Zambians should have access to mining agreements - Banda
By Gift Chanda
Fri 13 Dec. 2013, 14:00 CAT
ZAMBIANS should have access to all 'secret' mining agreements between the government and various mines to boost transparency in the extractive sector, says an industry official.
And ActionAid says the Zambian government cannot continue to ignore fresh calls for windfall tax and the need for Zambia to benefit from its mineral resources.
Zambia Extractive Industries Transparency Initiative Secretariat head, Siforiano Banda, said disclosure of existing and future mining agreements signed between the government and the mining firms was important as it would not only boost transparency, but also help beat tax evasion in the extractive sector.
Countries like Guinea have already made their agreements public by posting them online, but only after losing much of their national heritage through lopsided deals with cunning Western mining concerns.
On Monday last week, Ghana's President, John Dramani Mahama said his government would embark on a renegotiation exercise with companies, especially those in the extractive industry on new stability agreements.
In a move that could see Ghana follow Guinea's path, the head of head, said the current stability agreements which were signed for 20 years and beyond were not favourable to the government since the players would continue to receive the same amount of royalties, even if prices of such commodities are sky-rocketing on the world market.
"What Ghana is looking to do is the right thing. It is important that these agreements are reviewed and made public," Banda said, adding that the secrecy around the agreements promotes tax evasion by some mining firms in many African countries.
He explained that disclosure of the agreement was important as it would not leave Zambians guessing how the country was faring with regard to benefiting from its minerals.
According to Banda, the Zambian government in 2008 rescinded all development agreements it entered into with mining firms.
"...but there are some mining companies that have not adhered to the government directive," he said.
"It is in the interest of the public that the government discloses those companies. We also need a law to compel mining companies to disclose their tax contribution to the government because currently, it is voluntarily."
Pressure has been mounting lately on the government to ensure the country gets a fair share from its mineral resources following an overshoot in this year's national budget deficit.
Pamela Chisanga, ActionAid country representative, said with the fresh calls on windfall tax, it is apparent to many citizens that in spite of increased mineral production, Zambia was benefitting little from its mineral resources.
Zambia's 2013 copper production is forecast to exceed last year's output, which dropped to 824,976 tonnes from the previous year's 881,108 tonnes.
"Zambia currently does not have a robust mining tax structure to effectively tax the different mining operations and as such have failed to collect reasonable taxes from the mining sector," she said in an emailed response to a press query.
"The PF government promised to re-introduce the windfall tax once elected into office, but has since backpedalled on this without giving any reasonable justification why windfall tax is no longer an option. Mining companies have also failed to provide an explanation on why it is not good for Zambia to reintroduce the windfall tax as this is based on excessive profits and would not take effect below a given threshold."
She appealed to the government to re-open discussions with mining companies on the windfall tax and to allow for broader citizen engagement in the discourse.
"The government should further look at developing a robust mining structure to effectively tax the different mining operations in the country," Chisanga added.
In a new report "Walking The Talk", published on Tuesday, ActionAid observed that increased budget spending allocation to agriculture was being held back by a poor tax policy by governments.
The Zambian government spent just 6.4 per cent of its national budget on agriculture during 2009-2013, risking even greater food insecurity across the country, according to the report, which recommends that one option to combat this problem is to effectively tax and collect optimal revenue from mining companies.
"Empty words won't feed empty stomachs. The Zambian government must follow through on its promise and provide more money, ensuring it is better targeted to help the majority of Zambia's citizens, who earn their livelihood from agriculture," said Chisanga.
"To help them accomplish this, the government should revisit the current tax rates which apply to mining companies to see what opportunities exist to ensure that they make a fair contribution to the overall national budget through their tax contributions."
Although copper mining is the economic lifeblood of Zambia, some analysts argue that the country does not reap enough benefit because the mines are owned by foreign companies.
Labels: DEVELOPMENT AGREEMENTS, MINING, SIFORIANA BANDA, ZEITI
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Zambians should have access to mining agreements - Banda
By Gift Chanda
Fri 13 Dec. 2013, 14:00 CAT
ZAMBIANS should have access to all 'secret' mining agreements between the government and various mines to boost transparency in the extractive sector, says an industry official.
And ActionAid says the Zambian government cannot continue to ignore fresh calls for windfall tax and the need for Zambia to benefit from its mineral resources.
Zambia Extractive Industries Transparency Initiative Secretariat head, Siforiano Banda, said disclosure of existing and future mining agreements signed between the government and the mining firms was important as it would not only boost transparency, but also help beat tax evasion in the extractive sector.
Countries like Guinea have already made their agreements public by posting them online, but only after losing much of their national heritage through lopsided deals with cunning Western mining concerns.
On Monday last week, Ghana's President, John Dramani Mahama said his government would embark on a renegotiation exercise with companies, especially those in the extractive industry on new stability agreements.
In a move that could see Ghana follow Guinea's path, the head of head, said the current stability agreements which were signed for 20 years and beyond were not favourable to the government since the players would continue to receive the same amount of royalties, even if prices of such commodities are sky-rocketing on the world market.
"What Ghana is looking to do is the right thing. It is important that these agreements are reviewed and made public," Banda said, adding that the secrecy around the agreements promotes tax evasion by some mining firms in many African countries.
He explained that disclosure of the agreement was important as it would not leave Zambians guessing how the country was faring with regard to benefiting from its minerals.
According to Banda, the Zambian government in 2008 rescinded all development agreements it entered into with mining firms.
"...but there are some mining companies that have not adhered to the government directive," he said.
"It is in the interest of the public that the government discloses those companies. We also need a law to compel mining companies to disclose their tax contribution to the government because currently, it is voluntarily."
Pressure has been mounting lately on the government to ensure the country gets a fair share from its mineral resources following an overshoot in this year's national budget deficit.
Pamela Chisanga, ActionAid country representative, said with the fresh calls on windfall tax, it is apparent to many citizens that in spite of increased mineral production, Zambia was benefitting little from its mineral resources.
Zambia's 2013 copper production is forecast to exceed last year's output, which dropped to 824,976 tonnes from the previous year's 881,108 tonnes.
"Zambia currently does not have a robust mining tax structure to effectively tax the different mining operations and as such have failed to collect reasonable taxes from the mining sector," she said in an emailed response to a press query.
"The PF government promised to re-introduce the windfall tax once elected into office, but has since backpedalled on this without giving any reasonable justification why windfall tax is no longer an option. Mining companies have also failed to provide an explanation on why it is not good for Zambia to reintroduce the windfall tax as this is based on excessive profits and would not take effect below a given threshold."
