 PM ,  MrK said...

Continued...

He said it was because of such fraudulent activities being perpetuated by investors that the Zambian stakeholder had in the past called for the reintroduction of the windfall tax.

"We have to be very thankful to Agarwal for being very honest, for vindicating what we have been saying for a long time. And I think it is a wake-up call to this government, despite the fact that they have completely shut their ears to reason in terms of the windfall tax," he said.

"Agarwal has come out very clearly to say that in fact they are making a lot of money in the mines. Everything has come out in the open; the government must do what is necessary. Let them act. Let them even reintroduce the windfall tax. Windfall tax was easy to administer. You cannot have sophistication."

Milupi said it was unfair that the government was watching KCM exploit Zambia's mineral wealth without charging them proper tax.

"President Michael Sata should immediately recall Parliament so that they can come and legislate the reintroduction of windfall tax because these happenings are not just applying to KCM; they are happening in the mining sector," Milupi said.

He condemned the government's inertia on issues surrounding KCM.

"The government has been quiet and they know exactly what these mining companies are doing. They know and that is why when they were in opposition they supported the reintroduction of the windfall tax. But just before they went into government, they changed their mind," Milupi said.

"What changed? What did the mining companies pay them to shut their eyes to the gross theft that is going on in the mining sector? They have never given us a good reason for opposing the windfall tax. We have been asking questions but we were instead called lunatics, now who are lunatics here? We are losing money, at the same time we are going to borrow at commercial rates! "

Milupi said the government had the power to ensure that Zambians rightly benefited from their mineral wealth.

"But so far they have kept quiet, unable to issue a statement. They need to act on Agarwal's revelations," said Milupi.

And at a community meeting under the auspices of Extractive Industries Transparent Initiative spearheaded by Caritas Zambia and Catholic Diocese of Ndola's Justice and Peace programme at Chingola's Mokorro Grill on Friday, Chingola residents resolved to petition President Sata on the KCM scandal.

The meeting, which discussed the EITI Zambia report for 2011 released in February 2014, left the community infuriated after discovering discrepancies in figures that KCM claimed it paid to the government and those the government confirmed receipt.

The petition will be signed in Chingola on Wednesday.
A planned protest protest in Chingola against KCM was cancelled for security reasons.

And the community proposed that Chingola Municipal Council introduces an open day once a year for it to communicate its achievements and challenges to the community.

 

At 2:44 PM ,  MrK said...

(LUSAKATIMES) Zambia Revenue Authority to verify reports that KCM is making annual profits of US$500 million
Time Posted: May 18, 2014 8:23 am

THE Zambia Revenue Authority says it is verifying reports that Konkola Copper Mines (KCM) is making annual profits of US$500 million. This is to determine if KCM has been paying appropriate taxes to the Zambian government.

A ZRA source said yesterday that the authority has interest in recent press statements attributed to Mr Anil Agarwal, the chairman of Vedanta Resources, the majority shareholder of Konkola Copper Mines Plc.

In a statement posted on various media houses, including video footage on You Tube, Mr Agarwal has reportedly stated that KCM Plc has been making a minimum of US$500 million per year since the mine was acquired by Vedanta Resources Plc.

“Obviously, it would be prudent for Zambia Revenue Authority to check whether this statement is at variance with profits declared, and if need be make tax adjustments with possible resultant penalties and interest,” the ZRA statement read.

Mr Agarwal is reported to have said that KCM Plc is making US$500 million each year after buying the mine at only US$25 million from the Zambian government in 2004.

But Vedanta Resources has refuted the media reports.

KCM executive vice-president for group communications and corporate social responsibility (CSR) Roma Balwani said in a statement in Kitwe yesterday that Mr Agarwal’s recent speech at a business forum in India was used negatively by an activist.

“Our chairman, Anil Agarwal, recently addressed business people in India when he spoke engagingly about the human side of running a multinational mining business.

“In an anecdote, he referred to Vedanta’s 2004 acquisition of KCM, our Zambian subsidiary. Unfortunately, one activist has taken a small part of the video of this speech and used it negatively out of context,” Mr Balwani said.

Mr Balwani said nearly all the returns from KCM have been re-invested into the mining company.

And KCM chief executive officer Tom Albanese said Mr Agarwal and Vedanta Resources continue to believe that KCM has a great future despite short-term operational challenges.

 

At 5:40 PM ,  MrK said...

(ZAMBIAREPORTS) KCM Mockery of Zambians Unsurprising
Nse Udoh | May 17, 2014

KCM Opposition Zambians for Empowerment and Development says it is not surprising that Vedanta Resources owner Anil Agarwal mocked Zambians for the cheap price they sold his enterprise the Konkola Copper Mines.

Mutesa said Zambians who opposed the sale of Konkola Copper Mines at US$25 million had been vindicated.

He said the Vedanta boss should be applauded for revealing the truth about how investors perceived Zambians.

“We are not surprised because if you go to the archives when this transaction was done, many people criticized it and we were among those, and therefore this revelation does not come as a surprise to us,” Mutesa said.

“But what is disheartening is the amount of money involved when our nation is begging. This is wrong. If government has this information, what are they going to do about it? This is a company that has been holding officials to ransom by threatening redundancy.”

Konkola Copper Mines has come under the spotlight after Agarwal was captured on camera mocking Zambians for selling him the mine at US$25 million while he raked US$500 million every year.

 

At 9:41 PM ,  MrK said...

(DAILY MAIL ZM) ZRA verify KCM $500 million profits
Written by Online Editor
By CHARLES CHISALA and ALEX NJOVU

THE Zambia Revenue Authority says it is verifying reports that Konkola Copper Mines (KCM) is making annual profits of US$500 million. This is to determine if KCM has been paying appropriate taxes to the Zambian government.

A ZRA source said yesterday that the authority has interest in recent press statements attributed to Mr Anil Agarwal, the chairman of Vedanta Resources, the majority shareholder of Konkola Copper Mines Plc.

In a statement posted on various media houses, including video footage on You Tube, Mr Agarwal has reportedly stated that KCM Plc has been making a minimum of US$500 million per year since the mine was acquired by Vedanta Resources Plc.

“Obviously, it would be prudent for Zambia Revenue Authority to check whether this statement is at variance with profits declared, and if need be make tax adjustments with possible resultant penalties and interest,” he said.

Mr Agarwal is reported to have said that KCM Plc is making US$500 million each year after buying the mine at only US$25 million from the Zambian government in 2004.

But Vedanta Resources has refuted the media reports.

KCM executive vice-president for group communications and corporate social responsibility (CSR) Roma Balwani said in a statement in Kitwe yesterday that Mr Agarwal’s recent speech at a business forum in India was used negatively by an activist.

“Our chairman, Anil Agarwal, recently addressed business people in India when he spoke engagingly about the human side of running a multinational mining business.

“In an anecdote, he referred to Vedanta’s 2004 acquisition of KCM, our Zambian subsidiary. Unfortunately, one activist has taken a small part of the video of this speech and used it negatively out of context,” Mr Balwani said.

Mr Balwani said nearly all the returns from KCM have been re-invested into the mining company.

And KCM chief executive officer Tom Albanese said Mr Agarwal and Vedanta Resources continue to believe that KCM has a great future despite short-term operational challenges.

 

At 8:38 AM ,  makumbi said...

Thanks for the blog- makes for very interesting reading.
To my fellow Zambians, Mr Agarwal and Vendanta are a business. It's imperative for every business to take opportunities and they did and it is paying off for them- well done!. Our anger as Zambians should rather be directed to our curse in poor leadership...or rather since leadership reflects its followers, anger should be directed to ourselves. The question is not what should this leadership do about this...rather, what are we as young, educated, professional Zambians going to do about this? Never mind about Sata, Chikwanda and gang- they won't suddenly change and become visionary leaders. For them seemingly its a race against time to try and leave something for their offspring....
We are all to blame and frankly, we deserve the mockery. educated Zambians have failed the masses.

 

At 9:23 PM ,  MrK said...

(LUSAKATIMES) Opposition leaders demand the re-introduction of windfall tax following Anil Agarwal video
Time Posted: May 16, 2014 6:44 pm

Opposition political parties have demanded that government re-introduces windfall tax in view of revelations by Vedanta Chairman Anil Agarwal that Konkola Copper Mines (KCM) makes a minimum profit of $500 million profit per year.

A YouTube video taken in March 2014 Mr. Agarwal mockingly tells of how he bought Konkola Copper Mines for only US$25 million and how the mine has continuously been making a minimum of $500 million profit per year plus $1 billion.

United Party for National Development (UPND) President Hakainde Hichilema has told QFM News in an interview that if government had reintroduced windfall tax the money could have been channeled to infrastructure development in the country.

Mr. Hichilema says the PF government should not wait for the opposition and other relevant stakeholders to remind them of the need to re-introduce windfall tax in view of such revelations.

The UPND leader adds that if the PF government is a descent government, it would not to wait for the revelation by the Vedanta Chairman of huge profits KCM is making but would have introduced the windfall tax when it took over office in 2011 as they promised.

And National Movement for Progress (NMP) President, Ng’andu Magande, says when he reminded the PF government of the need to reintroduce the windfall tax he was called him a lunatic.

Mr. Magande who introduced windfall tax during the time he served as Finance Minister before it was scrapped off by his predecessor Situmbeko Musokotwane says the PF have now seen the result of failing to reintroduce the tax.

Mr. Magande says it is common knowledge that many developing countries such as Zambia are losing billions of dollars in the extractive industry owing to poor policies.

Speaking in a separate interview, Alliance for Better Zambia (ABZ) President Father Frank Bwalya says the information coming from the Vedanta boss should not surprise Zambians because it was expected when the PF government refused to re-introduce the windfall tax.

Father Bwalya says remarks by the Vedanta Chairman confirm what various stakeholders have always said about the privatization of some of the country’s assets.

And the Zambia Revenue Authority is checking to establish whether claims by Vendanta Chairman that Konkola Copper Mines makes a minimum of $500 million in profit per year is at variance with profits declared.

Reliable sources at ZRA have told QFM News that if need be, tax adjustments with possible resultant penalties and interest will be made

 

At 2:06 AM ,  MrK said...

MUZ urges govt to nationalise KCM
By Chiwoyu Sinyangwe, Moses Kuwema and Edwin Mbulo
Mon 19 May 2014, 14:00 CAT

MINE Workers Union of Zambia (MUZ) says the government should nationalise Konkola Copper Mines (KCM) in order to bring back sanity to the mining giant.

And Vice-President Dr Guy Scott says the government is determined to get Zambia's share from the KCM profits.
Key stakeholders say government should act on revelations, through a video leaked by activists from Foil Vedanta, of Agarwal boasting that he rakes a minimum of US$500 million per year from KCM the mine he bought in 2005 for US$25 million.
Agarwal owns Vedanta Resources, which has a 69 per cent controlling stake in KCM.
Last week, in its own statement to spin the declaration Agarwal made during the JITO connect conference (March 22 - 23) in Bangalore, India, Vedanta confessed that it had only declared US$14.6 million dividend to Zambia over the last nine years in which Agarwal has been getting US$500 million out of the mine annually.
MUZ general secretary, Joseph Chewe, said the government should consider repossessing KCM in light of the revelations that Agarwal duped the government when purchasing the mines.
In an interview after the close of the 13th Quadrennial Conference at New Fairmount Hotel last Friday, Chewe said Zambians must benefit from the mineral resources of the country.
"This investor has had a lot of problems and we have been complaining, we want to see sanity coming back to this company," Chewe said. "Even looking at repossession because we still have a lot of problems with KCM and the community is not happy. The mining community of Chingola and Kitwe are either working on contracts capacities which is not what KCM promised Zambians. They promised better jobs, they promised better working
conditions and creating more decent jobs, which has not been the case," Chewe said.
He said Agarwal's mockery of Zambians and the government was a shame.
Chewe implored the government to seriously look at that issue even if it meant re-negotiation.
"Let us re-negotiate so that we get a better package, especially that KCM has given miners problems," he said. "We were much better working for the previous owner who offered better conditions of service and re-capitalised the mines, so our appeal to the government is, let us take action before we continue being laughed at by the international community while Zambians continue suffering."

He said the new executive committee of the MUZ would work towards poverty reduction and improving the safety conditions of the miners.

 

At 2:07 AM ,  MrK said...

Continued...

"We know that the salaries have not been very good, and we shall take this privilege of being elected to the union leadership to improve the lives of mines and we shall not relent as MUZ on all mines that are particularly paying less than the food basket. We shall not relent, we shall ensure that workers start getting decent salaries."
And Vice-President Scott said Agarwal had excited the Zambia Revenue Authority Commissioner General with his revelations of profits from KCM, which has often declared losses.
He said the government was determined to get Zambia's share from KCM profits
"What we shall do naturally is that the Zambian tax authorities will write to him Agarwal asking him to explain where the money is, where was it declared because they KCM have been declaring losses," Vice-President Scott said. "If he Agarwal is making US$500 million,
can he show us where it is in the accounts? Otherwise we will go ahead and charge him tax and penalties. He has excited the interests of Commissioner General of the Zambia Revenue Authority who wants to know. He is going to send him a tax invoice. If you jump off and say you are making K100 million which you are not paying tax on, ZRA will ask you, 'where did you get this money'?"
He said a committee has since been set up under Cabinet office to look into KCM's matter.
"Let us not be too worried about the so-called 'mocking', I think that's an emotional destruction. Now we can stand up and say we, Zambians, we are even cleverer than the Jains when they start boasting about how much they are worth, it is our taxman who takes an interest," Vice-President Scott said, in reference to Agarwal who belongs to the Jainism. "That's what our job is now. It is to get the money for Zambia. There is no question of change, we don't have to change the law, cheating is illegal. It is not a problem of not having the right law, it is a question of the right information. Vedanta has given us the information and the taxman will take an interest."
He said the government had been given a starting point to claim for what belonged to the Zambian people because of the information that Agarwal had provided.
He said although Agarwal had mocked Zambians on the paltry money he paid for the mine and the VVIP treatment he received from late president Levy Mwanawasa's regime, there was no need for Zambians to be angry about the revelation.
"Agarwal has put a chance on our way, now we are going to take advantage," Vice-President Scott said. "He Agarwal has put the chance on the table, we will take his words. He is saying you Zambians take chance so we are taking the chance. He is the one who has said these numbers, not us... these numbers have been pronounced by the owner of KCM. He has given us the chance and we cannot let the
chance go. We have to do the job properly. Never mind whether he mocked Levy Mwanawasa or not, that's not the issue; the issue is that he has given us the information and we will make sure that we follow it up. It is a serious matter, it is a taxation matter and it is a legal matter involving possibilities of fraud, and stuff like that," said Vice-President Scott.

 

At 2:07 AM ,  MrK said...

Continued 2...

On February 14, 2014, Vice-President Scott told Parliament that 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$billion," he said during the Vice-President question and answer session.

"They have not paid loans to banks, they are owing a lot of money to companies. So, there are a lot of these strange things happening."

Vice-President Scott said KCM was hiding a lot of information from the government, something he described as sad.

"It seems they are heading into the direction of receivership," said Vice-President last February.

"It is a matter that concerns billions of dollars that we stand to lose. The owner of Vedanta is buying his own shares at the moment."

 

At 4:11 PM ,  MrK said...

(LUSAKATIMES) Opposition leaders demand the re-introduction of windfall tax following Anil Agarwal video
Time Posted: May 16, 2014 6:44 pm

PROMINENT Lusaka businessman Andrew Sardanis has said there was a lot of secrecy about the sale of Konkola Copper Mines.

Mr Sardanis said in a statement yesterday that “the generosity to Vedanta, the holding company, during the sale knew no bounds”.
“The Mwanawasa government had been very secretive about the deal. I tried to obtain details about my book ‘A venture in Africa’ but I struck a wall of silence,” he said.

Mr Sardanis said the nation received nothing from the sale.

“Anil Agarwal [Vedanta chairman] received KCM shares against his US$25 million, Zambia Copper Investments got US$23.2 million but the only money Government was allocated is US$16.8 million, which disappeared,” he said.

And Alliance for Democracy and Development (ADD) president Charles Milupi has said the MMD should be held responsible for problems KCM is facing.

He said there was no need for the MMD government to privatise KCM because the mining giant was economically viable after Anglo-American Corporation left.

He said that when Zambians took over the running of the mine after Anglo-American Corporation, KCM’s profits were soaring.
“What was the purpose of selling KCM at US$25 million when the mining company had a value of US$400 million and was actually making profits?”

Mr Milupi said on MUVI TV’s The Assignment programme on Sunday that the sale was at a “giveaway” price and was not appreciated by those who understood mines’ operations.

Mr Milupi said when KCM was being privatised, some of the hurdles like the price of copper were not bad as the government then portrayed.

Meanwhile, THE International Council on Mining and Metals (ICMM) says there is substantial doubt about the data supplied by mining companies in Zambia on the total level of production including the sectors contribution to the gross domestic product (GDP).

The UK-based organisation said several international data sources suggest that the official Bank of Zambia figures overstate production levels.

 

At 4:11 PM ,  MrK said...

Continued...

“With regards to the GDP contribution of the mining sector, the 2013 official data which is in the process of being revised, understates the GDP contribution of mines. The unofficial estimate is that the sector contributes at least 12 percent of GDP,” ICMM says.

It says in contrast, the official data suggest that the mines contribution to GDP is less than three percent in constant prices and around eight percent in current prices.

This is according to a study released last week by the ICMM on enhancing mining’s contribution to the Zambian economy and society.
ICMM says the projections made by Kansanshi, Lumwana, Konkola and Mopani copper mines indicate that the future contributions of mining are likely to increase.

