Thursday, June 30, 2016

How De Beers Pays Shareholders 23 times more than Workers

This report shows how De Beers is paying billions to it's international shareholders, money that is taken directly out of the South African economy. In fact, if they ever want to make the 'we bring jobs' argument, the same article also shows that De Beers spends 23 times more on it's international shareholders than on it's South African employees. This is the dispensation that Apartheid was intended to protect, and that is continuing under the ANC.

De Beers's Report To Society 2008 (cached)

De Beers Payments (billion USD) to:

International Shareholders: $6.2
South African Workers: $0.269
South African Taxman: $1.4

Highlights

De Beers paid US$6.2 billion (2007: US$6.2 billion) to stakeholders around the world

Payments to partners, joint ventures and suppliers amounted to US$4.8 billion (2007: US$4.9 billion).

About US$3.2 billion of this was paid for diamonds and services in Africa (2007: US$3.6 billion)

Payments to employees in Africa amounted to US$269 million (2007: US$332 million)
De Beers paid US$1.4 billion in taxes and royalties to governments; 87.9%
of this (US$1.2 billion) was paid to governments in Africa

A total of US$1.1 billion was allocated to preferential procurement in southern Africa and Canada (2007: US$1.0 billion)

More than US$1.1 billion in rough diamonds was supplied to Sightholders for manufacture in southern Africa (2007: US$1.0 billion)

Economics

If the global economic crisis has underlined the extent to which the diamond industry is key to the prosperity of our producer countries, it has also highlighted the importance of recent efforts to leverage diamond revenues as a catalyst for building strong diversified post-mining economies in these countries.

The deployment of natural resources wealth as a platform for developing diversified economies in Africa requires firstly an effective model for the creation and distribution of natural resource wealth and secondly an effective model for translating this wealth into a robust economic, social and political capital base. The remarkable contribution of diamonds to development in countries like Botswana, Namibia and South Africa owes a great deal to the effectiveness of our partnership model in achieving the former. The year 2008, however, will be remembered across the Family of Companies for the progress made in supporting governments to achieve the latter through beneficiation programmes.

De Beers support for government-led economic diversification efforts in producer countries has focused until recently on local procurement and enterprise development initiatives. Beneficiation by contrast aims to leverage the current pipeline position of producer countries by facilitating the development and promotion of local downstream diamond sorting, cutting and polishing industries that, it is hoped, will endure well beyond the life of existing mines.

While the short-term success of these initiatives will inevitably be impacted by the current economic downturn, the long-term supply and demand fundamentals of the diamond industry bode well for the success of this process.

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1 Comments:

At 3:52 AM , Blogger MrK said...

More on mining company tax evasion:

no mining company paid the 20 per cent mineral royalty tax the government introduced last year.

Yaluma’s revelation explains economic mess - Simuusa By Stuart Lisulo | Updated: 29 Jun, 2016 ,12:11:48

MINES minister Christopher Yaluma’s revelation that no mining company paid the 20 per cent mineral royalty tax last year clearly explains why Zambia is experiencing economic hardships, says Wylbur Simuusa.

And Simuusa, a former minister in Michael Sata’s PF government, says the constant change to the mining fiscal
regime has destabilised the performance of the mining sector and economy in general.

Last Thursday during the sixth Zambia International Mining and Energy Conference Exhibition at the Government Complex, Yaluma revealed that no mining company paid the 20 per cent mineral royalty tax the government introduced last year.

He also disclosed that mining companies were “still battling” to pay the disputed 20 per cent mineral royalties passed by Parliament last year.

Simuusa said Yaluma’s revelation clearly showed why Zambia’s economy had deteriorated to the current levels as the country’s main foreign exchange earner was not remitting any mining tax revenue to government coffers.

“If he [Yaluma] is saying not a single ngwee has been paid, then we have got a serious problem but also, definitely, that explains why we are going through the hardships we are going through as a nation because mining is still our backbone,”
Simuusa, a mining engineer, said in an interview.

“When we don’t have that kind of revenue from there, then definitely we are sick as a nation. So I think that revelation is important. What needs to be said now is what level of contribution has been managed and we compare that to what has been agreed, whether we are being sincere or not.”

He challenged the government to also disclose what mining companies were remitting following the reversal of the mineral royalty tax to the current sliding scale, which the sector welcomed.

“We need to be very brave and bold when handling issues of the mines. If they are struggling to pay, and no one has paid 20 per cent, what should be revealed is how much has been paid because it is a known fact that the MRT has been reversed,” Simuusa added.

And Simuusa said the government’s constant changes to the mining fiscal regime had destabilised the industry and the country’s economy.

“Definitely, it is incumbent on government to have a stable tax regime. When you look at these countries that are surpassing us, one of the characteristics there is a stable mine tax regime. We have changed regimes four times, so it is a change every year. That’s a world record, I think!” said Simuusa, adding that the projected target of 750,000 metric tonnes of finished copper this year is too optimistic given the persistent challenges the sector is faced with.

In January 2015, the government introduced a single mining tax regime with mineral royalties of 20 per cent for open pit mines and nine per cent for underground operations.

But the high royalty levels lasted less than six months as they were slashed to nine per cent for open cast mines and six percent for underground mines by June last year after mining companies threatened to close down their operations and retrench thousands of workers.

By the end of 2015, however, close to 10,000 workers lost their jobs, mainly on account of the frequent changes in the fiscal regime, which mining experts have cited as a key reason for the instability that rocked the sector.

The government has now implemented the sliding scale tax system, which the mining companies have welcomed.

 

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