She appealed to the government to re-open discussions with mining companies on the windfall tax and to allow for broader citizen engagement in the discourse.
"The government should further look at developing a robust mining structure to effectively tax the different mining operations in the country," Chisanga added.
In a new report "Walking The Talk", published on Tuesday, ActionAid observed that increased budget spending allocation to agriculture was being held back by a poor tax policy by governments.
The Zambian government spent just 6.4 per cent of its national budget on agriculture during 2009-2013, risking even greater food insecurity across the country, according to the report, which recommends that one option to combat this problem is to effectively tax and collect optimal revenue from mining companies.
"Empty words won't feed empty stomachs. The Zambian government must follow through on its promise and provide more money, ensuring it is better targeted to help the majority of Zambia's citizens, who earn their livelihood from agriculture," said Chisanga.
"To help them accomplish this, the government should revisit the current tax rates which apply to mining companies to see what opportunities exist to ensure that they make a fair contribution to the overall national budget through their tax contributions."
Although copper mining is the economic lifeblood of Zambia, some analysts argue that the country does not reap enough benefit because the mines are owned by foreign companies.
Labels: ACTIONAID, DEVELOPMENT AGREEMENTS, SIFORIANO BANDA, WINDFALL TAX
Read more...
Zambians should have access to mining agreements - Banda
By Gift Chanda
Fri 13 Dec. 2013, 14:00 CAT
ZAMBIANS should have access to all 'secret' mining agreements between the government and various mines to boost transparency in the extractive sector, says an industry official.
And ActionAid says the Zambian government cannot continue to ignore fresh calls for windfall tax and the need for Zambia to benefit from its mineral resources.
Zambia Extractive Industries Transparency Initiative Secretariat head, Siforiano Banda, said disclosure of existing and future mining agreements signed between the government and the mining firms was important as it would not only boost transparency, but also help beat tax evasion in the extractive sector.
Countries like Guinea have already made their agreements public by posting them online, but only after losing much of their national heritage through lopsided deals with cunning Western mining concerns.
On Monday last week, Ghana's President, John Dramani Mahama said his government would embark on a renegotiation exercise with companies, especially those in the extractive industry on new stability agreements.
In a move that could see Ghana follow Guinea's path, the head of head, said the current stability agreements which were signed for 20 years and beyond were not favourable to the government since the players would continue to receive the same amount of royalties, even if prices of such commodities are sky-rocketing on the world market.
"What Ghana is looking to do is the right thing. It is important that these agreements are reviewed and made public," Banda said, adding that the secrecy around the agreements promotes tax evasion by some mining firms in many African countries.
He explained that disclosure of the agreement was important as it would not leave Zambians guessing how the country was faring with regard to benefiting from its minerals.
According to Banda, the Zambian government in 2008 rescinded all development agreements it entered into with mining firms.
"...but there are some mining companies that have not adhered to the government directive," he said.
"It is in the interest of the public that the government discloses those companies. We also need a law to compel mining companies to disclose their tax contribution to the government because currently, it is voluntarily."
Pressure has been mounting lately on the government to ensure the country gets a fair share from its mineral resources following an overshoot in this year's national budget deficit.
Pamela Chisanga, ActionAid country representative, said with the fresh calls on windfall tax, it is apparent to many citizens that in spite of increased mineral production, Zambia was benefitting little from its mineral resources.
Zambia's 2013 copper production is forecast to exceed last year's output, which dropped to 824,976 tonnes from the previous year's 881,108 tonnes.
"Zambia currently does not have a robust mining tax structure to effectively tax the different mining operations and as such have failed to collect reasonable taxes from the mining sector," she said in an emailed response to a press query.
"The PF government promised to re-introduce the windfall tax once elected into office, but has since backpedalled on this without giving any reasonable justification why windfall tax is no longer an option. Mining companies have also failed to provide an explanation on why it is not good for Zambia to reintroduce the windfall tax as this is based on excessive profits and would not take effect below a given threshold."
She appealed to the government to re-open discussions with mining companies on the windfall tax and to allow for broader citizen engagement in the discourse.
"The government should further look at developing a robust mining structure to effectively tax the different mining operations in the country," Chisanga added.
In a new report "Walking The Talk", published on Tuesday, ActionAid observed that increased budget spending allocation to agriculture was being held back by a poor tax policy by governments.
The Zambian government spent just 6.4 per cent of its national budget on agriculture during 2009-2013, risking even greater food insecurity across the country, according to the report, which recommends that one option to combat this problem is to effectively tax and collect optimal revenue from mining companies.
"Empty words won't feed empty stomachs. The Zambian government must follow through on its promise and provide more money, ensuring it is better targeted to help the majority of Zambia's citizens, who earn their livelihood from agriculture," said Chisanga.
"To help them accomplish this, the government should revisit the current tax rates which apply to mining companies to see what opportunities exist to ensure that they make a fair contribution to the overall national budget through their tax contributions."
Although copper mining is the economic lifeblood of Zambia, some analysts argue that the country does not reap enough benefit because the mines are owned by foreign companies.
Labels: ACTIONAID, DEVELOPMENT AGREEMENTS, SIFORIANO BANDA, WINDFALL TAX
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(STICKY) Zambians should have access to mining agreements - Banda
By Gift Chanda
Fri 13 Dec. 2013, 14:00 CAT
ZAMBIANS should have access to all 'secret' mining agreements between the government and various mines to boost transparency in the extractive sector, says an industry official.
And ActionAid says the Zambian government cannot continue to ignore fresh calls for windfall tax and the need for Zambia to benefit from its mineral resources.
Zambia Extractive Industries Transparency Initiative Secretariat head, Siforiano Banda, said disclosure of existing and future mining agreements signed between the government and the mining firms was important as it would not only boost transparency, but also help beat tax evasion in the extractive sector.
Countries like Guinea have already made their agreements public by posting them online, but only after losing much of their national heritage through lopsided deals with cunning Western mining concerns.
On Monday last week, Ghana's President, John Dramani Mahama said his government would embark on a renegotiation exercise with companies, especially those in the extractive industry on new stability agreements.
In a move that could see Ghana follow Guinea's path, the head of head, said the current stability agreements which were signed for 20 years and beyond were not favourable to the government since the players would continue to receive the same amount of royalties, even if prices of such commodities are sky-rocketing on the world market.
"What Ghana is looking to do is the right thing. It is important that these agreements are reviewed and made public," Banda said, adding that the secrecy around the agreements promotes tax evasion by some mining firms in many African countries.