“These projections are based on already approved investment programmes and imply an increase in production to 2016, and roughly a doubling in Government revenue,” the study notes.

Meanwhile the ICMM says lack of appropriate data on which both Government and the mines rely on to guide decisions has affected the quality of debate on mining in the country.

The ICMM says the poor mines data has also negatively affected the quality of policy decision by Government.

It says both Government and mining companies could play a key roles in addressing this problem.

“In June 2013, the Chamber of Mines and the government committed to work together to address the quality and availability of data on the mining sector.

The problem is already being addressed by the government-appointed Zambia Revenue Authority Mineral Value Chain Monitoring project which is assessing industry production figures,” ICMM says.

In recent times the mining companies have become under serious scrutiny and criticism regarding the production level statistics along with the true value of their tax contribution to Government.

With Konkola Copper Mines at the centre of what is now being term as the mines ta saga, many business analyst are wondering why Government has not address the matter.

 

At 11:33 PM ,  MrK said...

(LUSAKATIMES) Don’t attack Levy for selling KCM at $25 million, blame those who removed the windfall tax-Kalala
Time Posted: May 20, 2014 5:38 pm

Former Special Assistant to late President Levy Mwanawasa for Policy and Project Implementation and Monitoring Jack Kalala has defended the Mwanawasa administration over the sale of Konkola Copper Mines (KCM).

Mr Kalala said the Mwanawasa administration handled the sale of KCM to Vedanta above board.

And Mr. Kalala says Zambians should direct their anger at the people who reversed the windfall tax instead of condemning Mr Mwanawasa who did everything in his power to ensure that Zambians get a fair return on their mineral resources.

Speaking at a Press Briefing in Lusaka today, Mr. Kalala said the Levy Mwanawasa government saw it fit to sale the mine because it was spending too much on it as the government was losing 1million US dollars per day to keep the company open.

Mr Kalala revealed that the Zambian government sold the mine for US $25 to Vendeta after the involvement of Stanchart UK and some experts while the asking price was $400 million.

He explained that sale of the mine was split into two the first being the already operational KCM which went at $25 million and the other money was to be spent on developing the Konkola deep was has since be realized and adds to the over 800,000 metric tones the country is producing now.

Mr Kalala said the sale of KCM was a tactical “Donche Kubeba” strategy where the Mwanawasa administration sold the mine but at the same time introduced windfall tax as a way for government to collect dividends from the mines.

He said Dr Mwanawasa had the vision for the country stressing that the late president knew that copper prices were not going to be good all the time and that was why he asked his team to come up with programmes where proceeds from the mines were to be invested.

Mr Kalala said the sale of KCM was a tactical “Donche Kubeba” strategy where the Mwanawasa administration sold the mine but at the same time introduced windfall tax as a way for government to collect dividends from the mines.

Mr Kalala called on Zambians to take to task all those that participated in the removal of windfall tax for them to explain why they did so.

Mr Kalala charged that the removal of the windfall tax was criminal as it denied the Zambian people a share of the country’s natural resources.

Mr. Kalala further condemned former President Rupiah Banda for removing Windfall Tax on Mines and described the act as criminal.

He called on the public to take the people who were in charge of the country and make them tell the nation why the removed the windfall tax which had the backing of donors.

He said instead of condemning Mwanawasa and the current owner of KCM Anil Agarwal, Zambians should seat down and reflect on who to blame.

Meanwhile, the former President’s Aid has asked President Michael Sata and his Patriotic Front government why they have not reintroduced the Windfall Tax which he said was the cushion to the selling to KCM at a low price of US $25million.

He said instead of condemning Mwanawasa and the current owner of KCM Anil Agarwal, Zambians should seat down and reflect on who to blame.

PF should further be answerable to Zambians why they have not reintroduced the Windfall Tax

And Mr. Kalala has told Finance Minister Alexander Chikwanda to resign for insulting Zambians that “those calling for Windfall Tax are Lunatics”.

He said if he does not then President Michael Sata should fire him.

He advised the public not to allow the Finance Minister to continue in his office as doing so would vindicate his statement that Zambians are lunatics for calling for the re introduction of the windfall tax.

 

At 11:37 PM ,  MrK said...

(LUSAKATIMES) Government will not nationalise KCM-Mines Minister
Time Posted: May 20, 2014 6:11 pm

Mines Minister Christopher Yaluma says Government will not nationalize Konkola Copper Mines (KCM) in view of recent revelations by Vedanta Resources Chairman Anil Argawal that the mine has been giving him profit exceeding $500 million per year.

Mr. Yaluma has however warned investors in the Mining Sector that government will not hesitate to take necessary action against any fraudulent activity to prevent loss of much needed government revenue and save jobs.

Speaking during a media briefing in Lusaka today, Mr. Yaluma says as at 30th September 2013, KCM’s total liabilities of one point five billion US Dollars (USD1.5 billion) exceeded the current assets by US $123 million, and that consequently KCM was unable to meet its obligations as they fall due.

Mr. Yaluma has revealed that Vedanta Resources Plc has up to date not complied with its commitment to inject three hundred and ninety seven million US dollars (USD 397 million) into KCM as foreign direct investment.

Mr. Yaluma states that from the time Vedanta Resources acquired KCM, two point eight billion dollars made up of internally generated funds by KCM, bank loans and finance leases, was injected in capital projects which included the Konkola Deep Mining Project (KDMP), concentrator expansion at Konkola mine, the new concentrator and smelter at Nchanga mine.

He says when taking over KCM, Vedanta Resources committed itself to provide a bank guarantee of four hundred million dollars towards the outstanding loans that KCM had on its books.

Mr Yaluma states that government will ensure that KCM meets its obligation of recapitalizing the mine, paying off its debts to lenders, suppliers and contractors including concentrate suppliers.

And Mr Yaluma says the issues that the Vedanta Chairman alluded to in the publicized video especially those touching on the company’s revenue and its profitability will require investigation by the government.

Mr. Yaluma says government will ensure that at the end of the day, the people of Zambia get a fair share of the returns from their mineral wealth.

He has assured investors in the mining industry that government regards them as partners and as such government will endeavor to dialogue to resolve any arising issues.

 

At 1:48 PM ,  MrK said...

Kalala explains Levy's kcm sale
By Chiwoyu Sinyangwe and Moses Kuwema
Wed 21 May 2014, 14:01 CAT

COMMENT - Anil Agarwal already made it clear that he didn't inject any new funds into KCM, having only $4 million in his pocket. All the funds used to 'turn around' KCM came from KCM. It is nothing any Zambian couldn't have done. And yet the MMD insisted on selling the mines - why? Were they more comfortable taking a bribe, or is this what the IMF/World Bank commanded. - MrK

JACK Kalala yesterday explained that late president Levy Manawasa's government sold KCM at US$ 25 million to Vedanta Resources as a tactical 'don't Kubeba strategy'.

Meanwhile mines minister Christopher Yaluma has revealed that Vedanta Resources has not injected any Foreign Direct Investments in KCM but used locally generated resources for all the expansion programmes.

Kalala, who is former State House special assistant for policy implementation and monitoring under Mwanawasa, said the late president did nothing wrong in selling Konkola Copper Mines (KCM) to Vedanta Resources for US$25 million.

"Today, some people are condemning Mwanawasa for introducing the windfall tax or for selling KCM. Yes, KCM was sold at that price. And what happened, I call it a tactical 'Don't kubeba' strategy. Sell the mine, investor develop it, later, we come in with the windfall tax… pay us our money. But what happened, in my view, Mwanawasa's death is the worst thing that happened to Zambia and to Zambians because of us here. When someone goes, everything goes with him. His death marked the end of the story of the windfall tax and these development programmes," he told journalists.

Kalala said the windfall tax was meant to compensate for any loss of revenue the country faced when it sold the mines.

"The party that was elected, the leader that was elected came and changed everything," he said.

"So, instead of condemning president Mwanawasa, instead of condemning Anil Agarwal, we should reflect. For me, I regard him Agarwal, as a whistle-blower. We are sleeping and I think God has used him…'Say this provocatively so that My people can wake up'."

Kalala said it amounted to criminality for Rupiah Banda's government to cancel the windfall tax.

"After President Mwanawasa, our government went to Parliament without any pressure and changed the law, removed the windfall tax, and we applauded it," Kalala said.

"And today, we are saying that the person is an excellent leader. The person who denied the Zambians what they deserved is a good leader! I think we are jokers. It's not Vedanta directors who went to Parliament to go and change that law. It's not Anil Agarwal who went to change that law. It is us Zambians through our members of parliament, through our Cabinet ministers who sat on their own to come up with the bill to remove the windfall tax. And today, we are saying this man is what…except ourselves. We don't blame ourselves and instead those who did that are heroes. I don't agree. In my view, that was criminal to the people of Zambia today and the future generation because we are taking away what belongs to the Zambian people and giving it to other people for nothing."

Kalala said the revelation in the video where Agarwal boasted of raking US$500 million annually from KCM was a wake-up call to Zambians.

Kalala, who also opposed calls for the nationalisation of KCM, said cheating in the mining sector was widespread although he didn't show how.

 

At 1:49 PM ,  MrK said...

Continued...


"Let's use the law, this man has confessed his sins. Let's go to this company and I know it's not only KCM…we are only concentrating on KCM," said Kalala.

"Even other companies are doing the same things. In my view, let us not blame president Mwanawasa. We are just cursing ourselves. He did the right thing. We undid it. Let us call the people who removed the windfall tax today and ask them why did you do this? President Banda is still alive; Dr Situmbeko Musokotwane, who was the minister of finance is still alive, the minister of mines at that time is still alive. Let's take them to task. Zambians should benefit from their natural resources."

Kalala said it was criminal for Banda's regime to remove the 25 per cent windfall tax on base metals.

But Banda's administrative assistant Mikatazo Wakumelo said he would not comment on the matter because he did not have facts on which Kalala based his briefing.

And Dr Musokotwane, who was finance minister under Banda, said the decision they made at the time to remove the windfall tax made sense.
Dr Musokotwane said if the idea of reintroducing the windfall tax was practical, the PF would have gone ahead with it.

"I'm a nationalist with the necessary academic qualifications and experience in these matters. I have explained this issue over and over. Those calling for it should go to the PF," he said.

Meanwhile Kalala said finance minister Alexander Chikwanda should resign for calling advocates of the windfall tax lunatics. But Chikwanda could not be reached for comment by press time.

"President Mwanawasa did not make a mistake to introduce the windfall tax which had the support of the donors," he said.

"I was inside. These investors did not object to the windfall tax but they objected to the method of calculations. Also, the current government should be answerable to us why they have not introduced the windfall tax. When advocates of the windfall tax were asking the government to reintroduce the windfall tax, our minister of finance Alexander Chikwanda said those who were doing it are lunatics. But can he say the same thing today in light of what has been revealed by Anil? So, I would say let Chikwanda resign on moral grounds for insulting Zambians. If he doesn't resign, the President should fire him. If the President doesn't fire him, the people of Zambia should fire him. If the people of Zambia fail to do that, then we are lunatics. Then he is very much right, we are lunatics."

And Yaluma said investigations by the government have revealed that KCM's plans to retrench more than 1,500 people had nothing to do with the mechanisation programme as alleged by the company but sheer mismanagement of the business.

"Funds generated within KCM, that in a normal operation will be used for operations, were diverted to finance capital projects," he said during a press briefing yesterday.

"They bought the mine for a song, they didn't put in anything. They started sweating every asset to get every penny and putting it back into the mine instead of bringing in Foreign Direct Investments as they promised. From the time Vedanta acquired KCM, $2.8 billion made of internally generated funds from KCM, bank loans and finance leases was injected in capital projects, which included the Konkola Deep Mining Project, concetrator expansion and Konkola Mine and the new concetrator and smelter and Nchanga Mine."

Yaluma said the technical audit committee by the government to audit operations at KCM revealed that the mine was mismanaged as the total liabilities exceed the current assets by US$123 million.

Yaluma, who ruled out the possibility of nationalising KCM, said the video clip depicting Agarwal boasting of getting US$500 million per year from KCM would require investigations and government would ensure that at the end of the day, Zambians would get a fair share of their mineral wealth.

 

At 2:54 PM ,  MrK said...

(LUSAKATIMES) KCM was sold for a song to Vedanta but we are not going to nationalize it-Yaluma
Time Posted: May 21, 2014 5:49 am

PATRIOTIC Front Malole Member of Parliament Christopher Yaluma explains details of the new rebased currencies to his electorates in Finshe ward in Mungwi district

Mines, Energy and Water Development Minister Christopher Yaluma

Mines and Minerals Minister Christopher Yaluma has revealed that Government has no plans to nationalize Konkola Copper Mines.
Mr Yaluma told a packed news conference in Lusaka Tuesday afternoon that Government will not go back on its policy to privatize the mines.

“We made the decision as a Government to put the mines in private hands and we have received some benefits on one hand and yes we have been ripped off on the other but we are not going to go back on our policy decision to private the mines,” Mr Yaluma said.

Mr Yaluma also admitted that the US$ 25 million that Vedanta Resources Plc paid for KCM was insufficient.

“It is true that they bought the mine for a song. We didn’t do our homework as a nation then and our audit of KCM operations has revealed that KCM did not bring in any fresh investment as promised, they just started reinvesting the same funds generated from sales proceeds against the original agreement,” Mr Yaluma said.

He also revealed that the audit conducted by a technical audit committee chaired by Dr Sixtus Mulenga showed that KCM was heavily in debt and faced threats of insolvency as at 30th September 2013.

“Following the announcement by KCM to retrench 1,529 employees, Government appointed a technical audit committee to audit the operations at KCM and recommend the course of action to be taken to preserve jobs. Contrary to the assertion by KCM that the planned mechanization of mining methods, the audit established that there was no plan linking the two. The problem was the mismanagement of the business,” he said.

He added, “The mismanagement was evidenced by threat to insolvency. As at 30th September 2013, KCM’s total liabilities of US$ 1.567 billion exceed the current assets by US$ 123 million. Consequently, KCM was unable to meet its obligations as they fall due.”

Mr Yaluma also blamed the company’s operational problems to the high turnover of Chief Executive Officers and high exodus of skilled Zambian professionals.

‘The main problem is that when Vedanta took over the mine, it did not have any business plan or a mining plan for the company.”

The Mines Minister disclosed that Vedanta Resources has up to now not complied with its commitment to inject US$ 397 million into KCM as foreign direct investment.

“Following the submission of the audit report, My Ministry engaged Vedanta shareholders and KCM’s top management to find means an ways of steering the company out of the desperate situation. Through this dialogue, a business plan to improve operations at KCM was developed and agreed upon by both parties,” he said.

“The business improvement plan targets to incrementally ramp up production from 132,318 tons of finished copper in 2013 to 178,994 tons by 2017. To achieve this, the company committed to inject US$ 250 million into production operations and US$ 30 million into smelter operations to improve flow of concentrates.”

On the video showing Vedanta Chairman Anil Agarwal mocking Zambia about the sale price, Mr Yaluma said Government will institute investigations into the matter using appropriate channels.

“Some of the issues that the Vedanta Chairman alluded to in the recent media reports especially touching on the company’s revenue and its profitability will require investigation by the Government. We as Government shall ensure that at the end of the day, the people of Zambia get a fair share of the returns from the mineral wealth,” Mr Yaluma said.

 

At 2:10 PM ,  MrK said...

Vedanta running KCM down, reveals audit
By Chiwoyu Sinyangwe
Thu 22 May 2014, 14:00 CAT

A TECHNICAL audit report has revealed glaring levels of mismanagement and dishonesty in the manner Vedanta Resources has been running Konkola Copper Mines.

And the report has revealed that the Konkola Deep Mining Project (KDMP), which KCM invited President Michael Sata to "commission" last December, is not yet producing.

Last November, mines minister Christopher Yaluma appointed a 10-man committee headed by Dr Sixtus Mulenga to conduct a technical audit of operations of KCM after the mine proposed to retrench about 1,529 workers at its mining units.

Vedanta had announced plans to retrench staff by March 2014 in view of mechanisation at its mines to optimise costs.

"Contrary to the assertions by KCM that the proposed retrenchment was necessitated by the planned mechanisation of the mining methods, the audit established that there was no plan linking the two," according to findings of the report presented by Yaluma on Tuesday.

"The problem was purely mismanagement of the business by KCM. The mismanagement was evidenced by there being some risky, threat of insolvency."

According to the report, KCM's total liabilities were US$1.6 billion, exceeding assets by US$123 million.

"Consequently, KCM was unable to meet its obligations as they fall due," Yaluma announced.

"The liabilities of KCM included bank loans, local and foreign suppliers and contractors, ZCCM-IH copper and cobalt price participation, deferred taxes and outstanding bank guarantees…. Vedanta did not bring in any money into KCM."

The report also revealed poor corporate governance at the mine, epitomised by high turnover of chief executive officers.

Yaluma said Vedanta had rundown assets at KCM by using mining equipment they bought, without injecting any fresh capital into the business.

"Instead, funds generated within KCM, which in a normal operation would be used for operations, were diverted to finance capital projects. They bought the mine; they didn't put in anything. They started running the mine, sweating the assets to get each and every pen to start putting it back instead of bringing in foreign direct investment."

From the time Vedanta took over KCM, over $2.7 billion of internally generated funds from KCM, bank loans and finance leases had been injected into capital projects which included the KDMP, concentrator expansion at Konkola mine and the 300,000 metric tonnes copper smelter at Nchanga.

"And the normal plant was suffering from lack of maintenance to sustain the business running smoothly," according to the report which also revealed lack of investment to develop new ore sources and provide sustainable feed and efficient and cost-effective running of the Nchanga Smelter, as well as failure to achieve the finished copper production target set at the time Vedanta acquired KCM.

"They have failed to meet their own production target," Yaluma said.
"Due to delay in commencement of production at KDMP, coupled with 100 per cent subcontracting of core mining activities at Nchanga Open Pit and Chingola Open Pit, consequently, production costs at KCM had remained high."

Yaluma said the audit also revealed that KCM was failing to purchase and treat concentrates from other mining companies.

"This situation which deprived the company of incremental revenue and resulted in the underutilisation of the facility smelter," he said.
Last October, KCM strategy and business development director Brad Gnanasivam told the expanded Parliamentary Committee on Estimate that the KCM smelter was operating at 50 per cent capacity due to lack of concentrates.

 

At 2:11 PM ,  MrK said...

Continued...


"Government shall ensure that KCM meets its obligations of recapitalising the mines, paying off its debts to lenders, suppliers and contractors including the concentrates suppliers - these are the companies like Lubambe, Lumwana, Kansanshi, who are sending their concentrates to their smelter so that it could be processed there and they have got to pay for that facility," Yaluma said.

He also said KCM lacked a strategic survival business plan in view of the financial crisis the company was faced with.

Yaluma said a business plan to improve operations at KCM was developed to ramp up production from 132,000 metric tonnes of finished copper in 2013 to 178,000 by 2017.

"To achieve this, the company committed to inject US$250 million into production and US$30 million into smelter operations through improved flow of concentrates," Yaluma said.

"In addition, Vedanta committed itself to provide a bank guarantee of US$400 million towards the outstanding loans that KCM had on its books. The company also committed to settling the overdue credit balance to suppliers and contractors amounting to US$110 million and also to restart production at the closed open pits in Chingola"

"Employment for our people is secured," he said.

"KCM gave an undertaking and commitment that there will be no redundancies as a result of the implementation of the business plan. KCM is here today; KCM will be there tomorrow, and no employment is lost. Government to monitor KCM through quarterly reports and random checks and we are expecting first full report before the end of this month."

And the audit report revealed that KDMP was not expected to start producing copper until after 2019.

"KDMP was supposed to be completed somewhere in 2009 but now, they have pushed it to somewhere like five years," said Yaluma.

"For now, KDMP is not functioning but when it will come into being, it will boost lifespan of the mine...so, right now, the production ramp we have given here is based on existing facilities, not taking into consideration that seriously."

During the March 22-23 Jain International Trade Organisation connect conference in India, Anil Agarwal, the owner of Vedanta Resources, which is the majority shareholder in KCM, mocked the Zambian government over the US$25 million he paid to buy the mine, which is now giving him hundreds of millions of dollars in profit.

In a video released by activists from Foil Vedanta, Agarwal boasts of raking a minimum of US$500 million per year from the country's biggest mining operation, which he bought in 2005.

 

At 2:15 PM ,  MrK said...

Agarwal's mockery a painful slap in the face - Simuusa
By Misheck Wangwe, Darious Kapembwa and Kombe Mataka
Thu 22 May 2014, 14:01 CAT

ANIL Agarwal's mockery of Zambians over KCM is a painful slap in the face which cannot go without government reaction, says PF chairman for mines Wylbur Simuusa.

Meanwhile, Chishimba Kambwili says Agarwal's sentiments over KCM must be seriously investigated and appropriate action taken to protect the interests of Zambians in the mines.

Commenting on calls by key stakeholders for the government to act on revelations, through a leaked video by activists from Foil Vedanta, of Agarwal, the KCM owner, boasting that he rakes a minimum of US$500 million per year from the mine he bought in 2005 for US$25 million, Simuusa, who is PF Nchanga member of parliament in Chingola, said people were annoyed with the manner KCM was being managed.

Agarwal owns Vedanta Resources, which has a 69 per cent controlling stake in KCM.

Simuusa said calls for repossession of KCM were justified because the mine was being mismanaged by the majority shareholders but the matter needed to be handled carefully.

Simuusa, a mining engineer, further said Zambians should not panic over KCM because President Michael Sata's administration was addressing the matter appropriately.

He said the manner in which the previous MMD government handled the privatisation of the mines was extremely poor and embarrassing.

"The previous administration, the MMD, made very embarrassing decisions, the way they handled the takeovers by these foreign investors and the disposal of mining assets were handled very poorly. We need to work towards correcting these mistakes to ensure we protect the interests of Zambians in the mines because we still have copper and President Sata's administration is seriously looking into this issue," Simuusa said.

And Simuusa said the focus of the government was to ensure that KCM was properly managed so that Zambians, starting with those in Chingola, Chililabombwe and Nampundwe, where KCM had invested, begin to see the fruits of their mines again.

"Many people are talking about repossession and yes they are justified in their thinking but we need to be careful, look at best ways to proceed; is it for the government to take over the entire mining operation and run it? Is it to look for other investors? Overall, the objective is to ensure that the mine is properly run and managed," he said.

More...

 

At 4:18 PM ,  MrK said...

Audit report enough basis to retake KCM - Haabazoka
By Misheck Wangwe in Kitwe and Chiwoyu Sinyangwe in Lusaka
Fri 23 May 2014, 14:00 CAT

THE PF government must repossess KCM without further hesitation because the investors have exhibited serious acts of dishonesty in the management of the mines, says Dr Lubinda Haabazoka. And Mbita Chitala says the government should rebuy Konkola Copper Mines as it is allegedly insolvent.

A technical audit report has revealed glaring levels of mismanagement and dishonesty in the manner Vedanta Resources has been running KCM.
Commenting on the matter yesterday, Dr Haabazoka, a Copperbelt-based economist and senior lecturer of business studies at the Copperbelt University said the investors at KCM could not be trusted because they had failed to invest money in the mines, contrary to its initial promises when it took over the mine.

He said it was unacceptable that Vedanta Resources had failed to fulfill its obligations of investing in the mine when the government of the Republic of Zambia on the other hand was doing its best to create a favourable environment for them.

"This report is basis enough for the government to retake the mine and there is nothing to be afraid of because when we repossess, we are going to keep everything that is at the mine. The investors should not even get any equipment or anything because they have actually made more money than they even paid for the mine. They also inherited very good equipment that was left by Anglo-American before it left KCM around 2004," Dr Haabazoka said.

He said the country had capacity to repossess and run the mine looking at the mining expertise many Zambians had gained over the years.
Dr Haabazoka said the repossession, however, must be done with caution and within the legal framework that exists to avoid sending a bad picture to the outside world that foreign investors in Zambia were being intimidated.

"Again we need to remind the world that Zambia is the country that is governed by the rule of law and citizens must not be taken for granted. On the other hand, we will be reminding the world that Zambia is one of the best investment climates in Africa. We must demand mutual respect from investors," said Dr Haabazoka.

Separately, Dr Chitala said KCM was almost insolvent in spite of its chairman Anil Agarwal claiming he was making profits of more than US$500 million annually from a mine he never injected any Foreign Direct Investment into.

Dr Chitala said finance minister, Alexander Chikwanda, who holds a golden share on behalf of the country must use that constitutional authority immediately and cause the appointment of Forensic Auditors to audit the company for the period they have been running the mine.

 

At 4:18 PM ,  MrK said...

Continued...


"This is what any patriot who is sincere would do unless there is either contrary information or the process is less than transparent," Dr Chitala said.

"It is also strange that we have not heard anything from ZCCM-IH who are, in fact, shareholders and sit on the board of KCM Plc on behalf of the people of Zambia. Should their silence be interpreted as being accessories to the negligence or what?"

Dr Chitala advised the government to appoint a commission of enquiry to look into the affairs at KCM and recommend what should be done.
"The options for our country are few," said Chitala.

"We continue being abused and plundered with the danger of plunging our people in Chingola in a disaster or we exhibit boldness and patriotism and assume our rights in KCM Plc? It is possible for Zambia to rebuy the company for a dollar as it is allegedly insolvent and let a rejuvenated ZCCM IH or another Zambian entity run the mine for the benefit of our people."

The Mineworkers Union of Zambia early this week called for the nationalisation of KCM following revelations by Vedanta Resources chairman Anil Agarwal that the mine is giving him US$500 million every year in profits when he bought it for US$25 million.

 

At 6:54 PM ,  MrK said...

ZCTU joins calls to repossess KCM
By Misheck Wangwe in Kitwe
Sat 24 May 2014, 14:00 CAT

ZAMBIA Congress of Trade Unions says the government must immediately repossess KCM because Vedanta Resources, the majority shareholder in the mine, has been manipulating Zambians over their own minerals.
And the Mineworkers Union of Zambia says a technical audit report that has revealed serious mismanagement at KCM has vindicated the union's call for the government to repossess the mine.

A technical audit report has revealed glaring levels of mismanagement and dishonesty in the manner Vedanta Resources has been running Konkola Copper Mines.

In an interview yesterday, ZCTU general secretary, Roy Mwaba, said just as President Michael Sata's government repossessed 75 per cent shares in Zamtel that were dubiously sold to LapGreen Networks of Libya by the previous MMD administration, it should also retake KCM for exhibiting grave acts of dishonesty in the management of the mine.

He said the levels of mismanagement and dishonesty exhibited by the investors in KCM were extremely shocking.

"We were shocked when we received information on how that gentleman (Anil Agarwal) the owner of Vedanta Resources was boasting; that he rakes a minimum of US$500 million per year from the mine he bought in 2005 for US$25 million dollars. We are further shocked with the revelations of the technical audit report on KCM as reported in your paper The Post," Mwaba said.

He said the recent revelations about KCM showed clearly that the mine was making huge sums of money in terms of profits and Zambians were not getting anything tangible from it.

Mwaba said there was no way the country could continue to entertain an investor in its largest mines who did not care about the plight of the locals and the local economy.

"For us we are of the idea of government taking over KCM. Those mines in Chingola, Chililabombwe and Nampundwe where KCM operates, have huge potential in terms of production and ensuring that the country is developed to acceptable levels," he said.

Mwaba said based on the revelations of the audit report from the technical team on the mines, KCM must be repossessed without further hesitation.

"The other day we heard the Minister of Mines (Christopher Yaluma) saying KCM will not be repossessed. We know government is trying to ensure that they don't send a wrong signal to investors out there but investors who mean well, those genuine investors should not be scared of government nationalising KCM because in this case, it's the investor who has continued to abrogate the ethical standards," Mwaba said.

Meanwhile, Mineworkers Union of Zambia (MUZ) general secretary, Joseph Chewe, said as stakeholders charged with the responsibility of protecting the interests and the welfare of thousands of workers, the union was extremely concerned about the future of the mine.

Chewe, however, said the union in the next two weeks would start meeting the new chief executive officer at KCM, Steven Din, to share knowledge and chat the way forward on the future of the mine because production needed to continue to safeguard the jobs of many mineworkers in all Integrated Business Units (IBUs).

"This report has vindicated our earlier call on KCM. The new CEO, Din, has requested that we give each other as stakeholders chance to meet and discuss the challenges that have engulfed the mine. As a union, we are yet to present to him (Din) certain critical issues that they need to work on. We are going to have discussions and we will inform the public what will be decided after the meetings," said Chewe.

 

At 3:58 PM ,  MrK said...

Nawakwi urges govt to repossess KCM
By Misheck Wangwe in Kitwe
Tue 27 May 2014, 14:01 CAT

EDITH Nawakwi says it is high time the government stopped treating manipulative investors with kids' gloves.

Commenting on the recently released technical audit report that revealed glaring levels of mismanagement and dishonesty in the manner Vedanta Resources has been running Konkola Copper Mines, the FDD president said repossessing the mine was the best move the PF government can make to protect the country from further manipulation of its mineral wealth.

She said it was painful that many Zambians were sleeping on empty stomachs and living in poor conditions with no proper infrastructure within their communities, while investors were busy looting the country's rich mineral wealth.

Nawakwi said the country had its own mining experts and business administrators that could effectively run KCM, with positive benefits trickling down to ordinary Zambians.

"I don't see anyone in this Vedanta Group who knows the Nchanga and Konkola mines more than our own people like Pius Maambo, Dr Sixtus Mulenga, Shamutete and many others. As long as we don't immediately act on the revelations of the audit report that KCM was being mismanaged, and as long as we don't act as a country on those boastings we heard from Anil Agarwal, the owner of Vedanta Resources, who was saying that he rakes a minimum of US$500 million per year from the mine he bought in 2005 for US$25 million, we are not going anywhere as a country in the management of our mines," Nawakwi said.

She said if it was a Zambian company that had been caught defrauding the state on taxes, the Zambia Revenue Authority would have swiftly pounced on such a company and it would have been closed.

Nawakwi further said on her part, it was disappointing that every time she tried to advise senior government officials on issues of national interest such as management of the mines, the only response she was being given was that she was finance minister in the Chiluba administration and that she failed to address the challenges the sector was facing.

"We need to listen to each other if this country is to see meaningful development. I was finance minister at a time when there wasn't even US$500 at the central bank and the current minister Alexander Chikwanda can confirm that because he was an adviser at State House. There was absolutely no money in the economy and it was extremely bad that you couldn't even pay workers at the mine. We had to borrow money from the private sector to pay salaries," said Nawakwi.

"There is no man who can buy a house with a leaking roof and continue to live in it and complain about the situation without working on the roof. Zambians expect those ministers in the PF administration to deliver, to address the problems in the mines and they must act on KCM."

 

At 5:41 PM ,  MrK said...

(FOIL VEDANTA) Protests at Zambia High Commission demand KCM publish profits and taxes
April 9, 2014Uncategorizedlankoid

Zambia High Commission April 2014Today more than 40 protesters from Foil Vedanta, the Afrikan diaspora and other organisations in London chanted, played drums and held banners and placards outside the Zambia High Commission in London. They demanded that some of the revelations in Foil Vedanta’s groundbreaking report Copper Colonialism: British Miner Vedanta KCM and the copper loot of Zambia are addressed by Vedanta and the Zambian government, and asked the UK Government to formally investigate the company. Meanwhile Vedanta may be about to de-list from the London Stock Exchange as Chair Anil Agarwal becomes the 70% owner by buying up shares in the suffering company.

See the videos here! and here, and more pictures here.

and read the national debate following the demonstration in the Post Newspaper, Zambia:

London protestors call for KCM probe – Saturday 12th April
London protests on KCM a wake-up call – Milupi – Sunday 13th April
Govt can hold Vedanta to account – Thornton – Monday 14th April
SARW urges govt to keep an eye on KCM

Protesters at the Zambian High Commission today held a banner reading ‘Vedanta plunders, Zambia bleeds’ and placards asking the UK government to bring Anil Agarwal to trail. Loud and rhythmic drums and megaphone chants echoed in the streets during the vibrant demonstration. A delegation met the Deputy High Commissioner and handed over a copy of the report in the presence of Zambian TV and diplomats. The delegation pledged to assist the Zambian government in monitoring Vedanta and making links with its operations in other parts of the world to understand its pattern of operation. The protesters called for Vedanta and the Zambian government to release KCM’s annual reports, containing figures on profits and tax payment, which are currently kept secret. Figures from Vedanta’s own documents, revealed in the report, suggest that KCM made $362 million in 2013, contrary to its own claims that it was making a loss and may need to be saved by the Zambian government.

Zambia High Commission April 2014The report also highlighted that the true volumes of production and export from KCM are not known, and suggested that tax evasion scams such as transfer mis-pricing (undervaluing exports) and under-declaring production may be occurring. Protesters demanded an independent investigation into volumes of copper and cobalt mined, processed and exported from KCM’s plants, and their direction of export.

In the UK Foil Vedanta will continue to echo the calls of parliamentarians and financiers to formally investigate and bring Vedanta to trial for its environmental and humanitarian crimes and poor corporate governance.

They will also demand that Vedanta is 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.

Zambia High Commission April 2014Finally, they joined the calls of KCM employees and former employees in Zambia, demanding that retrenched workers are properly compensated for taking redundancy, and existing contract labourers are unionised. Following the visit of new Vedanta CEO Tom Albanese in February, newspapers reported that Vedanta has come to an agreement with the labour minister that retrenchments would be stopped and casual labourers unionised. Protesters in London will demand that this promise is fulfilled.

 

At 5:41 PM ,  MrK said...

Continued...

Since Foil Vedanta’s report was published in late January, Vedanta executives have visited Zambia more than four times, and claimed that the report is misleading and incorrect. However, as of yet no evidence has been presented by Vedanta to dispute the figures and other claims presented in the report.

Zambia High Commission April 2014Foil Vedanta’s Samarendra Das says:

“There is a clear pattern in the way this company operates across India – building projects without permissions, evading tax, de-unionising and illegal mining. They have also been found guilty of gross negligence leading to mass fatalities and major pollution incidents. The Government of Zambia must make KCM’s accounts and annual reports public. The Zambian people and the international community demand to know the volume of copper leaving KCM’s plants.”

Zambia High Commission April 2014Vedanta’s share price dropped by a third during 2013, prompting Chairman and majority owner Anil Agarwal to raise his stake in the company to 69.71% to keep the company afloat, and raising questions about whether Vedanta will soon de-list and become a private company. The loss of earnings was largely due to illegalities and local protests at Vedanta’s operations in India. In Goa, Vedanta’s iron ore mines have been stopped for the past year following revelations that they had exported 150 million tonnes of iron ore in 2010/11 while only declaring 7.6 million, their agreed export allowance. In Odisha, their Niyamgiri mine has been banned by the Ministry of Environment and Forests due to local opposition, costing them $10 billion in lost investments, and in Australia their Mount Lyell copper mine has been suspended following a series of fatal accidents.