He explained that disclosure of the agreement was important as it would not leave Zambians guessing how the country was faring with regard to benefiting from its minerals.
According to Banda, the Zambian government in 2008 rescinded all development agreements it entered into with mining firms.
"...but there are some mining companies that have not adhered to the government directive," he said.
"It is in the interest of the public that the government discloses those companies. We also need a law to compel mining companies to disclose their tax contribution to the government because currently, it is voluntarily."
Pressure has been mounting lately on the government to ensure the country gets a fair share from its mineral resources following an overshoot in this year's national budget deficit.
Pamela Chisanga, ActionAid country representative, said with the fresh calls on windfall tax, it is apparent to many citizens that in spite of increased mineral production, Zambia was benefitting little from its mineral resources.
Zambia's 2013 copper production is forecast to exceed last year's output, which dropped to 824,976 tonnes from the previous year's 881,108 tonnes.
"Zambia currently does not have a robust mining tax structure to effectively tax the different mining operations and as such have failed to collect reasonable taxes from the mining sector," she said in an emailed response to a press query.
"The PF government promised to re-introduce the windfall tax once elected into office, but has since backpedalled on this without giving any reasonable justification why windfall tax is no longer an option. Mining companies have also failed to provide an explanation on why it is not good for Zambia to reintroduce the windfall tax as this is based on excessive profits and would not take effect below a given threshold."
She appealed to the government to re-open discussions with mining companies on the windfall tax and to allow for broader citizen engagement in the discourse.
"The government should further look at developing a robust mining structure to effectively tax the different mining operations in the country," Chisanga added.
In a new report "Walking The Talk", published on Tuesday, ActionAid observed that increased budget spending allocation to agriculture was being held back by a poor tax policy by governments.
The Zambian government spent just 6.4 per cent of its national budget on agriculture during 2009-2013, risking even greater food insecurity across the country, according to the report, which recommends that one option to combat this problem is to effectively tax and collect optimal revenue from mining companies.
"Empty words won't feed empty stomachs. The Zambian government must follow through on its promise and provide more money, ensuring it is better targeted to help the majority of Zambia's citizens, who earn their livelihood from agriculture," said Chisanga.
"To help them accomplish this, the government should revisit the current tax rates which apply to mining companies to see what opportunities exist to ensure that they make a fair contribution to the overall national budget through their tax contributions."
Although copper mining is the economic lifeblood of Zambia, some analysts argue that the country does not reap enough benefit because the mines are owned by foreign companies.
Labels: ACTIONAID, DEVELOPMENT AGREEMENTS, SIFORIANO BANDA, WINDFALL TAX
Read more...
First Quantum dealings
By Editor
Mon 28 Oct. 2013, 14:00 CAT
COMMENT - Also see: Magande questions removal of duty on copper concentrates, By Chiwoyu Sinyangwe, Mon 28 Oct. 2013, 14:01 CAT
It is solliciting corruption, when it is legally possible for a minister is able to grant individual corporations tax exemption. The law must apply to all companies and all individuals at all time. It must not be possible fora company to approach a minister, and walk away with a tax exemption. Also, the Development Agreements were secretive and should all be scrapped for that rason alone. I say - nationalize the criminal enterprise. - MrK
The way our government is handling issues pertaining to First Quantum Minerals raises a number of issues and concerns. It is either those government officials responsible for the government's dealings and decisions concerning First Quantum Minerals are very corrupt and are receiving kick-backs or they are very incompetent.
First Quantum Mining has sued the Zambian government in the United Kingdom courts for allegedly abrogating the Bwana Mkubwa Development Agreement. The matter is now under arbitration and the Zambian government has filed in a plea to the claim by First Quantum Mining, who consequently submitted a counter claim based on the government's defence on September 25, 2013.
This same company, this same First Quantum Minerals that has sued the Zambian government, continues to receive benefits from our government and to be defended in all sorts of ways by some of the leading elements of our government. How is this possible?
On October 4, 2013, our government issued Statutory Instrument number 89 to waive export duty and allow First Quantum Minerals to export concentrates. This is difficult to understand for a government that wants to go and borrow hundreds of millions or billions of dollars on the international money markets. What is the purpose of us borrowing such huge amounts of money when we are allowing legitimate export duties not to be collected from First Quantum Minerals?
And why should First Quantum Minerals be exporting concentrates at a time when we have adequate refining capacity? Who can say they really know the other minerals other than copper that those concentrates contain? Again, there is something seriously amiss here; there is something stinking here. Is this a product of oversight, incompetence or outright corruption?
Whatever some may say or claim, it will not be wrong for anyone to conclude that Statutory Instrument number 89 was exclusively procured for First Quantum Minerals, which has stockpiled concentrates and does not want to export them because they will have to pay 10 per cent export duty on them.
First Quantum Minerals claims that there is no capacity in Zambia to treat concentrates. But this is contrary to what the smelter owners are saying. This is simply a strategy for avoiding to pay the correct tax to the Zambian government. And the Zambian government has allowed this to happen. Instead of collecting this duty, the government is opting to allow First Quantum Minerals to keep this money and burden the Zambian taxpayer with further national debt by going to borrow.
We have been advised by the international community, including the World Bank and International Monetary Fund, to collect more revenue from our mining activities. But what do we hear from our leaders responsible for these things? They are always defending the mining investors; they speak like they are directors of these mining companies. They seem to be more concerned about the profits of the mining companies than the benefits accruing to the Zambian people. Why? Again we ask: is it because of incompetence or it's simply a matter of corruption?
It is clear that the government is making the Zambian taxpayers subsidise the operations of First Quantum Minerals in this country.
When one critically analyses all that is happening, it is clear that the Zambian government is actually paying for the investment that First Quantum Minerals is putting in Kalumbila and other projects at Kansanshi. For what? Is it because someone in government is incompetent or is getting kick-backs from First Quantum Minerals?
And these people have no shame. They even went as far as trying to mobilise that clean man, that honest man, that apostle of our liberation struggle, Dr Kenneth Kaunda, to defend these clearly unjust and unfair dealings of First Quantum Minerals. Of course, Dr Kaunda, if he was told the truth, would never have agreed in any way to defend the interests of a company that is engaging in such unfair and unjust dealings against the Zambian people. There has been a strong lobby for First Quantum Minerals to have its permits, title deeds, Zambia Environmental Management Agency clearance to be processed quickly.
Regardless of the lawsuits that First Quantum Minerals has initiated against the Zambian government, whatever this company needs, it is still getting from our government. How is this possible?