Zambia High Commission April 2014Francis Wambuzi, Chair of the Former KCM Miners Association and resident of Wusakile township, located beside KCM’s Kitwe smelter says:

“KCM workers are being over taxed and under paid, and Vedanta has shifted the majority of workers onto contractual labour who’s union they do not recognise. Those who were retrenched from KCM this year as part of cutbacks have received peanuts in redundancy pay, just like the rest of the 752 retrenched workers in our group. Their factory chokes us with sulphur and we can’t even grow crops. Is this development?

We demand that Anil Agarwal answers our question: who is with-holding our severance benefits?”

Zambia High Commission April 2014100 workers staged a lock in on 17th March, refusing to come out of Shaft no 1 at KCM’s Chililabombwe mine because meals for overtime workers had been stopped by KCM management.

 

At 3:01 PM ,  MrK said...

(LUSAKATIMES) Hundreds demonstrate against KCM in Lusaka over tax controversy
Time Posted: May 30, 2014 8:32 am

Hundreds of protesters who marched to the Headquarters of Konkola Copper Mines in Lusaka Thursday afternoon

Hundreds of protesters who marched to the Headquarters of Konkola Copper Mines in Lusaka Thursday afternoon

Hundreds of protestors marched to the Headquarters of Konkola Copper Mines in Lusaka Thursday afternoon over the recent controversy regarding the mining giant’s tax practices.

The demonstrations were organised by ActionAid in Zambia.

The protest follows the YouTube release of a video of Vedanta Chairman Anil Agarwal apparently mocking Zambia at a trade conference over the giveaway price he paid for KCM assets.

In the video, Agarwal said: “We took over the company. It’s been nine years and since then, every year it is giving us a minimum of US$ 500 million plus US$ 1 billion every year…It has continuously giving back.”

Vedanta has claimed that Mr Agarwal’s comments were taken out of context and that nearly all the returns from KCM have been reinvested back into KCM.

However, the statement made no mention of the company’s profitability or tax payments.

ActionAid Zambia Country Director Pamela Chisanga said: “Zambia’s citizens are up in arms. If KCM is engaged in tax avoidance, it would be depriving Zambia of vital revenue through taxes and dividend payments to the government. Tax is vital, it pays for schools, hospitals and roads. When big companies don’t pay their fair share, Zambia’s citizens suffer. Vedanta and KCM must pay their fair share of tax. The Zambian government should carry out a forensic audit of KCM accounts and publish the results.”

Ms. Chisanga is asking the Zambian Government to go further than the Zambia Revenue Authority investigation and carry out a forensic audit of the company.

She said ActionAid believes transparency is vital to reveal whether Mr Agarwal’s claims are true and whether the Zambian Government needs to act to recover unpaid taxes from the company.

“Further, ActionAid is calling on the Zambian Government to introduce legislation to mandate the Auditor General to audit all mining companies in Zambia,” she said.

ActionAid in Zambia is also calling on the public to join the SMS action by texting their call to Government to act on the number 5577.

 

At 12:41 PM ,  MrK said...

(LUSAKATIMES Kwacha fall can be arrested by introduction of proper tax on the mining sector -HH
Time Posted: May 31, 2014 1:20 pm

The continual sliding of the Kwacha is not only an indication of the PF’s failure to run the economy, but it actually borders on economic sabotage.

It is unacceptable and embarrassing that since PF took over power in 2011, our currency can today be on free fall where it is always being declared as the worst performing currency in the world, as if there are no people running a government in place.

The excuse being given that the weakening of the currency is as a result of low copper prices does not hold water because the metal prices are way still higher than 2000s when the Kwacha was still doing better.

To cure the situation, the PF must first accept that among the reasons for the depreciation of the Kwacha are careless policies and wanton expenditure that are having a telling effect on our fledgingeconomy.

By deciding to tie all the revenues and borrowed money into infrastructure, PF have made our economy consume more than it is producing to generate more wealth.

Also other than the poor policies such as the introduction of statutory instruments 33 & 55 that killed our monetary policies, PF are also not generating enough revenue from the few productive sectors of theeconomy.

As UPND we insist that the Kwacha fall can also be arrested by introduction of proper tax on the mining sector such as windfall tax.

As country, whereas we need investment infrastructure, there is also need to heavily release money for the manufacturing sector so as to reduce our heavy dependency on imports, and therefore create jobs.

With the free-falling Kwacha, we have consigned our small scale businessmen such as cross border traders, motor vehicle parts dealers, those young men and women who make a living selling fruits and other imported items such as toys in our streets and roads to perpetual poverty.

At this rate, the prices of fuel, basic food prices, fertiliser and other agriculture inputs will continue going up thereby increasing the cost of living for our people.

Hakainde Hichilema
UPND President

 

At 1:40 PM ,  MrK said...

Protestors want Vedanta to come clean over KCM
By Gift Chanda
Sat 31 May 2014, 14:00 CAT

SCORES of people in Lusaka have demanded that Vedanta Resources leaves Zambia or comes clean over its tax affairs at KCM.

The fresh calls, sparked by a video showing Vedanta boss Anil Agarwal boasting that the firm has made up to US $1billion every year for nearly a decade from its Konkola Copper Mines subsidiary, were sounded on Thursday when hundreds of marchers descended on the mining giant's offices in Lusaka.

The mass protest, organised by Action Aid Zambia, saw several angry tax justice advocates shout slogans demanding that Vedanta pays its fair share of tax in the country.

The protesters, clad in T-shits describing Vedanta as a fake investor that must go, called on President Michael Sata to act to save the minerals that belong to Zambians.

Some motorists, incited by the demands made by the marchers, were seen joining the protest.

Mercy Mweene, a tax justice advocate, said the tax that Vedanta was denying Zambia could build many schools and hospitals.

"This is the more reason we want them to go if they are not willing to pay," she said, amid other protestors shouting "abash fake investors!"
Another activist, Rose Kafundulula, said it was better Zambia's mineral resource "remains in the ground rather than be exploited by heartless investors like Vedanta."

During the March 22-23 Jain International Trade Organisation connect conference in India, Agarwal, the owner of Vedanta Resources, which is the majority shareholder in KCM, mocked the Zambian government over the US$25 million he paid to buy the mine, which is now giving him hundreds of millions of dollars in profit.

In a video released by activists from Foil Vedanta, Agarwal boasted of raking a minimum of US$500 million per year from the country's biggest mining operation, which he bought in 2005.

Vedanta's last set of accounts show a US$15.9 million operating loss from its Zambian operations, with a US$63.6 million profit the year before.

 

At 1:40 PM ,  MrK said...

Continued...


But tax campaigners said Agarwal's comments, from a speech in Bangalore, cast doubt on Vedanta's transparency.

The Zambia Revenue Authority (ZRA) has already begun a probe into Vedanta but campaigners are demanded that the mining giant be subjected to a full audit to ensure that it is not funneling cash out of the country.

William Chilufya, national coordinator of CSO-SUN, said Zambia remained among the world's poorest nations with high levels of nutrition, despite being Africa's second largest copper producer.

"We firmly believe Zambia has potential to raise domestic resources and address serious problems of under nutrition - we have 46 per cent of under five children stunted. This is unacceptable," Chilifya said.

"We demand that Zambia increases domestic resources to fund nutrition interventions that make a difference and to do this, mines have to pay right taxes."

Official data previously estimated annual losses of US$2billion from tax avoidance.

"We are a country that can take care of its own problems if we collected taxes fairly from our natural resources," Mutale Wakunuma, the Platform for Social Protection country representative, said.

The civil society organisations also demanded that the government enacts legislation mandating the Auditor General to audit all mining companies in Zambia.

They also urged the government to identify and initiate actions to close loopholes in tax legislation and international treaties that make it possible for multinational companies to avoid paying their fair share of taxes in Zambia.

"The boss of Vedanta has been boasting publicly about making billions of dollars profits from our mines. Yet in Zambia, KCM say they make losses or little profit and so pay very little tax. We call on Vedanta and KCM to come clean about their tax affairs and pay fair share of tax," Sombo Chunda, Diakonia acting country representative, said.

 

At 1:43 PM ,  MrK said...

Scott calls for forensic audit on mining investors
By Misheck Wangwe in Kitwe
Sat 31 May 2014, 14:01 CAT

VICE-PRESIDENT Guy Scott says it's offensive for any foreign mine investor to stand on an international platform and boast about how much they have reaped out of Zambia.

Speaking yesterday at a luncheon held for him by Barrick Lumwana Mine at this year's 57th Copperbelt Mining, Agriculture and Commercial show in Kitwe, Dr Scott said the PF government would not takeover any mine, but would ensure that correct taxes were paid to the state.

With apparent reference to Anil Agarwal, the owner of KCM who was boasting that he rakes a minimum of US$500 million per year from the mine he bought in 2005 for US$25 million, Dr Scott said such utterances meant that the government must do a forensic audit on such mining investors.

"We would prefer the owners of the mines in Zambia not to stand up at international conferences in other parts of the world and say how much money they made out of Zambia because it just means we must do a forensic audit. The collector of taxes, the commissioner general from ZRA, will demand for an audit," Vice-President Scott said.

"If you are making boastful remarks in public, you don't expect us to be quiet about it. It's very offensive and let us be civilised in the manner we do business. This extraction of copper and mines must pay what belongs to Caesar, finish."

Dr Scott said the government had no intentions of taking over any mine.
He said the government wanted the mines to be operated by their owners and correct taxes paid.

He said in agriculture, the government would continue to invest heavily to increase the country's food basket.

And Barrick Lumwana Mine general manager Bill MacNevin said since entering Zambia in 2011, the company had focused on consolidating its operations to ensure that it operated a world class asset with a well developed team of the locals working with a culture of success.

 

At 4:59 PM ,  MrK said...

Sata warns KCM over dishonesty
By Bivan Saluseki
Mon 02 June 2014, 14:01 CAT

PRESIDENT Michael Sata has warned Konkola Copper Mines (KCM) against being dishonest. And President Sata has directed Bank of Zambia Governor, Dr Michael Gondwe, to explain to Zambians issues surrounding the fall of the kwacha.

In an interview at State House, President Sata said the mines were taking advantage of Zambians and the government would be forced to act, including nationalising them if they do not change their behaviour.

"The mines should be honest. Let me single the mine out…Vedanta and KCM should be honest. The Indians must be honest. The Zambians and miners themselves are saying 'let us nationalise KCM', but when the situation becomes alarming, the government will consider that. You tell them, I'm waiting for a report from the Ministry of Mines and as soon as I have the report, I will table the report in Cabinet," President Sata said.

He made these comments in reference to the fall of the kwacha.

"Let the copper which KCM is exporting from Zambia bring dollars back, because KCM is exporting so many things. Why should they export concentrates to go and be processed in South Africa? When there was Anglo American and other companies, the kwacha was very strong. But these Vedanta, who are the owners of KCM, let them be honest. If they are honest to us, the situation is going to be completely different."

KCM owner, Anil Agarwal, recently revealed that he bought the mine, whose asking prices was US$400 million, for a paltry US$25 million.

During the March 22 - 23 Jain International Trade Organisation connect conference in India, Agarwal, owner of Vedanta Resources, which is the majority shareholder in KCM, mocked the Zambian government over the US$25 million he paid to buy the mine, which is now giving him hundreds of millions of dollars in profit.

But President Sata said Zambians should be calm because the government was heeding people's complaints.

"What the kwacha is going through, the businessmen and mines are taking advantage. There is nothing wrong with the kwacha. The mines are taking advantage of us. The Bank of Zambia says the kwacha fall is driven by speculative behaviour, people should avoid speculation," he said.

"You see, Zambia had a much stronger currency even before independence. But why did Zambia have a stronger currency? We had more honest entrepreneurs. We had more honest businessmen because they exported and they brought the Dollars back to Zambia. At the moment, people want dollars and when you want dollars, you can't find them anywhere." he added. President Sata said to strengthen the kwacha, the government would look at policies that would improve the country's ability to export.

"If anyone wants to strengthen the kwacha, we have so many things which we can export as Zambians," he observed.

President Sata directed Dr Gondwe to explain to Zambians what was happening with the kwacha.

On Thursday, BoZ urged people to desist from speculating with the kwacha to halt the current free fall of the local currency.

 

At 5:00 PM ,  MrK said...

WHAT ARE THE LESSONS FROM THE KCM REVELATION?
By THE PRESS FREEDOM COMMITTEE
Mon 02 June 2014, 11:20 CAT

THE PRESS FREEDOM COMMITTEE OF THE POST PRESENTS A PUBLIC DISCUSSION ON: WHAT ARE THE LESSONS FROM THE KCM REVELATION?

DISCUSSANTS:
1. HON. CHRISTOPHER YALUMA - MINISTER OF MINES, ENERGY AND WATER DEVELOPMENT
2. DR. MATHIAS MPHANDE - UNZA LECTURER AND MINERAL EXPERT
3. DR. MBITA CHITALA - PUBLIC POLICY CONSULTANT

DATE: MONDAY, JUNE 2, 2014
VENUE: SOUTHERN SUN HOTEL, LUSAKA
TIME: 18:00 HRS
ADMISSION: FREE FREE FREE!
CASH BAR!!!!

 

At 3:54 PM ,  MrK said...

Nawakwi urges ZRA to send KCM tax bill
By Moses Kuwema
Tue 03 June 2014, 14:01 CAT

FDD president Edith Nawakwi says there is no need for President Michael Sata to wait for a report from the Ministry of Mines over operations of Konkola Copper Mines but instead present the mine with a bill.

During a briefing yesterday at the party secretariat, Nawakwi said the matter surrounding KCM was very clear because all the information which the government required was in the open.

"There is no need to wait for a report, just send KCM a bill. That way, you won't even have to nationalise the mine. If we nationalise the mine, KCM will go back without paying money which they owe us," Nawakwi said.

Nawakwi said in the event that KCM failed to pay the money it owed Zambians, the government would then have a clear case of getting back its assets.

"So for now, let KCM just pay the bill and I am sure they will pay in dollars... this might help stabilise the Kwacha. So, let ZRA send a bill to KCM," she said.

KCM owner, Anil Agarwal, recently revealed that he bought the mine, whose asking price was US$ 400 million, for a paltry US$25 million.

During a March 22-23 Jain International Trade Organisation connect conference in India, Agarwal, owner of Vedanta Resources, which is the majority shareholder in KCM, mocked the Zambian government over the US$25 million he paid to buy the mine, which is now giving him hundreds of millions of dollars in profit.

And Nawakwi said the board of the ZCCM-IH should have been fired immediately Agarwal made the revelations..

She accused the board of conniving with mining houses to keep Zambians in the dark on how much money the mines were making.

"If I was President Sata, I would have fired the mines minister first. ZCCM-IH is supposed to advise the government on how much KCM is making, but it seems these people have been colluding with the mines to defraud the country. The appointment of people to these boards should be on merit, but most of these people we have on these boards just sit and wait for allowances," Nawakwi said.

And Nawakwi asked Bank of Zambia governor Dr Michael Gondwe to immediately step down because the Zambian people no longer required "his poor services".

She said if the depreciation of the Kwacha was not quickly arrested, the country might find itself in the Zimbabwe or Greek situation because the purchasing power of the local currency was evaporating with each day that passes.

Nawakwi said it was plain for everyone that Dr Gondwe lacked the basic understanding of the economic matrix, let alone how the financial market operates.

She said the Kwacha had continued to lose its value because of the lack of fiscal and monetary policy by the PF government, coupled with what she termed as ill- prepared individuals who were managing the country's economy.

Meanwhile, Nawakwi called on the government to immediately lift the wage freeze and honour the 2013 collective agreement.

 

At 10:23 PM ,  MrK said...

COMMENT - More corruption from minister Yaluma. KCM have been caught declaring a loss while making billions of dollars in taxes, and now they are allowed to be part of the solution? And they're sent a tax bill on what? $15 billion or so in profits they evaded taxes on? - MrK

Govt wants more money from KCM
By Moses Kuwema, Stuart Lisulo, Chiwoyu Sinyangwe
Wed 04 June 2014, 14:01 CAT

VICE-PRESIDENT Dr Guy Scott says the government is already working with the Zambia Revenue Authority to send Konkola Copper Mines a tax bill.

And mines minister Christopher Yaluma says the MMD regime allowed Vedanta Resources to run loose like stray dogs on their way to running down KCM.

Commenting on Forum for Democracy and Development president, Edith Nawakwi's statement that there was no need for President Michael Sata to wait for a report from the Ministry of Mines over the operations of KCM but instead present the mine with a bill, Vice-President Scott said the government through the ZRA was already working on that.

"Well, I thought we had made it very clear that we are working with the tax authorities," Vice-President Scott said.

He advised Nawakwi to concentrate on finding members for her party.

"Anyway, never mind, just tell her to find members for her defunct party because she is a lone voice," said Vice-President Scott.

Speaking on Monday during the Press Freedom Committee of The Post organised public discussion at Southern Sun Hotel under the theme 'What are the Lessons from KCM Revelations', Yaluma acknowledged that while Konkola Copper Mines (KCM) was grossly mismanaged, commitments have since been made by Vedanta Resources in a business improvement plan to revitalise operations.

"KCM were like a stray dog that was let loose out of the leach, who did whatever they wanted, but we have tied them. The business improvement plan was committed by Vedanta, in writing to help KCM raise fresh liquidity to the extent of US$250 million for meeting operational requirements and settling out overdue creditors. They have already settled US$100 million at the time of our meeting in February 2014," Yaluma said.

He said several other commitments such as the provision of a US$400 million bank guarantee for KCM loans were almost completed, and the overdue creditor balance of US$111 million expected to be settled last April also cleared.

"All of these were time-bound and the date was the April 21, and they have done a lot. We will be having our quarterly meeting to tell us how much they have achieved against the plan," he said.

 

At 10:24 PM ,  MrK said...

Continued...

He said KCM has been bound to report on performance benchmarks on a quarterly basis to ensure that the company fulfills its commitments to turn around its fortunes.

"They are reporting on a quarterly basis just to measure actual targets on all the issues identified," he said.

"KCM have been bound to report on performance on a quarterly basis to ensure that the company fulfils the undertaking they committed to do in order to turn around the business and achieve the growth plan upon which they had acquired the mine from government."

Yaluma said despite the mismanagement by Vedanta Resources, KCM had a lot of potential.

"There is a lot of potential to ensure that KCM is back on track," Yaluma said.

"They Vedanta Resources were let loose; it was like a stray dog out of the leach and they did whatever they wanted but we have tied them and we will ensure they fulfil their obligations to KCM."

Yaluma said the government had no plans to nationalise KCM as it did not currently have money to run the asset which was almost insolvent.

"If we were to nationalise the mine, it won't only be US$1.6 billion because that is known debt," he said.

"You need monies again to forge forward the operations so you would need another US$1 billion just to go and resuscitate the mine; is that justified? That money will come from all of us through tax!" he said.

Yaluma, however, said the government might consider nationalising KCM if Vedanta Resources failed to live up to its commitment of resuscitating operations of the troubled mining giant.

He said following glaring revelations of dishonesty and mismanagement of KCM by Vedanta, the government would conduct audits of foreign-owned mining units in the country.

Yaluma said said the greatest lesson for Zambia from the Vedanta fiasco was that investors needed constant and regular supervision to ensure the pledges on which they got investment licences and incentives were fulfilled.

Yaluma said Vedanta had been allowed to run down and sweat Konkola Copper Mines' asset due to lack of supervision by the previous regime.

"After committing them to starting up a business plan, quarterly, they will be required to report on performance to government just to measure the actual versus the targets on issues we have identified," he said.
"The government wants to ensure Vedanta injects the required investment into KCM and develop Konkola Deep Mining Project so that it can start giving the mine 6 million tonnes of copper and also extend the life of the mine by another 36 years."

 

At 1:21 PM ,  MrK said...

(LUSAKATIMES) Action Aid Zambia welcome ZRA forensic audit at KCM
Time Posted: June 7, 2014 9:23 am

Action Aid Zambia has welcomed the move by the Zambia Revenue Authority (ZRA) to undertake a forensic audit at Konkola Copper Mine covering the period 2007 to 2013.

Action Aid Country Director Pamela Chisanga has told QFM in an interview that Civil Society Organizations have been calling on government to undertake a comprehensive forensic audit of the mining firm and other multinational companies.

Ms. Chisanga says the forensic audit is long overdue, stating that it is high time the people of Zambia started benefiting from country’s mineral wealth.

She adds that ZRA should also involve the office of the auditor general in its audit to ensure that a good audit report is produced.

Ms. Chisanga notes that ZRA should scrutinize all the transactions by KCM such as the money the mine is making and the payments it has been making.

She further states that ZRA should consider extending the forensic audit to other mining firms so that government begins to get a fair share from the mines.

 

At 1:22 PM ,  MrK said...

(LUSAKATIMES) Yaluma advises Nawakwi to study KCM report
Time Posted: June 7, 2014 9:29 am

Mines Minister Christopher Yaluma has advised Forum for Democracy and Development (FDD) President Edith Nawakwi to study the Konkola Copper Mines (KCM) report prepared after investigations conducted into the mine’s operations instead of making blank statements.

The FDD leader has accused the PF government of not carrying out thorough audits at mining companies in the country, the reason why Vedanta Chairman Anil Argawal boasted of how he has been making huge profits at KCM.

But Mr. Yaluma has accused Ms Nawakwi of not understanding the real issues that surround the operations of KCM.

Mr. Yaluma says it is not a matter of opposing what other people say, but rather a matter of understanding real issues that surround the mining sector.

Mr. Yaluma says if Ms Nawakwi has read the report, she would not have been making such inattentive statements.

He has since advised and encouraged the FDD leader to get the report and study it thoroughly so that she understands the issues surrounding the operations of KCM.

 

At 2:03 PM ,  MrK said...

(DAILY MAIL ZM) State urged to act on KCM
By JIMMY CHIBUYE

THE Civil Society Organisations Extractive Industries Transparency Initiative (CSO-EITI) forum says Government should take appropriate action against Konkola Copper Mines (KCM) for alleged dishonesty.
CSO-EITI co-ordinator Marriot Nyangu said in a statement on Tuesday that Government should take revelations by Vedanta Resources owner Anil Agarwal and the technical audit report seriously.

“We also call upon all EITI shareholders to continue pushing for a transparent, accountable and inclusive mining sector,” Mr Nyangu said.
He said Zambia needs to look at KCM’s shareholding structure, conditions and agreements to preserve its right to its resources.

Mr Nyangu said despite all the incentives that the mines have been given, their contribution to the country’s gross domestic product (GDP) is still low at 10 percent.

He said the mining companies should be monitored for alleged under-reporting on revenue, tax incentives claims, tax avoidance and deliberate mismanagement.

And Mr Nyangu has also appealed to Minister of Mines, Energy and Water Development Christopher Yaluma to appoint new members to the EITI council with a new mandate for it to be effective.

He said the mandate to CSO representatives on the EITI was given in November last year and elapsed, hence the need to appoint new members.
Mr Nyangu said there has not been enough coordination in monitoring by the civil society represented on the EITI Council in Zambia due to lack of reporting mechanism to CSOs that gave the mandate.

He said there is need for stakeholders to look at the EITI’s effectiveness and reporting mechanisms for accountability’s sake.

 

At 2:05 PM ,  MrK said...

(ZAMBIA REPORTS) Govt Pretense on KCM Shocks Lawmaker
Nse Udoh | June 6, 2014

Parliamentary Accounts Committee chairperson Vincent Mwale says it is shocking that government wants to pretend that they are shocked by the revelation by Vedanta boss Anil Agarwal that he bought Konkola Copper Mines for a song.

Mwale said there is a lot of pretense by Zambians despite having been warned several times by Non Governmental Organizations that the mines were not remitting enough funds to the Zambian treasury.

“There is a lot of pretense that has been going on, we have known for a long time as Zambians because there are a lot of civil societies that have said we are not getting anything from the mines,” he said.

“And the mining companies are making false declarations of how much they are making, false declarations of equipments they are bringing in, we have known this as a country for a long time. “

Mwale added: “What the Vedanta boss said is not new, it is actually a reminder of the things that we have known for a long time.”

Recently Agarwal told an audience in his native India that he bought KCM at US$25 million instead of US$400 million which was its true value.

 

At 2:21 PM ,  MrK said...

(LUSAKATIMES) FQM Sentinel mine could contribute $441 million to the country’s treasury in 2019-Saasa
Time Posted: June 9, 2014 8:33 am

FIRST Quantum Minerals (FQM) Sentinel mine is estimated to contribute US$441 million to the country’s treasury in 2019, economist, Oliver Saasa has said.

Professor Saasa in a case study titled ‘Economic Impact of the Trident Project’, said it was additionally estimated that, in 2015, Sentinel would pay US$69 million in mineral royalty tax, rising to US$97 million and US$107 million in 2016 and 2017, respectively.

“Sentinel is projected to reach its peak in tax payments (royalty, corporate tax and variable profit tax) in 2019 when it will contribute to the national Treasury an estimatedUS $441 million in corporate tax alone,” Prof Saasa said.

Prof Saasa said although the level would subsequently taper down, the mine would continue to pay over the 2020-2027 period an average of US$272 million per annum in corporate tax.

He said Sentinel would also be paying an average of US$106 million annually in royalty tax, if it remained at six percent and an average variable profit tax of US$115 million over the same period.

On employment creation, Prof Saasa said the mining sector in North Western Province was the largest formal sector employer and it was the expectation that the Trident Project would significantly contribute to this.

“A total of 10,000 people are expected to benefit from the Project through employment, that is through direct, indirect and multiplier jobs. As of September 2013, more than 2,000 Zambians of which more than 1,400 from North West Province, were employed at the on-going construction of Sentinel,” he said.

He observed that there existed, in the Trident Project area, very low levels of formal education and inadequate employable skills amongst the people that reside around the Kalumbila mine project.

He said this made it difficult for the local population to be employed by the project and explained why it had remained a challenge for local people around Kalumbila to establish meaningful business activities that could improve people’s livelihoods.

“It is, nevertheless, the plan that the initial years of construction and production at Trident would help upscale the skills base among the immediate local population in Kalumbila. On-the-job training, for example, is one if the priority areas of the project,” he said.

He said the mining sector accounts for the largest share of Community Social Responsibility (CSR) compared to all the other sectors in Zambia, with over the 2010-2011 period, US$31.4 million was spent on CSR, followed with a huge gap by companies in real estate at US$1.2 million, those in professional, scientific and technical fields contributed US$1.1 million while deposit-taking firms such as banks contributed US$1.1 million.

He said FQM had already committed more than K128 million to CSR projects and entitlements at the Trident Project.

 

At 5:54 PM ,  MrK said...

(LUSAKATIMES) Katele favours revision of mining agreements
Time Posted: June 9, 2014 4:20 pm

Former Finance Minister Katele Kalumba has encouraged members of public to take advantage of the commencement of the preparations for 2015 Budget by making submissions that will confront the current economic situation in the country.

The Ministry of Finance announced the commencement of the preparations for the 2015 National Budget and the 2015 -2017 Medium Term Expenditure Framework (MTEF) to which members of the public have been encouraged to make submissions on issues related to Tax and Non-Tax Revenue matters before July 31 2014 deadline.

Dr. Kalumba has observed that with Zambia’s current economic performance, anyone coming from outside the country would have a mixed and uncertain assessment of the country’s future.

He said his observation is based on the fact that in spite of how the country’s economy is performing, the informal sector is booming especially in housing and estate development while the formal sector is stagnating and also deteriorating.

Dr Kalumba told Qfm News in an interview that this requires confronting without necessarily creating political costs to the government.

He has also called upon members of the public to demand a tax regime in line with revelations of what the country’s Mines are able to make per year going by the recent disclosure that Konkola Cooper Mines is able to make US$500 million dollars per year in profits.

Dr Kalumba said government should be encouraged to revise the current mining agreements signed with the mines and examine the possibility of renegotiating the tax regime.

Dr. Kalumba also said there is need to examine other sectors not adequately taxed such as the Tourism sector without necessary changing the instruments that are being used to attract investments in the sector.

Dr. Kalumba said he holds the position that the Agriculture sector should be given more incentives.

He also advised that government considers the economic situation in the country and ensures that workers are well paid to meet the cost of living in the country.

 

At 1:35 PM ,  MrK said...

Refusal to reintroduce windfall tax frustrating - Nawakwi
By Misheck Wangwe in Kitwe
Wed 11 June 2014, 14:01 CAT

SOME colleagues in the government are suffering from a syndrome of financial illiteracy on how much the country can benefit from the mines, hence their refusal to reintroduce windfall tax, says Edith Nawakwi.

Speaking when she featured on a special programme on Kitwe's Radio Icengelo yesterday, Nawakwi, the FDD president, said the government's refusal to act on calls for the reintroduction of windfall tax and other fiscal measures for the mining sector was extremely frustrating.

She said the PF government must heed the cries of Zambians on the need for windfall tax so that the country could begin to get appropriate taxes from its mineral wealth.

"Our brothers and sisters in government are completely adamant to the advice of both the local people and the international community. Even the World Bank has come forward and said they can help us get more money from our mineral resources. Unfortunately, you can take a horse to the river but you can't force it to drink water. Our horse, which is the government, is not able to listen to its own people on how we can get more money from the mines to reduce the escalating levels of poverty," Nawakwi.

"In 2008, Chile, which is number one in copper production in the world, earned US$12 billion in taxes alone from the mining houses. We are number two; I heard the announcement that one of the mining firms, Mopani would give us US$442 million dollars between now and 2019. Now five years divide by 400, it's basically US$80 million per year," Nawakwi said.

"Unless you have a government that understands that this wealth is for the benefit of Zambians, we will continue getting almost nothing."

She said it was sad that Zambians had been crying for appropriate taxes and on the other hand, the owner of KCM, which was one of the largest mining operations in Zambia, Anil Argawal, was boasting at an international platform that he rakes a minimum of US$500 million per year from the mine he bought in 2005 for US $ 25 million.

"Those board members in ZCCM-IH, what do they do when they sit on the boards of these mines? Do they just go there to drink tea and get allowances? We have some shares in KCM and these other mines and ZCCM-IH represents us. Do they know what they are doing? What is the quality of people representing us at these mining conglomerates? Let's find people that understand mining to sit on these boards," she said.

The Zambia Revenue Authority is conducting a forensic audit of KCM.

 

At 1:37 PM ,  MrK said...

Refusal to reintroduce windfall tax frustrating - Nawakwi
By Misheck Wangwe in Kitwe
Wed 11 June 2014, 14:01 CAT

SOME colleagues in the government are suffering from a syndrome of financial illiteracy on how much the country can benefit from the mines, hence their refusal to reintroduce windfall tax, says Edith Nawakwi.

Speaking when she featured on a special programme on Kitwe's Radio Icengelo yesterday, Nawakwi, the FDD president, said the government's refusal to act on calls for the reintroduction of windfall tax and other fiscal measures for the mining sector was extremely frustrating.

She said the PF government must heed the cries of Zambians on the need for windfall tax so that the country could begin to get appropriate taxes from its mineral wealth.

"Our brothers and sisters in government are completely adamant to the advice of both the local people and the international community. Even the World Bank has come forward and said they can help us get more money from our mineral resources. Unfortunately, you can take a horse to the river but you can't force it to drink water. Our horse, which is the government, is not able to listen to its own people on how we can get more money from the mines to reduce the escalating levels of poverty," Nawakwi.

"In 2008, Chile, which is number one in copper production in the world, earned US$12 billion in taxes alone from the mining houses. We are number two; I heard the announcement that one of the mining firms, Mopani would give us US$442 million dollars between now and 2019. Now five years divide by 400, it's basically US$80 million per year," Nawakwi said.

"Unless you have a government that understands that this wealth is for the benefit of Zambians, we will continue getting almost nothing."

She said it was sad that Zambians had been crying for appropriate taxes and on the other hand, the owner of KCM, which was one of the largest mining operations in Zambia, Anil Argawal, was boasting at an international platform that he rakes a minimum of US$500 million per year from the mine he bought in 2005 for US $ 25 million.

"Those board members in ZCCM-IH, what do they do when they sit on the boards of these mines? Do they just go there to drink tea and get allowances? We have some shares in KCM and these other mines and ZCCM-IH represents us. Do they know what they are doing? What is the quality of people representing us at these mining conglomerates? Let's find people that understand mining to sit on these boards," she said.

The Zambia Revenue Authority is conducting a forensic audit of KCM.

 

At 3:41 AM ,  MrK said...

(Letters To The Post) KCM audit is welcome
By Wisdom Muyunda, Chingola
Fri 13 June 2014, 14:00 CAT

I write to commend the government on the first step taken to recover taxes from KCM by sending a letter to KCM management informing the firm of an impending forensic audit.This has shown that the government is willing to recover, for the Zambians, what is due to them.

My source of worry, however, is that while all the talk of unpaid taxes to the Zambian treasury has been going on, I am yet to hear a comment from our accountants through the holding body ZICA. What is even more worrying is why ZICA has kept quiet, while its members in KCM are being found wanting by virtue of the unfolding revelations.

Do we, as a nation, have qualified tax experts? Of course, ZICA has its own story to tell, but what is certain is that when issues bordering on a professional body's integrity are raised, the masses need to hear such bodies speak out and detail us with what is actually in the offing.

I have also noted that while some colleges and universities outside Zambia take taxation as a profession on its own, Zambian colleges and universities take it merely as a component of some courses, thereby posing challenges to most accountants on in-depth tax matters. This is why multinational firms will always come with their own tax experts to deal with tax issues at the expense of Zambian accountants. So, as ZRA goes for forensic audit in KCM, we expect a lot of hurdles. However, we wish the team all the best.

 

At 3:32 AM ,  MrK said...

Minerals haven't helped in reducing poverty - EFZ
By Abigail Chaponda in Ndola
Sat 14 June 2014, 14:00 CAT

MINERAL wealth has not contributed to reduction in poverty levels in the country, says Evangelical Fellowship of Zambia board chairman Lawrence Temfwe.

During a meeting at Mukuba Hotel in Ndola on Thursday to discuss the third Zambia Alternative Mining Indaba to be held next week, Reverend Temfwe said poverty levels in Zambia had continued going up instead of coming down.

"Despite marked improvements in economic performance and huge investment in the mining sector, Zambia has yet to achieve significant gains in social and human development. Social indicators have shown not only modest improvements, but high unemployment, particularly among the youth, while income inequalities have widened. The subsequent growth of the extractive industry in Zambia has triggered a myriad of social and environmental conflicts," he said.

Next week's meeting, under the theme 'Our minerals, our future, putting local communities first', will be held in Ndola.

He said Zambia, despite being a resource-rich country, was among the poor performers.