First Quantum Minerals is claiming US$30 million from the Zambian government. The company has also stated that in the coming few months, it will be suing the government for US$2 billion for allegedly abrogating the Kansanshi Development Agreement. Surely, is this a company whose interests our apostle, our government should be made to defend and promote? There is definitely something wrong with those in government who are handling these issues. As we have already stated, it's either they have been bribed by First Quantum Minerals or they are extremely incompetent and not fit to hold the positions they hold in our government.
It is important for the Zambian people and their leaders to know what type of company First Quantum Minerals truly is. First Quantum Minerals is trying to portray itself as a very good investor when it is not. These dealings we are commenting on cannot be said to be acts of a very good investor. They actually project the very opposite.
The question is: should we continue as a nation to grant benefits to such a company? Should our government continue to allow such a company to operate in Zambia? Why should our government continue to be so nice, so kind, so generous to a company that is suing the Zambian state for over US$2 billion?
This behaviour is not new or strange to First Quantum Minerals. We shouldn't forget that this is the same company, the same First Quantum Minerals, that was kicked out of Congo because of similar behaviour or conduct.
We urge the Zambian government to be very transparent over matters pertaining to First Quantum Minerals. Given what is going on, it may be necessary for the Attorney General of the Republic to make known to the Zambian people these legal suits that their government is having with First Quantum Minerals. It is important for the Zambian people to have a direct say on these issues because those who are handling these matters on their behalf seem to be compromised; they continue to give incentives to First Quantum Minerals, ignoring its lawsuits against the Zambian people.
There should be no incentives or other benefits extended to First Quantum Minerals by the Zambian government until it withdraws its lawsuits against the Zambian people.
Why should the Zambian government give First Quantum Minerals title deeds to 600 square kilometres of land in North Western Province when the same company is demanding over US$2 billion from the Zambian people?
It is clear that there is some arm-twisting here, some blackmail here. But why should the Zambian government accept to be arm-twisted, to be blackmailed by First Quantum Minerals in this way? If there are Zambian government officials who have eaten First Quantum Minerals' money, promising to deliver all these things to them come what may, then let them give to First Quantum Minerals that which belongs to them and let the Zambian people hold on to what is theirs because they were not a party to those deals.
It's clear that right now, First Quantum Minerals thinks it is calling the shots. Yes, First Quantum Minerals may be calling the shots now. But for how long? This type of behaviour, conduct or deals cannot be sustained over the long term. It is such things that lead to nationalisations. They can be told to park their equipment and go. And in saying this, we are not in any way advocating anarchy. We believe in the rule of law. But what is happening borders on corruption and not legitimate business dealings. And the law punishes such conduct and practices.
Labels: ALEXANDER CHIKWANDA, CORRUPTION, DEVELOPMENT AGREEMENTS, FQM, NG'ANDU MAGANDE, TAX EVASION, TAXATION
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(STICKY) First Quantum dealings
By Editor
Mon 28 Oct. 2013, 14:00 CAT
COMMENT - Also see: Magande questions removal of duty on copper concentrates, By Chiwoyu Sinyangwe, Mon 28 Oct. 2013, 14:01 CAT
It is solliciting corruption, when it is legally possible for a minister is able to grant individual corporations tax exemption. The law must apply to all companies and all individuals at all time. It must not be possible fora company to approach a minister, and walk away with a tax exemption. Also, the Development Agreements were secretive and should all be scrapped for that rason alone. I say - nationalize the criminal enterprise. - MrK
The way our government is handling issues pertaining to First Quantum Minerals raises a number of issues and concerns. It is either those government officials responsible for the government's dealings and decisions concerning First Quantum Minerals are very corrupt and are receiving kick-backs or they are very incompetent.
First Quantum Mining has sued the Zambian government in the United Kingdom courts for allegedly abrogating the Bwana Mkubwa Development Agreement. The matter is now under arbitration and the Zambian government has filed in a plea to the claim by First Quantum Mining, who consequently submitted a counter claim based on the government's defence on September 25, 2013.
This same company, this same First Quantum Minerals that has sued the Zambian government, continues to receive benefits from our government and to be defended in all sorts of ways by some of the leading elements of our government. How is this possible?
On October 4, 2013, our government issued Statutory Instrument number 89 to waive export duty and allow First Quantum Minerals to export concentrates. This is difficult to understand for a government that wants to go and borrow hundreds of millions or billions of dollars on the international money markets. What is the purpose of us borrowing such huge amounts of money when we are allowing legitimate export duties not to be collected from First Quantum Minerals?
And why should First Quantum Minerals be exporting concentrates at a time when we have adequate refining capacity? Who can say they really know the other minerals other than copper that those concentrates contain? Again, there is something seriously amiss here; there is something stinking here. Is this a product of oversight, incompetence or outright corruption?
Whatever some may say or claim, it will not be wrong for anyone to conclude that Statutory Instrument number 89 was exclusively procured for First Quantum Minerals, which has stockpiled concentrates and does not want to export them because they will have to pay 10 per cent export duty on them.
First Quantum Minerals claims that there is no capacity in Zambia to treat concentrates. But this is contrary to what the smelter owners are saying. This is simply a strategy for avoiding to pay the correct tax to the Zambian government. And the Zambian government has allowed this to happen. Instead of collecting this duty, the government is opting to allow First Quantum Minerals to keep this money and burden the Zambian taxpayer with further national debt by going to borrow.
We have been advised by the international community, including the World Bank and International Monetary Fund, to collect more revenue from our mining activities. But what do we hear from our leaders responsible for these things? They are always defending the mining investors; they speak like they are directors of these mining companies. They seem to be more concerned about the profits of the mining companies than the benefits accruing to the Zambian people. Why? Again we ask: is it because of incompetence or it's simply a matter of corruption?
It is clear that the government is making the Zambian taxpayers subsidise the operations of First Quantum Minerals in this country.
When one critically analyses all that is happening, it is clear that the Zambian government is actually paying for the investment that First Quantum Minerals is putting in Kalumbila and other projects at Kansanshi. For what? Is it because someone in government is incompetent or is getting kick-backs from First Quantum Minerals?
And these people have no shame. They even went as far as trying to mobilise that clean man, that honest man, that apostle of our liberation struggle, Dr Kenneth Kaunda, to defend these clearly unjust and unfair dealings of First Quantum Minerals. Of course, Dr Kaunda, if he was told the truth, would never have agreed in any way to defend the interests of a company that is engaging in such unfair and unjust dealings against the Zambian people. There has been a strong lobby for First Quantum Minerals to have its permits, title deeds, Zambia Environmental Management Agency clearance to be processed quickly.