He said one of the major reasons for the failure to reduce poverty was the high inequality levels and poor wealth distribution mechanisms in the country.

Rev Temfwe said apart from the country slowing the pace of poverty reduction, highly skewed patterns of income distribution also act as a brake on growth.

"This is because extreme inequality restricts the development of markets, undermines investment opportunities and limits the ability of poor people to secure access to the resources they need to raise productivity. There is evidence that economic disparities in Zambia are rising with economic growth, dampening the potential for poverty reduction," he said.

He said in Zambia, the rural poor had been cut adrift from economic growth, hence the sharp increase in poverty.

Rev Temfwe said marked regional disparities in access to basic services reinforced income inequalities by heightening the vulnerabilities faced by poor households and limiting access to productive infrastructure.

 

At 3:33 AM ,  MrK said...

Continued...

"Other explanations for why high growth has reduced poverty by so little percentage in Zambia include; inequitable public spending and the neglect of regions and sectors with concentrated poverty. The government has failed to use revenue to support wider development strategies. This partly explains the weak poverty-reduction effects in spite of the rise in economic growth. There is limited revenue collection. The degree to which our government is able to capture, for the public purse, a fair share of the export wealth generated by minerals depends on the efficiency of taxation, and on the practices of investors. Zambia is losing revenues as a result of weak management of concessions, lack of aggressive tax planning, tax evasion and corrupt practices," he said.

He further said there was weak linkages between the resource sector and the rest of the economy.

And Rev Temfwe said the civil society believe and contest that mineral wealth and extraction was one important source with huge revenue generation opportunities that African governments could exploit.

"African civil society is calling for fair taxation of companies, a lower tax burden for the poor, for African assets abroad to be traced and for the African elite to be effectively taxed. There is also a renewed interest in tax reform from donors as aid budgets fall in these austerity times. The African Economic Outlook (AEO)'s 2013 report highlights how growth has been accompanied by insufficient poverty reduction, persisting unemployment and increased income inequalities. Debates about taxation and its role in reducing income inequality are beginning to gain traction," said Rev Temfwe.

 

At 2:11 PM ,  MrK said...

Lembalemba defends sale of KCM at $25m
By Stuart Lisulo
Mon 16 June 2014, 14:00 CAT

COMMENT - "And in a separate interview, Nshitima said the fact that KCM over time had been cheating on taxes and abrogated its development agreement made the contract void." The best description an assessment I have read in a long time. - MrK

KAUNDA Lembalemba says the MMD government was desperate to sell Konkola Copper Mines for the paltry US$25 million as there were no alternative investors. And certified fraud examiner Cheleman Nshitima echoed calls to nationalise KCM to safeguard the country's interest.

In an interview in Lusaka, Lembalemba, who served as mines minister during the sale of KCM to Vedanta Resources in 2005, defended the MMD regime's handling of the sale, saying there were no alternative investors willing to buy the mine at a time the country was highly indebted.

"The government was desperate to sell the mine because we had no money to put in the continuation of mining operations at that place. Our negotiating team failed to get what Anil Agarwal knew could have been the correct price," Lembalemba said.

He said Agarwal's statement that KCM was making in excess of US$500 million was an indication of how much the sale was 'hurting' his conscience.

"We were pressed against the wall because of the situation that was left by Anglo American Corporation. So I personally believe that Agarwal saw that we were in a fix, hence offering what he offered. It now seems his conscience has not allowed him to keep quiet and this is a very big lesson to all of us who are in a position of running public affairs," he said.

Lembalemba, however, said the outlook for mining in the country was very good because the government was putting right what previous regimes failed to do.

"The outlook looks very good because the government has tried their level best to put right things which were not put right at the advent of privatisation," he said.

And in a separate interview, Nshitima said the fact that KCM over time had been cheating on taxes and abrogated its development agreement made the contract void.

He further said the revelations by Agarwal had given the country an opportunity to revamp the entire mining sector to improve compliance in terms of taxation and operational performance.

"What has happened is a 'blessing in disguise' because it has given us this opportunity to revamp the entire mining sector and to be good monitors. Right now these mines operate like cartels; other mines are also doing the same," said Nshitima.

 

At 1:04 PM ,  MrK said...

(LUSAKATIMES) Government to extend KCM forensic audit to all mining companies in the count
Time Posted: June 27, 2014 6:10 am

THE Government will extend forensic audits to all mining companies in the country to ensure they operated in a transparent manner, Mines, Energy and Water Development Minister, Christopher Yaluma has told Parliament.

Mr Yaluma informed the House during yesterday’s session that it was important audit works were conducted in the mining sector in the wake of a forensic audit at Zambia’s mine giant, Konkola Copper Mines (KCM), following indications of mismanagement by major shareholders, Vedanta Resources.

“Government shall penalise any fraudulent mining company to prevent loss of the much-needed revenue and save jobs. Government will be undertaking regular audits at all the mines to ensure compliance and avoid the recurrence of the situation at KCM,” Mr Yaluma said.

Mr Yaluma said this in a ministerial statement based on the attempt by KCM to lay off 1,529 employees as well as media reports in which Vedanta chairperson Anil Agarwal was quoted as having said that he was making US$500 million from KCM.

Mr Agarwal allegedly boasted that he bought KCM for a song, at $25 million, from the asking price of $400 mllion.

In view of Mr Agarwal’s remarks, Mr Yaluma said KCM was currently undergoing a forensic audit by the Zambia Revenue Authority (ZRA) after a directive from Vice-President Guy Scott recently.

He said the decision not to nationalise KCM was taken in the best interest of the nation as such an action would have sent wrong signals portraying Zambia’s investment climate as unstable.

Mr Yaluma reiterated that it was against Government’s policy to nationalise as it wanted an economy driven by the private sector.

He said following the submission of the audit report, the Government engaged KCM’s major shareholders, Vedanta Resources, to find means and ways of steering the company out of insolvency.

“In view of the findings, the audit team recommended that Government should not take over KCM as doing so would mean nationalisation, which would be against Government policy of having a private sector-driven economy.

“This could also have a negative impact on the investment environment in Zambia. Government should ensure Vedanta injects the required funds into KCM to avoid liquidation and consequent job losses,” Mr Yaluma said.

He said Vedanta was given targets to meet following a process of dialogue entailing increasing production from 132,318 tonnes of finished Copper in 2013 to 178,994 tonnes by 2017.

Mr Yaluma said to achieve the set target, Vedanta committed to inject $250 million into production and $30 million into smelter operations to improve the flow of concentrates.

Additionally, the mine owners agreed to provide a bank guarantee of $400 million towards the outstanding loans that it owed.

Other commitments meant settling of the overdue credit balance owed to its suppliers and contractors amounting to $111million and re-starting production at the closed open pits by procuring its own equipment.

 

At 12:52 AM ,  MrK said...

Vedanta promises to cooperate on KCM tax probe
By Gift Chanda
Sun 29 June 2014, 14:00 CAT

LONDON-LISTED Vedanta Resources Plc will cooperate with the government over a tax probe at KCM, the company's chief executive said on Friday.

KCM is subject of an audit of its books following a video released by activists from Foil Vedanta showing the mining giant's owner, Anil Agarwal, boasting of raking a minimum of US$500 million per year from the country's biggest mining operation, which he bought in 2005 for US$25 million.

Vedanta's last set of accounts show a US$15.9 million operating loss from its Zambian operations, with a US$63.6 million profit the year before.

"What we have seen in the past few weeks in Zambia is the government calling for a forensic audit of the accounts of KCM and more recently an audit of all the mines in the Copperbelt," Vedanta Resources Plc chief executive, Tom Albanese, said.

"When the audit comes forth, we look forward to cooperating with the government. We are completely transparent."

Successive Zambian governments have complained that they felt mining companies were not paying their fair share of taxes.

Albanese told Reuters that Vedanta Resources remained committed to its "under-performing" KCM despite disputes with the government over lay-offs and a looming audit of its books.

 

At 1:29 PM ,  MrK said...

kcm cheating on copper exports
By Mwala Kalaluka
Fri 04 July 2014, 14:00 CAT

THE High Court of Justice in London has heard that Vedanta Resources-owned Konkola Copper Mines is cheating on its copper exports prices by under-pricing and selling it through subsidiaries in Dubai.
The assertions pertaining to KCM's business practices came up during a hearing on Wednesday at the Royal Courts of Justice in London, where the High Court of Justice held that the London Court of International Arbitration's order to KCM to pay U&M Mining Zambia Limited US$14,619,900.12 and 15,155.23 British pounds over disputed copper mining agreements was valid and could be enforced in Zambia.

This is in a matter before Justice Eder in the commercial court of the High Court of Justice Queen's Bench Division in London, where KCM was the claimant and U&M Mining Zambia Limited the defendant.

Following three arbitration awards dating as far back as September 2013 that the London Court of International Arbitration (LCIA) granted to U&M in the matter, KCM took action in the Zambian courts to challenge the arbitration awards.

According to Justice Eder's judgment, U&M Mining Zambia Limited filed applications in the High Court of Justice in London, stating that there was cogent evidence that KCM was being deliberately grounded and that Vedanta may be preparing to abandon it along with its substantial debt in the region of US$1.5 billion.

The court heard that the juxtaposition of KCM's apparently poor position on paper with owner Anil Agarwal's statement that KCM was giving Vedanta US$500 million profit every year since 2009, was obviously troubling.

"The accounts for KCM do not make any provision for any such payment. This may be occurring through "transfer mis-pricing", i.e. by the selling of copper to an associated company at an undervalue allowing the seller to declare less profit (or even a loss) and reduce its tax liability. The associated company, usually based in a tax haven or lower-tax jurisdiction, then makes a large profit on resale of the copper. In the case of KCM, it appears that this practice is indeed being done through a subsidiary called Fujairah Gold (owned by Vedanta) based in Dubai. These transactions amount to transactions at an undervalue, putting KCM's assets beyond the reach of creditors," the court heard.

KCM has stated that they have made an investment of US$2.8billion in upgrading equipment, building new facilities and expanding capacity.
But the Government Technical Audit Committee (GTAC) findings are that KCM has not made any such investment. The same findings were made by the Grant Thornton Report.

The thrust of U&M's application before the High Court of Justice was that KCM would not be able to pay it the arbitration awards due to its current financial position, its relationship with the Zambian government and activist groups and the steps it has taken in the Zambian courts challenging the LCIA's holding in favour of U&M.

Justice Eder noted that KCM and U&M entered into a number of contracts which were, in essence, for the provision by U&M of open pit mining and related services at one of the mines on the Copperbelt and disputes arose subsequently.

The Michael Lee-chaired LCIA found in favour of U&M that the settlement agreement that was entered into by the parties in 2012 was binding and it ordered KCM to pay US$14,619,900.12 and 15,155.23 Pounds.

"The first award was not challenged in England although KCM is now resisting its enforcement in Zambia based on a number of allegations," said Justice Eber in his judgment. "It seems to me that the first award is plainly to be regarded as valid and binding as a matter of English law."

Justice Eber said in the second award of US$40,205, 995.31, KCM failed to render any argument to the contrary despite the 14-day ample time accorded to it.

 

At 1:31 PM ,  MrK said...

Continued...


In its application before the High Court of Justice, U&M expressed concern over KCM's current financial position and the steps which it has taken not to honour the first and second awards granted to U&M by the LCIA.

But KCM responded that while it has experienced difficulties in its relationship with the Zambian government and certain activist groups in Zambia in recent months, that does not reflect the reality of the commercial challenges it faces.

"There is evidence that KCM has not defaulted on the payment of employee salaries, repayments or interest payment of bank loans, or payments to the Zambian government or utilities," the judgment read.
KCM also emphasised that the evidential weight of its response far outweigh all the rhetoric, politically motivated reports and hearsay media stories relied upon by U&M.

However, U&M insisted in additional evidence before Justice Eder it was clear that KCM was now at the centre of very heated public controversy as to its business practices, what happens to the vast amounts of money it earns from mining in Zambia, and whether it was wrongfully diverting its assets to Vedanta or other third parties.

U&M argued further that KCM would not be able to trade its way out of its financial difficulties in the short term.

In his judgment, Justice Eder agreed with U&M that the evidence shows a real risk of dissipation of assets.

"The steps employed by KCM in Zambia in seeking to resist enforcement of the first award which is, on its face, a valid and enforceable award as a matter of English law are such as to demonstrate that there is, at the very least, a real risk that KCM will refuse to pay any costs order this court might make against KCM or at the very least, delay payment for as long as possible," read the judgment in part.

Justice Eder said although the LCIA's second arbitration award against KCM was enforceable in Zambia, there was no evidence as to what the court in Zambia might or might not do in the circumstances because U&M has not taken steps to enforce the award in the country.

"For these reasons, I am not persuaded that there is any relevant prejudice so as to justify an order under s70 (7)," said Justice Eder. "For these reasons, I upheld the application by U&M for security for costs in the sum of 300,000 British pounds...but, in the exercise of my discretion, rejected the application by U&M for security...."

 

At 2:26 PM ,  MrK said...

On the scale of tax evasion through transfer pricing:

" The Centre for Global Development study found that from 2007 to 2010, 99.8 percent of Zambia's exports to Switzerland - 27.7 percent of all its exports - were not recorded as entering Switzerland. "

(REUTERS) AFRICA INVESTMENT-The Swiss commodities connection in African poverty

Fri Jun 27, 2014 8:48pm IST

* Switzerland has big but opaque influence on Africa * Opacity in commodity trade may cost Africa billions * NGOs say Africa victim of Swiss mispricing * Swiss government says making efforts at transparency By Ed Stoddard JOHANNESBURG, June 27...

* Switzerland has big but opaque influence on Africa
* Opacity in commodity trade may cost Africa billions
* NGOs say Africa victim of Swiss mispricing
* Swiss government says making efforts at transparency

By Ed Stoddard

JOHANNESBURG, June 27 (Reuters) - Are mispricing and the opacity of commodities trading in Switzerland contributing to Africa's underdevelopment?

The world's poorest continent remains heavily dependent on natural resources and so is extremely vulnerable to manipulations in the price of the commodities it extracts and exports, with very real consequences for its economies.

Switzerland is a global hub for trade in commodities, and so exerts a significant influence on Africa's development.

But critics say the way commodities are traded through the country is shrouded in opacity and this ultimately deprives developing regions such as Africa of revenue.

The Swiss government this week took steps that it says will bring more transparency to its lucrative commodities trading sector, but the problem is deep-seated.

For example, a 2010 study by Christian Aid showed that as Zambia's copper production soared in the 2000s, Switzerland came to account for more than half of the southern African country's exports of the commodity.

But the price of Swiss re-exports of the copper was far higher than that received in Zambia.

In 2008, the study estimated, Zambia's GDP would have been 80 percent higher if the copper leaving its borders in that year alone had received the same price as Switzerland. It's a pattern of trade mispricing that has persisted, critics say.

A study in January by the Centre for Global Development, a trade and aid think tank, estimated that developing countries may be losing between $8 billion and $120 billion a year because of mispricing of commodities in Switzerland.

 

At 2:27 PM ,  MrK said...

Continued 1...

That report analysed 244 jurisdictions, including virtually all sub-Saharan countries, and almost 2,600 commodity categories, and found that the average price of commodity exports to Switzerland was lower than to other jurisdictions.

The difference here cost developing countries about $8 billion annually, according to the report.

But it found Switzerland also declared higher re-export prices for those same commodities and this difference was as high as $120 billion.

DEPRESSED PLATINUM

The Swiss impact varies from commodity to commodity.

As for platinum, it looks to be a case of depressing prices that has consequences for the continent's most advanced economy, South Africa, which accounts for 70 percent of global supplies of the precious metal.

Reuters reported this week that vaults in the Zurich Freilager, or freezone, may hold around 20 percent of the total stocks of platinum in London and Zurich, the world's two main storage centres for the metal.

This may explain the muted reaction of spot prices to a five-month platinum mining strike in South Africa. That stoppage, which ended this week, hit 40 percent of global production of the precious metal.

"A platinum price rise would have benefited South Africa's economy ultimately, at least to the extent that South Africa's export prices - and related declarations for profit tax and royalties - reflect actual market prices," said Alex Cobham of the Centre for Global Development.

He said there were two ways in which prices might have been depressed during the strike.

"If Switzerland's freezones contain major but uncertain platinum holdings then the market price may not reflect the true nature of supply and demand," he said.

"And second, if as we have shown, commodity exporters appear to receive systematically lower prices when trading with Switzerland than other partners, which Swiss opacity facilitates," he said.

Tracking the Swiss connections is not always easy.

 

At 2:27 PM ,  MrK said...

Continued 2...

Metals sent to the freezones, for example, are not recorded by Swiss customs because of their tax-exempt status.

In other cases, commodities such as copper will be recorded as destined for Switzerland but instead go to a Swiss-based trading house and onwards to, say, China.

The Centre for Global Development study found that from 2007 to 2010, 99.8 percent of Zambia's exports to Switzerland - 27.7 percent of all its exports - were not recorded as entering Switzerland.

For mineral-rich Burkina Faso, a west African gold producer, 100 percent of its exports to Switzerland over this period, accounting for 15 percent of all exports, also "vanished".

This all adds to the levels of opacity associated with Switzerland, and the companies involved have not come under the kind of international pressure for disclosure that has been exerted on the country's famously secretive banks.

Having been on the losing end of battles over bank secrecy and tax avoidance, Switzerland has tried to reassure critics that its lucrative commodities trading sector is above board.

Earlier this week Switzerland's cabinet published a proposal for greater transparency in the commodities sector, which would apply to listed firms and large unlisted companies, and proposed a consultative process for the rest of 2014.