Regardless of the lawsuits that First Quantum Minerals has initiated against the Zambian government, whatever this company needs, it is still getting from our government. How is this possible?
First Quantum Minerals is claiming US$30 million from the Zambian government. The company has also stated that in the coming few months, it will be suing the government for US$2 billion for allegedly abrogating the Kansanshi Development Agreement. Surely, is this a company whose interests our apostle, our government should be made to defend and promote? There is definitely something wrong with those in government who are handling these issues. As we have already stated, it's either they have been bribed by First Quantum Minerals or they are extremely incompetent and not fit to hold the positions they hold in our government.
It is important for the Zambian people and their leaders to know what type of company First Quantum Minerals truly is. First Quantum Minerals is trying to portray itself as a very good investor when it is not. These dealings we are commenting on cannot be said to be acts of a very good investor. They actually project the very opposite.
The question is: should we continue as a nation to grant benefits to such a company? Should our government continue to allow such a company to operate in Zambia? Why should our government continue to be so nice, so kind, so generous to a company that is suing the Zambian state for over US$2 billion?
This behaviour is not new or strange to First Quantum Minerals. We shouldn't forget that this is the same company, the same First Quantum Minerals, that was kicked out of Congo because of similar behaviour or conduct.
We urge the Zambian government to be very transparent over matters pertaining to First Quantum Minerals. Given what is going on, it may be necessary for the Attorney General of the Republic to make known to the Zambian people these legal suits that their government is having with First Quantum Minerals. It is important for the Zambian people to have a direct say on these issues because those who are handling these matters on their behalf seem to be compromised; they continue to give incentives to First Quantum Minerals, ignoring its lawsuits against the Zambian people.
There should be no incentives or other benefits extended to First Quantum Minerals by the Zambian government until it withdraws its lawsuits against the Zambian people.
Why should the Zambian government give First Quantum Minerals title deeds to 600 square kilometres of land in North Western Province when the same company is demanding over US$2 billion from the Zambian people?
It is clear that there is some arm-twisting here, some blackmail here. But why should the Zambian government accept to be arm-twisted, to be blackmailed by First Quantum Minerals in this way? If there are Zambian government officials who have eaten First Quantum Minerals' money, promising to deliver all these things to them come what may, then let them give to First Quantum Minerals that which belongs to them and let the Zambian people hold on to what is theirs because they were not a party to those deals.
It's clear that right now, First Quantum Minerals thinks it is calling the shots. Yes, First Quantum Minerals may be calling the shots now. But for how long? This type of behaviour, conduct or deals cannot be sustained over the long term. It is such things that lead to nationalisations.
They can be told to park their equipment and go. And in saying this, we are not in any way advocating anarchy. We believe in the rule of law. But what is happening borders on corruption and not legitimate business dealings. And the law punishes such conduct and practices.
Labels: ALEXANDER CHIKWANDA, CORRUPTION, DEVELOPMENT AGREEMENTS, FQM, NG'ANDU MAGANDE, TAX EVASION, TAXATION
Read more...
Deferring mineral royalties
By Editor
Fri 13 Sep. 2013, 14:00 CAT
Deferring mineral royalties will certainly leave government in a tight cash situation. It is therefore a decision that has to be taken carefully.
The mining companies are asking for this, arguing that the drop in copper prices has greatly diminished their capacity to pay such royalties. But there are others like former finance minister Ng'andu Magande, who feel that the mines "can't just be crying foul every time the price goes down by a dollar.
And it's only that we started taxing the mining companies on a wrong note. We were too kind to them and so, if we want to change the situation, they will go on and say you are not fair. For me, the current copper prices are reasonable and the mining industry must also be adjusting to accommodate the movement in market prices."
It cannot be denied that this government has bent over backward to listen to the cries of the mining companies. And most of their requests have been responded to favourably. For instance, the mining companies were very opposed to windfall taxes and the government gave in to their wish. And today, when there are windfall profits, the mining companies take everything. But they are not ready to take all the losses when prices are not favourable and they want to pass the burden to the government.
No one wants to see any mine closed as a result of cash problems because the government is over-milking them. If there are legitimate problems the mines are facing, the government has a duty to listen to them and seek some accommodation. But the government should not be the only burden-bearer. There is need for both the government and the mining companies to share the rewards and the risks equitably. This was the essence of the windfall taxes they rejected. They didn't want the government to share in the windfall profits but they want it to take a share of their 'windfall losses'. This is not fair. And if all taxpayers were treated in this way, the government would be collecting very little money from taxes. This is so because every sector or industry has its own problems. Prices of products and inputs change continually across many industries but this does not result in changes in the way they are taxed.
What's good for the mining companies is good for other sectors as well. Important as the mining sector may be to our economy, it only accounts for 11 per cent of our gross domestic product and contributes just eight per cent of our total revenue.
Concessions being extended to the mining industry need to be examined carefully if the government is to increase its revenues and meet its development targets. The negotiating capacities don't seem to be equal.The mining companies seem to be represented by the best experts available in this country and others from outside. Most of the people the government is supposed to rely on are advisors of mining companies.
There is need for government to strengthen its negotiating capacity when it comes to dealing with mining companies. This is the only way we will maximise revenue from our mining sector.
In saying all this, we are not in any way suggesting that the government should not entertain the cries of mining companies. We are simply saying that the government should be in a position to discern what is legitimate and what is not from the complaints of the mining companies. We need to favourably address legitimate complaints of these companies because if we don't, they will close. The government needs to dialogue with the mining companies in a more efficient, effective and orderly manner.
If we play around with income from the mines, soon the government will have difficulties servicing its loans, and we will run back into serious debt problems. Government is borrowing money, and rightly so, for infrastructure development on the basis of the expected revenues from the mines. If money from the mines is not flowing in the quantities expected, there will be problems. It is therefore important for the government to be very clear on what mining taxes can be negotiated away and on what can't.
If the government is not getting enough revenues from the mining sector, desperation will soon set it and the government will have no choice but to start borrowing heavily from the local market. This, of course, has serious disadvantages to the growth of the economy because it inhibits the private sector from accessing finance. The government crowds out the private sector in the local market. And when this happens, other taxes also will start to drop. Here discipline, and a lot of it, is required. So how we manage the mining taxes is of crucial importance to the economic progress of our country. And government needs to be given time to negotiate with the mining companies and come up with a win-win tax system.