The proposal examined other countries' rules and said it was important not to disadvantage Swiss firms by overburdening them with regulations, so Switzerland would keep track of what other countries were doing.

The Geneva Trading & Shipping Association, representing commodity trading firms, said this was "useful and constructive".

But Berne Declaration, an NGO that campaigns for transparency, called the proposal "window dressing" because it did not say whether trade with state entities should be subject to any new rules, even though Switzerland had a "particular responsibility" as the leading trading hub.

One thing is clear: Switzerland needs to make the same kind of effort in the commodities trading sphere that it has in banking. Such a drive could show where some of the "missing billions" have been going and help African countries get proper financial compensation for their resources. (Additional reporting by Tom Miles in Geneva; Editing by Dale Hudson)

 

At 2:56 PM ,  MrK said...

KCM 'explains' its copper sales
By Stuart Lisulo
Sun 06 July 2014, 14:01 CAT

KONKOLA Copper Mines says all copper exports done by the mine are at market terms. On Wednesday, the High Court of Justice in London heard that Vedanta Resources-owned Konkola Copper Mines (KCM) was cheating on its copper exports prices by under-pricing and selling it through its subsidiaries in Dubai.

The assertions pertaining to KCM's business practices came up during the hearing at the Royal Courts of Justice in London, where the High Court of Justice held that the London Court of International Arbitration's order to KCM to pay U&M Mining Zambia Limited US$14,619,900.12 and 15,155.23 British pounds over disputed copper mining agreements was valid and could be enforced in Zambia.

Reacting to the revelation, KCM public relations and communications manager, Shapi Shachinda, said the mining firm strongly refuted the numerous allegations put forward by U&M Mining Limited.

"All copper exports done by KCM are at market terms and absolutely at arm's length," Shachinda said, in an e-mailed statement on Saturday.

He said as the matter between KCM and U&M is still pending in courts of law in London and Lusaka, the mining giant was unable to comment more fully on the allegations raised by U&M.

"Such allegations, as well as other disputes with U&M Mining, remain pending before the courts in London and in Zambia and before London arbitrators and until such time as all the related legal proceedings come to an end, we are unable to comment further," he said.

Shachinda further said Vedanta Resources remained committed to KCM on its operations in the country.

"Our majority shareholder, Vedanta Resources, remains committed to KCM and Zambia. Since acquisition, Vedanta had invested US$2.9 billion over the last decade in a new copper smelter, three new concentrators, a tailings leach plant and new underground facilities. Earnings from KCM have been reinvested back into the company," said Shachinda.

Meanwhile, certified fraud examiner, Cheleman Nshitima, has continued to echo calls to nationalise KCM to safeguard the country's interest.

"The question still begs, how is it possible that the same near insolvent company KCM would be at the same time be in a position to make good its development commitments? The reasons being advanced for not nationalising KCM, are not good enough," said Nshitima, in an e-mailed statement.

 

At 11:09 PM ,  MrK said...

(LUSAKATIMES) KCM workers fight back to end exploitation by Vedanta
Time Posted: July 10, 2014 10:31 am

In May this year Foil Vedanta released a video showing Vedanta boss Anil Agarwal mocking the Zambian parliament and bragging that he makes $500 million per year from Konkola Copper Mines (KCM), having bought the company for $25 million, against a $400 million asking price. The video caused outrage in Zambia, where KCM has failed to pay taxes, and is indebted to contractors. A few days later hundreds protested in the streets in Lusaka demanding that Vedanta pay taxes and improve the conditions for workers. In light of the profitability of KCM claimed by Agarwal, this article examines the poor treatment of KCM workers by Vedanta, and some of the recent protests by current and former miners.
KCM breaches workers contracts

KCM is Zambia’s biggest employer with 18,000 workers, 11,000 of which are reported to be on short contracts and un-unionised. Vedanta took over KCM from Anglo American in 2004. Since KCM was privatised in 2002, miners claim their conditions have worsened, and protests have become even more regular in recent years.

One active group are the Former KCM Miners Association. They represent more than a thousand retrenched and discharged KCM miners, including the 752 who were made redundant when Vedanta closed the Nkana smelter in 2009. (The Nkana smelter had not long been refurbished with an $81 million loan from the UK’s Department for International Development in 2001). The former miners have produced lengthy documents evidencing in detail how the 752 miners retrenched in 2009 were never paid the terminal benefits owed to them, due to deliberate manipulations by KCM (owned by Vedanta). In January 2013, in a letter to a news blog site, they claimed:

We are more than 700 ex-miners languishing in poverty after KCM breached our contracts. We have all the necessary agreements.

Since 2009, we have been spending sleepless night engaging government officials like Mr Musukwa, Ronald Msisika, Mr. Shamenda, Mr Simuusa, Mr Mikanga, Mr Mbulu. Even the President is aware but it is like KCM is bigger than our leaders. We visited Cabinet office on 12th February, 2012 but to no avail. We spent 180 days at intercity bus terminals in Lusaka surviving on pamelas and cabbages.



According to the Standard Code Book issued by the Industrial Relations Bureau, and not changed since 1996, the terminal benefits owed to miners should be ‘28 months basic pay, plus one month’s basic pay per completed year of service less any monies owed by you by [the mining company]‘. In 2000, the state mining company ZCCM became ZCCM Ltd and ZCCM Smelterco. Employment contracts were re-issued to ‘reaffirm KCM’s responsibility to honour its contractual obligations’, and though some of them contained the original, and legal, terminal benefits, others stated a new redundancy package of just ’2 months basic pay per completed year of service’, removing the 28 months basic pay workers remain entitled to according to the Standard Code Book. Employees noticed the discrepancy and refused to sign the new document, claiming this change was illegal under labour laws.

The pictures below show two versions of ZCCM Smelterco’s new contracts issued in 2000, with the legal, and illegal redundancy packages.

 

At 11:10 PM ,  MrK said...

Continued 1...


kcm letter

In 2009, around 700 workers were made redundant from the Nkana smelter and, in violation of their contract, were prohibited from re-entering the plant on the day they received their termination letters. A few months later more employees were retrenched at KCM’s Nampundwe mine. An information sheet issued by KCM at the time stated that there would be two different rates of redundancy pay for the workers – those transferring to other IBUs, and those taking voluntary separation. The former would get the legal 28 months plus 2 months (in this case) per year of completed service, which the latter would get only the 2 months per year of completed service. (see below)

kcm letter2

The former miners give examples of two of the workers retrenched in 2009. Mr Wambizi worked 25 years, but was only paid 28 months plus 5 years service (calculated from 2004 when Vedanta took over ZCCM Smelterco and it became KCM Plc). Mr Chitu worked 5 years, and was paid 2 months basic pay per year of service. The miners have fought this discrepancy ever since, demanding the full payment from Konkola Copper Mines, the Mine Workers Union and government departments.
KCM sends false records to ZRA

In January 2011 the Zambia Revenue Authority (ZRA) contacted the retrenched miners to say they had underpaid tax on their redundancy payments, showing a record of payouts of the full amount (28 months plus 1 months pay per completed year of service). The miners claim this suggests that KCM sent termination slips with the correct amount of terminal benefit due to the tax office, while sending the reduced payments and termination slips to the miners.

In December 2013, 76 workers retrenched in a spate of new redundancies by KCM claimed they had also been paid ‘peanuts’ in benefits.

In February this year the former KCM miners protested again, stating that they are owed over two hundred and seventy two thousand kwacha in terminal payments.


But it is not just former KCM miners who are getting a raw deal. On 8th May around 400 KCM contract workers stormed the Zambia National Broadcasting Corporation (ZNBC) offices in Kitwe during a protest over KCM’s refusal to implement the minimum wage. One worker, Mr Chisenga, told the Zambia News and Information Service that the workers were paid as low as K600 when their colleagues on the full time payroll were paid above K3000. According to the Lusaka Times:

He said the workers were demanding a pay rise to a level where the lowest should be paid at least K2000. He added that the workers were not provided with safety clothing while on duty which he said was putting their lives at risk. He said government should not allow workers in the mining sector to be exploited with poor wages when the investors in the sector were making a lot of money from the Zambian mineral resources. Mr Mulenga also complained that the police tear gassed the workers who were peaceful and did not commit any crime but merely walked to ZNBC studios to air their grievances.

The news crew that rushed to the scene found scores of employees heading to the Labor Offices at government offices otherwise known as BOMA in Kitwe, but were dispersed by police in riot gear before they could reach BOMA.

When reached for comment, management run away from journalist and declined to comment.

 

At 11:11 PM ,  MrK said...

Continued 2...

A soundbite in local language from the demonstration can be heard here.

On 17th March over 100 miners at Konkola Copper Mines’ Shaft No 1 in Chilililabombwe refused to come out from underground after their day shift in protest against management’s decision to stop giving meals to those that had worked overtime. They stayed underground from morning until 9pm. According to reports:

The miners alleged that management had started implementing harsh conditions of service for them as a way of saving on costs, a situation that was making their working conditions unbearable.

“We are passing through difficult times as employees; salaries leave much to be desired, our unions have tried to make things better but it’s really difficult with the style of management being applied by these investors. Now because they have tightened their financial management issues, they have cut on our meals and the issue of miners getting meals is an age-old tradition, which cannot be abolished in such a manner. We cannot continue operating like that. We demand respect from KCM management,” one of the miners said.
Retrenchments

In May 2013 KCM’s management announced their intention to retrench 2000 workers to streamline and mechanise operations. This was met with outrage by both miners, and Zambia’s President Michael Sata, who threatened that he would revoke the mine’s license if redundancies went ahead. Some commentators claimed the retrenchment threat was being used to prevent the Zambian exchequer charging a $586 million tax bill on exports of copper cathode which had no import certificates from the port of destination.

Following this announcement hundreds of KCM miners from Chililabombwe, Chingola and Kitwe stormed the Mineworkers Union of Zambia (MUZ) head offices in Kitwe to protest KCM’s plans.

AllAfrica reported:

Malambo Malambo who spoke on behalf of members of the three unions accused KCM management of trying to use the retrenchment as a tool to negotiate for mineral royalty tax and increased electricity tariffs. He said it was unjustifiable for KCM management to attribute their planned downsising to workers not meeting their targets.

“It is not true that KCM employees are failing to meet their targets. It is because of management’s failure to provide tools and equipment, change of contractors which takes time for them to mobilise and settle,” Mr Malambo said. He said the decline in production levels at KCM was not as a result of workers but management itself which had engaged contractors that were ill-qualified. “Ninety per cent of the work at KCM is done by contractors and why should they blame workers for low productivity,” he asked.

In November 2013 200 unionised workers refused to go underground and assembled in Chingola, protesting the deduction of 20% of pay from October’s salaries. KCM justified the deduction as they claimed miners had not met targets specified by management, but the miners were adamant that they had met targets and stormed the union offices accusing Mine Contractors and Allied Workers Union of Zambia President, Benny Isao of failing to represent them, as this video shows.

KCM had been deducting excess tax from workers since the retrenchment was announced in May, by claiming the workers had previously underpaid tax, and deducting the backdated amount from the paycheques, leaving them with up to half their usual salary. This went on for a few months until union action put a stop to it and the excess tax was eventually refunded.
Firing Zambian managers

 

At 11:12 PM ,  MrK said...

Contnued 3...


Back in February 2013, KCM was embroiled in another scandal when 11 Zambian managers were fired ahead of planned ‘downsizing’. When information on the terminations was reported in the media, KCM bosses became angry and ordered some workers to leave the premises immediately without collecting their belongings.

According to AllAfrica:

Affected workers, who sought anonymity, wondered why KCM had taken such an action when expatriate workers, who were not affected in the purported downsizing were getting more than US$17,000 (KR371,000) on a monthly basis compared to what Zambians were getting.

“We were questioned about who leaked the information to the media and we wonder why the so-called reducing of labour force has only affected Zambians and not expatriates because some expatriates are getting a lot of money as compared to what we are getting and yet it’s the locals doing most of the job,” they complained.

Meanwhile at Vedanta’s Annual General Meeting in London in August 2013 Agarwal brazenly claimed that the company has not retrenched a single worker at any of their operations.
Reduced standard of living on the Copperbelt despite huge profits

Each mine worker is estimated to have between 10 and 12 dependants, who rely on school fees, food and essential assistance from their working relative. Hence, the well being of the Copperbelt, and much of the rest of Zambia, is heavily dependant on the conditions of the mine workers. At the bare minimum workers should be entitled to full time contracts, a living minimum wage, and fair redundancy benefits. When Vedanta is raking in $500 million per year in profit, it is scandalous that the very basic workers rights are not being met.

Foil Vedanta will continue to work in solidarity with miners who demand fair treatment and labour rights, and will bring their issues to London to hold Vedanta to account. It is our hope that the Government of Zambia will also stand up for the rights of its miners and mine workers.

Source:Foil Vendanta

 

At 1:30 PM ,  MrK said...

Mining rip-off
By Editor
Fri 11 July 2014, 14:00 CAT

WHAT we are reading from the Konkola Copper Mines and U&M Mining Zambia Limited case about how the country is being ripped off is simply a tip of the iceberg.

In this case, it is revealed that KCM is cheating about its copper export prices by under-pricing the copper it is selling to a fellow subsidiary, Fujairah Gold, in Dubai.

We have no doubt this practice is widespread across our mining industry. And transfer pricing is being used as a very effective instrument in cheating the Zambian government of tax revenues.

But the story doesn't end here. There is also the issue of loans being advanced to the Zambian entities by fellow subsidiaries abroad, masquerading as independent entities when they are members of the same group. Huge amounts of taxes are lost in this way.

There are all sorts of financial arrangements that make the Zambian mining entities appear to be making losses or not to be doing well and pay very little, if not nothing, in terms of taxes to the Zambia Revenue Authority.

It is clear that we do not have the capacity to unravel these arrangements and tax the mining companies accordingly. We seem to have no local expertise in this area. And where such expertise exists, for one reason or the other, it is not utilised in the most effective and efficient of ways.

Left to Zambia Revenue Authority alone, and working as it has been working, the country will continue to lose millions, billions of dollars every year in untaxed mining income.

And this being the case, even the few shares ZCCM Investment Holdings holds in these companies will not earn us much dividend income. One wonders what the directors appointed from the Zambian government institutions do on the boards of these companies other than earning for themselves sitting allowances and other benefits.

It will also be interesting to hear or read what the auditors of these mining entities say or write in their audit reports.

There is no doubt we need outside help as a country to deal with these mining entities to get that which is our due. We need to engage financial and legal experts who have enough access to the financial and legal systems of the jurisdictions in which these companies are registered and are reporting.

We shouldn't cheat ourselves that we can do it on our own. The complexity of these issues is further compounded by the number of countries with complicated financial and legal systems in which these companies are operating and transacting. Look at the issue of KCM: Zambian copper is being sold to a fellow subsidiary company in Dubai. Vedanta, the holding company of KCM, is registered in the UK and owned by Indian nationals. Where do you start and where do you end in looking at its affairs? It means we need legal and financial experts to help us in all these countries.

 

At 1:31 PM ,  MrK said...

Continued...


This will of course cost a lot of money. Financial and legal services in many countries are not cheap as is the case in Zambia and other African countries. But whatever is spent on such an undertaking will be money well spent. If we don't have the money to spend on trying to correct this situation, let's seek the help of other countries, especially those which are benefitting from these unfair and unjust arrangements.

If we were to get all the income that is due to us from all the mining operations and transactions, we wouldn't need to borrow the type of money we are borrowing for our infrastructure development. In fact, what is happening is that we are going to some of these countries to borrow our own money - money that has been stolen from us. The taxes we forego here are collected by other countries, not on our behalf but for their own use.

We feel there is need to pay a lot of attention to this issue and give it the highest sense of urgency. If we don't, we will continue to be dribbled, short-changed by transnational mining corporations and other investors. If we don't change the state of affairs, we will never be able to get our people out of poverty and soon we will accumulate a debt we will not be able to repay. In a word, we will soon be back in a debt trap.

We want to develop. But to do that, we need to earn enough money and be able to pay for our developmental projects and repay the loans we are contracting as and when they fall due.

We are in this situation not only because we lack expertise but also as a result of laziness and corruption. People who have been given responsibility to do this work are not giving it their all. They are simply taking what the transnational corporations are giving them or are telling them. It is self-assessment in everything, to the full.

They only pay for what they want to pay for and not what they should pay or what we want them to pay. We are totally dependent on their goodwill and benevolence. But even where there is goodwill, the Russians say, "Trust but verify." We do not carry out any meaningful verification processes on the operations and income of these mining companies. As such, they are able to get away with anything.

Some of the things being revealed should make us ashamed of ourselves. How can we be tricked in that way in this day and era? And still some people are keeping their jobs after making the country lose so much income, so much revenue!

We also have people who are simply being paid to turn a blind eye to the wrong things the mining corporations are doing. Some are actually paid to aid them do wrong things, steal the nation's income. For peanuts they are willing and are able to sell billions of their country's revenue. What crime can be worse than this?

For a few millions of dollars, government policy is sold to benefit these transnational corporations. How much more treacherous can one be than this? But the worst thing is that all these elements are still keeping their jobs - jobs they actually don't need or deserve.
Something needs to be done and done thoroughly and quickly.

 

At 1:05 AM ,  MrK said...