Labels: DEVELOPMENT AGREEMENTS, MINING, NG'ANDU MAGANDE, TAX EVASION
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Magande opposes deferment of mineral royalties
By Chiwoyu Sinyangwe and Gift Chanda
Fri 13 Sep. 2013, 14:00 CAT
THE government cannot afford to defer mineral royalties in the current expansionary expenditure, says National Movement for Progress president Ng'andu Magande. And Magande says foreign mining companies are exaggerating the impact of the recent drop in copper prices on their operations.
Meanwhile, University of Zambia development studies lecturer Simon Manda said Zambia has room to raise more revenue from the mining sector without toiling with taxes.
Copper prices closed yesterday trading at US $7,170 a metric tonne as concerns over Syria eased and investors avoided making any bold bets ahead of a key meeting by US policy-makers next week.
Mines minister Christopher Yaluma on Monday said the government might defer mineral royalties to help mining companies hurt by dwindling international copper prices handle their loss of profitability.
But Magande, a former finance minister, said the government needed to maximise revenue collection to fund many huge unplanned expenditures announced in the last two years.
"I don't think this is the time we should be foregoing any revenues from anybody," he said.
"If we don't have enough of it revenue, we should tailor our budget to what exactly we have. They have gone ahead with these huge projects but did they forecast the revenue? Clearly after HIPC, one would want to caution the government that they don't take us on that route of heavy indebtedness again."
Magande warned that some of the infrastructure projects on the cards might not be completed as government coffers run dry.
He said increased government borrowing from commercial banks would push food prices high owing to the PF's failure to plan, distorting the macroeconomic position of the country.
"I hear the government is going to borrow US $350 million from the commercial banks to fund the salary increment of 200 per cent," he said.
"All the money the banks have, they will surrender it for the government to borrow, so there will be no money for farmers to borrow. If it will be there, it will be very expensive. So, what's going to happen to food prices next year? So you are saying we are going to keep macroeconomic policies correct but your actions are doing something else."
And Magande accused mining companies of exaggerating the impact of the recent drop in copper prices on their operations.
"For me, the current copper prices are reasonable and the mining industry must also be adjusting to accommodate for the movement in market prices," said Magande.
"They can't just be crying foul every time the price goes down by US$1. And it's only that we started taxing the mining companies on a wrong note. We were too kind to them and so, if you want to change the situation, they will go on and say you are not fair."
And Manda said while some stakeholders have observed that the mining sector can help finance the government's rising expenditure in the face of dwindling donor support, toiling with the mining tax regime all the time could have drastic consequences.
"We need to be careful not to have a situation where we maximise revenue collection at the expense of the very mining companies that are funding our budget," he said in an interview.
Manda said there was need to raise the Zambia Revenue Authority's capacity and ensure that various government institutions properly manage their spending.
The mining industry accounts for 11 per cent of the Gross Domestic Product and exports over US$3 billion worth of copper per annum, but contributes just eight per cent of total revenue.
"The PF government came into power under a populist agenda and they feel obliged to fulfil the promises they made to the people. But caution on mining taxes needs to be exercised not to kill the goose that lay the eggs," Manda said.
"People need to give the government time to dialogue with the mining companies to come up with a win-win tax system."
The government recently doubled royalties on mining to six per cent, arguing that the country does not benefit sufficiently from its mineral wealth.
Labels: DEVELOPMENT AGREEMENTS, MINING, NG'ANDU MAGANDE, TAX EVASION
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We've complied with govt's new tax regime - FQM
By Kabanda Chulu
Thu 14 Mar. 2013, 16:30 CAT
FIRST Quantum Minerals says its Zambian subsidiaries have complied with the government's new tax regime
without prejudice to the company's rights under the Development Agreement.
And construction of a 1.2 million tonne smelter has reached an advanced stage at Kansanshi Mines, a project that will result in the mining company becoming self sufficient in treating copper concentrates.
Meanwhile, the board of FQM that owns Kansanshi Mines has approved the second phase of the 400,000 tonne annual production capacity expansion project of the sulphide treatment plant facilities.
FQM stated in its financial and operational report for the three months and year ending December 2012, that the 2011 adjustment to mineral royalty from three per cent to six per cent was in breach of the Development Agreement it signed with the government at the time of investment in the country's mining sector.
"Government announced in 2008 a number of proposed changes to the tax regime in the country in relation to mining companies. FQM, through some of its Zambian subsidiaries, is party to Development Agreements with the government for its existing operations which provide an express right to full and fair compensation for any loss, damages or costs (including interest) incurred by FQM by reason of the government's failure to comply with the tax stability guarantees set out in the Development Agreements and rights of international arbitration in the event of any dispute," it stated.
"Following the change of government in 2011, the first Budget of the new government introduced a further increase in the copper mineral royalty tax from three to six per cent, effective April 2012, in breach of the Development Agreements. In the 2013 Budget, delivered in October 2012, the government has decreased the rate of Capital Allowances from 100 per cent per annum to 25 per cent per annum. This will impact the timing of the tax benefit from FQM's significant capital programs at Kansanshi and Sentinel. Until resolved differently with the government, FQM is recognizing and paying taxes in excess of the Development Agreement, resulting in an effective tax rate of approximately 43 per cent at Kansanshi."
According to highlights of the report, Kansanshi's concentrate was currently treated at smelters in Zambia.
"However, existing domestic smelting capacity will be insufficient to process the substantial increase in production resulting from the Kansanshi expansion and the Sentinel project hence the construction of a new copper smelter designed to process 1.2 million tonnes of concentrate to produce over 300,000 tonnes of copper metal annually," it stated.
"The smelter is also expected to produce one million tonnes of sulphuric acid as a by-product at a low cost which will benefit Kansanshi by allowing the treatment of high acid-consuming oxide ores and the leaching of some mixed ores. The additional acid is also expected to optimise the expansion of the oxide leach facilities and allow improved recoveries of leachable minerals in material now classified and treated as mixed ore."
It stated that detailed design works on the smelter were well progressed and all of the major equipment packages have been ordered.
"On site, earthworks construction is approximately 85 per cent complete and concrete pouring is 20 per cent complete. Mechanical installation commenced in January 2013. The project is scheduled for construction completion in mid-2014 followed by commissioning and ramp up," stated FQM.
Labels: DEVELOPMENT AGREEMENTS, FIRST QUANTUM MINING, TAXATION
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Rupiah, HH extend their anti-sata campaign to SA
By Kombe Chimpinde
Wed 13 Feb. 2013, 15:10 CAT
CHIEF government spokesperson Kennedy Sakeni has challenged former president Rupiah Banda to come out clean on yesterday's press conference in Johannesburg, which opposition leaders Nevers Mumba, Hakainde Hichilema and Sakwiba Sikota held in Rosebank.
And FDD president Edith Nawakwi has advised the opposition leaders to cool down and stick together since Zambia is still mourning the loss of 51 people in the Chisamba accident last Thursday's.
During the press conference staged to attract international sympathy for Banda, who is facing corruption-related charges, opposition leaders accused the government of, among other things, harassing and intimidating as well as attacking members of the opposition.
The opposition leaders accused President Michael Sata of trying to enforce a one-party state on Zambians.
The opposition leaders further claimed that President Sata was stoking ethnic tensions in the country and called for the suspension of Zambia from the Commonwealth on account of the alleged violations of human rights.
But Sakeni said the government was aware of Banda's direct links to immature and embarrassingly fruitless schemes to discredit President Sata's government and his governance style.
"For example, is it a coincidence that Mr Banda has been to South Africa twice in a week; he left on 6th February accompanied by Mr Dickson Jere and returned on 7th February; only to leave again for the same destination the following day," he stated. "And on 9th February, 2013, Mumba, accompanied by Nakacinda, similarly left for South Africa; only to be followed by Mr Hichilema, who was accompanied by Mr Jack Mwiimbu on 10th February. The result of these hasty and deceitful trips is today's (yesterday's) sponsored press conference in South Africa."
Sakeni advised Banda and his newly constituted defence team comprising the named opposition leaders that the matters he was facing would be justly determined within the Zambian jurisdiction, and not abroad.
"Therefore, let them make no mistake because the PF government is resolved to seek justice with regard to Mr Banda and his children's alleged involvement in the plunder of this country's resources," he said. "We shall follow the laid down legal procedures and processes to seek justice for all Zambian people… The truth of the matter is that Mr Banda is facing a credible investigation and this government has accorded Mr Banda respect so far as his legal rights and freedoms are concerned.
We therefore wonder what Mr Banda is scared of to hastily convene a press conference by proxy in South Africa," he stated.
Sakeni maintained that there were no human rights abuses against the leaders and members of the opposition as claimed by them.
The opposition leaders, during their briefing, also claimed that Zambia's democracy was under threat and accused President Sata of turning the country into a one-party state.
And Nawakwi said the opposition leaders should remember that there was time for mourning, sowing and reaping.
"Those who are aggrieved should realise that there are procedures in upholding the rule of law. And to my brothers, they should know better how to internalise their pain by following proper channels of addressing their grievances both at home and abroad," she said.
Nawakwi also wondered why the opposition leaders held their briefing in Johannesburg's Rosebank area, where they called for Zambia's suspension from the Commonwealth, when the institution's headquarters are elsewhere.
Labels: DEVELOPMENT AGREEMENTS, HAKAINDE HICHILEMA, KENNEDY SAKENI, MMD, OPPOSITION, RUPIAH BANDA, SOUTH AFRICA, UPND
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Magande ready to provide facts on RSZ Concession Agreement of 2003
TIME PUBLISHED - Friday, September 7, 2012, 7:22 pm
Former Finance Minister, Ng’andu Magande has called on President Michael Sata to constitute a commission of enquiry into the Zambia Railways Concession Agreement of 2003.
Magande who signed the agreement on behalf of government, says he is ready to give information regarding the concession, once called upon. He says as a former custodian of government property, he is obliged to put the record straight.
Mr. Magande has told ZNBC news that it is important for government and the public to know and understand issues surrounding the concession agreement.
And Railway Systems of Zambia Chief Executive Officer, Benjamin Even has said his organization is committed to discussing and clarifying the various issues over the concession agreement.
Mr. Even has told ZNBC in a statement that his organisation will respect the process to be determined by the government.
On Wednesday, President Michael Sata directed newly appointed Justice Minister Wynter Kabimba to revisit the Railway System Concession agreement.
ZNBC
Labels: DEVELOPMENT AGREEMENTS, MICHAEL SATA, NG'ANDU MAGANDE, ZAMBIA RAILWAYS
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Zambia’s mining tax rate highest in region
TIME PUBLISHED - Monday, August 6, 2012, 9:31 am
FIRST Quantum Minerals (FQM) Limited says the tax rates applicable to the mining industry in Zambia are the highest globally. Company head of tax Adam Little in an interview in Lusaka said FQM has from 2005 to date paid over K 9 trillion (US$ 2 billion) of taxes.
Of the total taxes paid, about K390 billion (US$ 84 million) is Pay As You Earn and K1.97 trillion (US$ 234 million) mineral royalties. Mr Little said despite the high taxes and high cost environment, mining prospects in Zambia remain bright for as long as Government does not try to kill the golden goose laying the golden egg.
“When you combine high existing taxes and high cost of production, it’s a country people will think twice before investing,” he said.
He described windfall tax introduced in 2008 as the worst tax he has ever seen, adding that it was retrogressive as it was charged on revenue rather than profits.
Mr Little said had the windfall tax persisted, a number of mines would have shut down at the time copper prices were high.
“I understand why people are calling for it (windfall tax) because they see what looks like a healthy industry and they see a contribution from the industry which isn’t high enough,” he said.
He said some companies are paying lower tax than people expect due to huge investment following privatisation.
[Privatisation was over a decade ago. - MrK]
Mr Little said once a number of companies reach tax paying levels and copper prices on the international market improve, tax and mining profits are expected to improve.
He said there is need to also improve capacity and capability levels of the Zambia Revenue Authority to collect taxes from the mines.
“Government should encourage future development, I don’t think that means offering individual incentives to the mines “No sweetheart deals” but coming up with consistent and fair tax environment,” he said.
Mr Little said because of the huge investments involved in mining, it is prudent that tax rates are stabilised as was in the old development agreements.
He said to operate new mines, citing the Trident project that includes Sentinel, Enterprise and Intrepid copper projects, one has to be efficient to control costs.
“Any additional taxes will make the next generation of mines that run on slim margins of copper very hard to succeed,” he said.
[Poor mines. - MrK]
Commenting on corporate social responsibility, Mr Little said FQM has been involved in upgrading of the local general hospital, Solwezi technical institute, upgrade of the Solwezi-Chingola road, sports development in Solwezi and was the major sponsor of the African Cup of Nations.
“As much as it is important that our corporate social programmes get through to the media, the big thing for us is tax contributions. Once the mines pay tax, the money is in the hands of Government and how it spends that money is between the citizen and Government,” he said.
[Zambia Daily Mail]
Labels: DEVELOPMENT AGREEMENTS, FIRST QUANTUM MINING, TAXATION, WINDFALL TAX
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CSOs protest over 'unfair share' from mines
By Gift Chanda
Sat 23 June 2012, 13:22 CAT
A CROSS section of civil society groups interested in the mining industry on Thursday demonstrated and pelted organisers of Zambia's second international mining conference in Lusaka over what they described as "unfair share" from the natural resources.