(LUSAKATIMES) ActionAid urges Zambian government to share findings of KCM audit
Time Posted: July 14, 2014 7:29 pm

In reaction to the government’s announcement yesterday of the conclusion of an audit report into Konkola Copper Mines (KCM), ActionAid Zambia spokesperson Pamela Chisanga said:

“We commend the government for the speedy conclusion of this audit however it must now share the key findings publicly to indicate whether the issues within the January 2014 audit have been followed up on.

“ActionAid has noted the worrying manner in which companies reduce taxable profits in countries where they generate their revenue. The earlier audit showed that KCM was selling its copper to a Vedanta subsidiary in Dubai – Fujairah Gold – that led to an under-pricing of the copper.

“This is a clear attempt by KCM to reduce its profits. We know how tax avoidance by multinationals happens, and there are clear case studies from Zambia that other countries are now using to identify ways to close these tax loopholes. The KCM audit should provide further evidence that needs to be used to institute measures to curb tax avoidance by multinationals.”

During a briefing with ActionAid in May, Minister of Mines Christopher Yaluma insisted that the government had already undertaken a comprehensive audit of KCM and so another audit was not necessary.

However, Zambia Revenue Authority announced a few days later that it had ordered a new forensic audit. This followed hundreds of protesters marching on the Lusaka headquarters of KCM in a demonstration organised by ActionAid in reaction to a YouTube release of a video of Vedanta’s executive chairman Anil Agarwal, apparently bragging to a trade conference about the huge profits Vedanta makes from the KCM mine, far larger than those publicly reported.

ActionAid is calling on the Zambian government to introduce legislation to mandate the auditor general to audit all mining companies in Zambia.

 

At 1:19 PM ,  MrK said...

Vedanta should pay back what they stole - Lembalemba
By Stuart Lisulo
Tue 15 July 2014, 14:00 CAT

KAUNDA Lembalemba says Vedanta Resources Plc have no option other than to pay back what they still owed the Zambian people.

Vedanta Resources Plc this year committed a Business Improvement Plan (BIP) to the Ministry of Mines in a bid to revitalise its operations at Konkola Copper Mines (KCM).

Under that BIP, the firm committed to help KCM raise fresh liquidity to the extent of US$250 million for meeting operational requirements and settling overdue creditors.

Mines minister, Christopher Yaluma, last month revealed that Vedanta had already settled about US$100 million at the time of their meeting the government in February 2014, and that several other commitments were also being met.

But Lembalemba, who served as mines minister during the sale of KCM to Vedanta Resources in 2005, said Vedanta has put themselves in a 'precarious situation' having not fulfilled previous commitments, and that the ultimate solution was to pay pack all that was still outstanding to the government.

"Vedanta has put themselves in a very precarious situation because having revealed that they cheated the people of Zambia at that particular time, knowing very well the correct price, very few people can trust them again! It is not waterproof that whatever they are planning will yield positive results," Lembalemba said in an interview on Friday.

He said that Vedanta needed to pay the correct price for acquiring KCM, having purchased it for US$25 million back in 2005.

"The only reasonable conclusion for this situation is for Vedanta to pay the correct price for the asset because that would be very meaningful. They must pay back what they stole from the people of Zambia because what they did was they capitalised on the situation we now find ourselves in," he said.

And Lembalemba said Vedanta's poor track record of managing KCM should give the government ample opportunity to continuously scrutinise its operations.

"Having known these people Vedanta, it gives very good ammunition to scrutinise whatever they promised the people of Zambia. It would be in the best interests of this country for Zambians to be availed the outcome of the discussions between Vedanta and the government," said Lembalemba.

 

At 2:05 PM ,  MrK said...

(LUSAKATIMES) British MPs hear evidence for de-listing Vedanta Resources from the London Stock Exchange
Time Posted: July 17, 2014 6:29 am

PRESS RELEASE 16th July 2014.

********* Under embargo until 20.30 hours 21st July 2014 ********

MPs HEAR EVIDENCE FOR DE-LISTING DODGY UK MINER VEDANTA RESOURCES & OTHERS

* Speakers tell MPs how high risk mining companies like Vedanta Resources are bringing shame on the London Stock Exchange.
* Fresh evidence of Vedanta’s criminal behaviour and tax evasion in India and Zambia revealed.
* UK’s role in protecting and assisting Vedanta is detailed.
* Speakers call for tighter regulation of the London Stock Exchange and the immediate investigation and trial of Vedanta Resources

Speakers from Foil Vedanta(1) and London Mining Network(2) today presented evidence in the House of Commons on the criminal behaviour of some London Listed mining companies, and called for better accountability measures and the de-listing of criminal companies.

Focusing on contentious UK miner Vedanta Resources, they exposed new evidence of tax evasion, illegal land grabs, displacement, major pollution and water poisoning, as well as the UK’s role in promoting and protecting the company, and called for its immediate investigation and potential de-listing in London.

In a meeting hosted by John McDonnell MP in the House of Commons last evening speakers told MPs, journalists, diplomats(3) and members of the public attending that high risk mining companies like ‘the world’s most hated company’ Vedanta Resources(4) are bringing shame on the London Stock Exchange, and demanded better accountability measures and the de-listing of criminal companies.

Miriam Rose and Samarendra Das from Foil Vedanta exposed fresh evidence on the criminal activities of Vedanta, including unseen footage of Vedanta’s illegal land grab of Reserve Forest at the sacred Niyamgiri Hills, as well as interviews with people displaced by Vedanta, and now destitute, at Vedanta’s now doomed Lanjigarh refinery(5).

New testimonies from communities suffering the intergenerational effects of major water poisoning by Vedanta is Zambia, who have never been compensated(6), and disturbing footage of the 2009 chimney collapse at Vedanta subsidiary BALCO which killed at least 40 people(7) was shown.

Speakers detailed Vedanta’s tax evasion and transfer mis-pricing in Zambia(8), as well as illegal mining and export of 144 million tonnes of iron ore from Goa in 2011/12 (9).

 

At 2:08 PM ,  MrK said...

Continued 1...

The UK’s role in assisting and protecting this contentious mining company was exposed – from the roles of the Department for International Development (DfID) and former British High Commissioner to India Sir David Gore Booth in launching the company on the London Stock Exchange in 2003(10), to David Cameron’s personal assistance in forcing the Indian government to sell lucrative oil company Cairn India to Vedanta in 2011 (11). Cairn India are now drilling in the pristine biosphere region of the Gulf of Mannar, Sri Lanka.

The pattern of human rights abuse, environmental damage and violation of Indigenous Peoples’ land rights among London Listed mining companies was outlined by Richard Solly from London Mining Network, bringing in the mining majors Rio Tinto, BHP Billiton, Glencore Xstrata and Anglo American – all listed in, and theoretically accountable to, London. London Mining Network’s 2012 report ‘UK listed mining companies and the case for stricter oversight’, gives specific recommendations for the tightening of listings rules to limit these abuses.

The speakers highlighted the failure of UK listing rules to prevent poor corporate governance, noting that boss Anil Agarwal owns 69.59% of Vedanta Resources, making other shareholders essentially irrelevant in decision making, and echoed the calls of other investors to ensure a 50% free float requirement for public companies on the LSE(12). They also noted the role of British controlled tax havens in enabling insider trading, transfer mis-pricing and tax evasion on a major scale.

They critiqued the UK’s failure to regulate mining companies or hold them to account including: the UK’s rejection of ILO 169 on the rights of indigenous and tribal people’s(13), the failure of ‘revenue transparency’ initiatives such as the Extractive Industries Transparency Initiative (EITI), and the OECD complaints system.

Finally, the speakers recommended that proper accountability measures, and recourse to justice for the victims of criminal behaviours by UK listed mining companies be introduced in London. This should include the independent auditing of company and subsidiary accounts to establish whether tax evasion is occurring.

The speakers called strongly for Vedanta Resources to be immediately investigated, trialled and potentially de-listed from the London Stock Exchange for the catalogue of crimes presented by them.

Concern over London’s protection of dubious mining and resource-based companies listed on the London Stock Exchange has been a regular topic in the House of Commons over several years. In 2011 Richard Lambert, the former Director General of the Confederation of British Industries (CBI), told the Financial Times;

 

At 2:09 PM ,  MrK said...

Continued 2...

‘It never occurred to those of us who helped to launch the FTSE 100 index 27 years ago that one day it would be providing a cloak of respectability and lots of passive investors for companies that challenge the canons of corporate governance such as Vedanta…’

Since then there have been parliamentary debates, a consultation on the role of Financial Services Authority, hundreds of Early Day Motions, and even the de-listing of contentious mining company Eurasian Natural Resources Corporation (ENRC) following a Serious Fraud Office investigation which exposed major kickbacks being paid to African leaders. The Department of Business Innovation and Skills is currently carrying out a consultation on the extractive industries sector to establish the need for tighter regulation.

Samarendra Das from Foil Vedanta says:

“When Vedanta launched on the London Stock Exchange in 2003 they did not have the rights to mine the sacred Niyamgiri hills, nor the environmental or social license to operate at Lanjigarh. Now we should be asking how the London Stock Exchange, JP Morgan, HSBC, and the Financial Times omitted this basic due diligence and gave Vedanta the “cloak of respectability” that comes with a London listing. Perhaps it is time to bring to trial those who are responsible for jeopardising the credibility that the City of London claims.”

Richard Solly from London Mining Network says:

“London Mining Network believes that mining companies listed on UK stock exchanges need to be regulated much more strictly. We made specific recommendations in the report we published in February 2012 and have repeated that call in the evidence we have presented to the current inquiry into extractive companies by the Select Committee on Business, Innovation and Skills. It is time that the British Government started taking this seriously.”

John McDonnell MP, who hosted the talk, says:

“We cannot stand by and allow London to be used as the financial base for companies that degrade our planet, exploit their workers and abuse the human rights of extremely vulnerable communities. We need to devise a comprehensive strategy to address this exploitation, on our doorstep. “

 

At 10:11 PM ,  MrK said...

(LUSAKATIMES) MPs urged address aggressive tax planning by multinational companies operating in the country
Time Posted: July 20, 2014 8:58 pm

The Centre for Trade Policy and Development (CTPD) has urged parliamentarians to ensure that there is adequate legislation with current challenges in the mining sector.

CTPD Executive Director Isabel Mukelabai has told Qfm news in an interview that there is need to have adequate laws to deal with aggressive tax planning by mining companies and curb practices such as transfer mispricing and general illicit financial outflows.

Ms. Mukelebai notes that Zambia’s current legislation does not effectively deal with aggressive tax planning by multinational companies operating in the country.

Ms. Mukelabai adds that currently the Zambia revenue authority (ZRA) has inadequate capacity to monitor production and quality of mineral being produced.

She stresses that this is the reason why the Zambia Revenue Authority cannot effectively collect mineral royalty from the mines.

Ms. Mukelabai notes that comparing revenue collection from the mining sector under the income tax with personal income tax collected from payee, they see that ordinary citizens are paying more than mining companies which raises issues of equity.

 

At 10:43 PM ,  MrK said...

(LUSAKATIMES) We are unpacking the mining industry-Yaluma
Time Posted: July 23, 2014 7:30 am

Mines Minister Christopher Yaluma says the PF Government is determined to unpack the operations of all mining companies in Zambia. Mr Yaluma said the recently launched industry wide forensic audit of the mining industry is a step towards cleaning up the situation in the mines.

He said for a very long time, the mining industry has operated in secrecy with little or no understanding of its operations by Government and other stakeholders.

“With what is happening at KCM, this is the beginning of opening up of the mining sector.

We want to unmask this important sector and allow Zambians to understand how it operates.

For a long time, mines were operating in secrecy but we are saying more transparency is required,” Mr Yaluma told Journalists in Lusaka.

Mr Yaluma said the recent KCM audit results managed to shed light on some of the operational challenges faced by the mining giant.

“We are hoping to build on that KCM audit. The revelations in the KCM audit were shocking and to an extent showed the mismanagement going on at some of these mines but we are determined as a Government to clean up the mining sector,” he said.

 

At 2:15 PM ,  MrK said...

Time to nationalize KCM.

KCM’s $30m debt may bankrupt CEC - lawyers
Edited by Francis Lungu | Updated: 01 Sep,2014 ,12:07:54

THE Copperbelt Energy Corporation has told the Lusaka High Court that failure by KCM to settle the over US$30 million debt would make the power company run into bankruptcy.

In this matter, Copperbelt Energy Corporation (CEC) sued Konkola Copper Mines (KCM) for failure to pay US$30,923,091 for electricity it supplied to the mining company over a period of years.

When the case came up for hearing before High Court judge William Mweemba, KCM lawyer Charles Siamutwa applied for an adjournment, claiming the mining company was served late with an application and supporting affidavit and skeleton arguments.

Siamutwa said as a result, he was only served with an affidavit in opposition by his client on August 28 in which he wished to obtain instructions from KCM.

He said the affidavit in opposition brought out contentious factual issues that needed to be responded to by way of affidavit evidence.

Siamutwa applied for a short adjournment which would not bankrupt the power-supplying company and that it was in the interest of justice that the application be heard.

However, CEC lawyers from Albert Wood and Company opposed KCM’s application for an adjournment, saying the application and supporting affidavit and skeleton arguments were made on August 21 and that the application should be heard.

CEC submitted that the payments for electricity were not being made and that the power supplying company might be bankrupt if KCM was not ready to pay the outstanding amount.

In his ruling, judge Mweemba said he agreed with CEC that matters in the commercial list ought to be heard expeditiously, especially when colossal sums of money were involved.

Judge Mweemba said he was reluctantly granting KCM’s application for an adjournment but that he would levy the mining giant with court hearing fee of K500 for causing the adjournment.

CEC is in this matter demanding interest, costs and any other relief the court may deem fit for failure by KCM to pay the said debt for supply of electricity pursuant to the Power Supply Agreement made between the two parties on March 31, 2000.

Judge Mweemba adjourned the matter to September 10 for the hearing.

 

At 1:28 AM ,  MrK said...

So Vedanta 'hasn't made a profit since 2004', but they invested $3 billion in the mine... so when are they going to pull out? And whose $3 billion have they been wasting?

(LUSAKATIMES) Vedanta has invested US$3 billon in KCM but has not made any profits-Vedanta CEO
Mar 30, 2015 1:09 pm

Vedanta Resources Plc has revealed that the Konkola Copper Mines has not made any profit since 2004 when it was acquired by the Indian mining giant.

Vedanta Resources Plc Chief Executive Officer Tom Albanese said KCM has been loss making forcing the parent company to keep injecting funds to keep the mine afloat.

Mr Albanese stated that Vedanta Resources Plc has so far invested US$ 3 billion which has extended the mine life of Nchanga and enabled the development of its flagship Konkola Deep Mine project.

He was speaking last evening when he featured on ZNBC TV’s Sunday Interview.

Mr Albanese who is also the Board Chairman for KCM said Vedanta Resources Plc is committed to its investment in KCM and sustaining the mining activities on the Copperbelt.

He also dismissed reports that Vedanta Resources Plc has been using funds generated from KCM to develop other mines in other countries.

Mr Albanese stated that Vedanta Resources Plc has infact exceeded its pledged investment threshold of US$ 450 million by pumping in US$ 3 billion in KCM operations.

He said the key target now to reduce the operating costs for KCM as it hopes for an improvement in the copper prices.

Mr Albanese said KCM also wants to improve its communication with key stakeholders such as the government, the media and civil society including local communities.

 

At 2:57 AM ,  MrK said...

KCM loss-making claims under new tax regime are lies - Mpande
By Stuart Lisulo
Updated: 29 Apr,2015

DR Mathias Mpande says Konkola Copper Mine’s loss-making claims under the new tax regime are a lie because they

are sitting on the richest and biggest copper deposit.

Last Wednesday, KCM chief executive officer Steven Din said despite the 2015 mining tax changes, the company is

facing a very difficult situation and would remain loss-making.

“KCM is in a loss-making situation. Whether it was under the old regime before December 31 or post-January 1

where we moved to 20 per cent [and] eight per cent or even nine per cent, we’re making losses,” Din told

journalists after giving a motivational talk to students at the University of Zambia.

But Dr Mpande, a mineral economist and former dean of the School of Mines at the University of Zambia, said KCM

should not cheat the public into thinking the company would still remain in a loss-making situation because their

operating conditions were conducive enough to make huge profits.

“They got the best deal ever in the world. Nchanga is a cash cow; it was the lowest-cost operating mine in Zambia

at US$0.43 per pound and is still rich,” he said in an interview.

“They have gone into Konkola, which is the biggest and richest copper deposit on the Copperbelt apart from the

North-Western Province, so they are lying because Nchanga Open Pit was the cheapest operating mine and they are

also sitting on the richest copper deposit; so they can’t be making a loss unless they are bad engineers in which

case they should pass over the deposit to somebody else.”

Dr Mpande, who is also chief Mpande of the Mambwe people of Mbala, added that KCM’s financial performance had

helped improve its parent company Vedanta Resources’ liquidity position.

“They got the cheapest and most cost-effective mine at Nchanga to make money and invest in the richest Copperbelt

deposit at Konkola, so how can they say they are not making money? Within three months, they made US$376 million

profits, which is what has re-lifted Vedanta, exactly what their boss [Vedanta Resources Plc chairperson, Anil

Agarwal] said,” he added.
- See more at: http://www.postzambia.com/news.php?id=7595#sthash.I5KDUMxJ.n98T167o.dpuf

 

At 3:41 AM ,  MrK said...

Zambian villagers take mining giant Vedanta to court in UK over toxic leaks

Fears of environmental catastrophe as report finds ‘constant contamination’ of streams around copper mine while locals report health problems and failed crops
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.”

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, 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.”

 

At 3:42 AM ,  MrK said...

Continued...


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.

 

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