The civil society groups, who were also attending a parallel mining conference in Lusaka dubbed: 'Mining in Zambia; who benefits?' denounced investors in the mining industry over lack of attention on communities they operate in.
The interest groups, who were drawn from Europe and the Southern African Development Community (SADC) including Zambia, accused investors of ripping Zambia off its mineral resource and leaving very little benefits for the locals.
Carrying placards, some which read; "We want our money! Where is it?", "Let's have a fair share of the profits", the CSOs convened at the new Government Complex where the international mining and energy conference was taking place and denounced the investors operating in Zambia, Africa's top copper producer.
They regretted that despite Zambia being endowed with mineral resources, more than 60 per cent of its 13 million populace live under the poverty datum line.
The interest group also reminded the government on its pre-election promise to re-introduce the controversial windfall tax.
According to a communiqué, the civil society groups demanded among others, increased benefits from the mining sector.
They demanded that the government revises the current mining tax regime in a way that would enable it collect commensurate royalties on mineral sales, gross production and tax on mining profits.
"The existing tax regimes in the mining sector are inadequate and undermine the socio-economic benefits for Zambians from the extractive industries. This has resonated from lack of transparency and accountability across the whole mining value-chain, coupled with narrow scope and levels of the fiscal arrangement," read part of the communiqué.
"The multinational corporations continue to undermine and manipulate national laws, standards and regulations, resulting in the worsening of the situation on the ground. In addition, the Zambia Revenue Authority's limited capacity to monitor, collect and enforce tax laws has worsened the status quo."
They demanded that mines be owned 51 per cent by indigenous people to have a fair share of the profits realised from mining activities.
Presently, most mines are majority owned by foreign companies who are allowed to externalise 100 per cent profits under the Zambian laws.
"As owners of the natural wealth, we demand that Zambians be given the first priority in owning, prospecting and awarding of contracts," they stated.
"It is also imperative that Zambia's government monitors and controls capital flight."
Additionally, they asked the government for a clear, transparent and consistent contract awarding mechanism ostensibly resulting in maximising the benefits of extractive industries while promoting ethical investments.
The interest groups noted with concern that the Zambian government lacked the political will and capacity to negotiate contracts that should result in maximising the benefits of mining, while promoting ethical investment.
"Realising that mining contracts are shrouded with secrecy, we demand that there must be a clear, publicly disclosed and consistent contracting mechanism," they stated.
"The government must review all current extractive contracts based on best environmental management and social standards. Parliament should be actively be involved in the ratification of mining contracts to protect the interest of the Zambian people and enhance accountability."
Participants for the parallel indaba that was held under the auspices of the three Church mother bodies namely: Council of Churches in Zambia, Evangelical Fellowship of Zambia and Zambia Episcopal Conference, were drawn from South Africa, Malawi, Zimbabwe, Mozambique, and United Kingdom.
Labels: CSO, DEVELOPMENT AGREEMENTS, MINING, TAXATION, WINDFALL TAX
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Government must push for revision of mining agreements - consultant
By Misheck Wangwe in Kitwe
Thu 21 June 2012, 13:24 CAT
THE PF government must push for the revision of mining agreements to secure greater benefits from the sector, says an international labour consultant.
In an interview yesterday, Andy Stroll said although the government's move to tighten regulations on taxation of mining companies and revenue collection was a milestone to maximising profit for Zambians,
the major problem was with the initial mining agreements that were signed at privatisation.He said although the government had indicated that it would not nationalise the mines and other industries currently in private and foreign hands, it would be important to ensure that it creates a
win-win situation between Zambians and investors.
Stroll said the minerals mined from Zambia had been used to develop other countries but successive government had failed to achieve economic development on behalf of the majority poor.
[I would say neglected, not 'failed'. Failed implies that they tried and it didn't work - they didn't try. - MrK]
He said programmes initiated by transnational mining companies under their corporate social responsibility could not be considered as real investment for the nation because they were not adequate to meet the needs of Zambians.
"When it is all said and done, what will Zambia look like 20, 30 or a 100 years from now? Do we insist that we continue to be only consumers and employees and not employers and owners? Is it enough to just collect mineral royalties and other taxes with no actual growth for our individual citizens? What is the goal? These are questions national leaders must answer and take steps to correct the situation because Zambians deserve to see development. This country is endowed with mineral resources so the people don't deserve to be living in poverty," Stroll said.
He said it would be illogical for national leaders to continue eulogising developed countries that had invested in the mining sector and making their economies stronger when Zambia had continued struggling with chronic poverty, disease and various social ills.
Stroll said initiatives that the government had put up were commendable but Zambians expect the government to move a step further to protect the interests of citizens even if the mines were in private hands.
"It is not meaningless that Zambia's credit rating is better than that of Ireland and there is a recorded five per cent average growth rate over the last six years. There is hope that everyone now has a stake on the dinner plate and every child has a desk at school, it simply means the country is moving in the right direction and we can now attract investments that can grow our economies and broaden the tax base which in turn can be used to deliver social services," he said.
Labels: DEVELOPMENT AGREEMENTS, PF
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Chikwanka backs CSO's calls for windfall tax
By Gift Chanda
Sat 26 May 2012, 12:43 CAT
ANY democratically-elected government that sets conditions to only favour investors betrays its people, says Council of Churches social and economic justice programme officer Nsama Chikwanka.
Commenting on calls by civil society organisations to reintroduce windfall tax in the mining sector, Chikwanka, a development expert, said there is need for the government to stop protecting the interests of investors at the expense of the people that ushered them into power.
Civil society organisations have stepped up calls for the reintroduction of the windfall tax on mines as the PF government prepares its first wholly developed national budget.
He said it is important for the government to establish that a country can only develop from the prudent utilisation of its various resources, both human and natural.
In this case, Chikwanka said the principal beneficiaries of Zambia's natural resource endowments should be Zambians and anything short of that is short-changing the owners of the land.
"It is betrayal of its people for a democratically-elected government to set conditions that support or favour the investors," Chikwanka said in an emailed response to a query.
"The story about ensuring that the goose is not killed should be viewed also from the point that we should not let the geese become so powerful as to start dictating how many eggs it should contribute. Any investment should not disadvantage locals."
He pointed out that at the moment, apart from the huge holes, traffic jams, finished roads, increased pollution and interim media statements, there is nothing to show for the boom in the mining sector.
"A walk to the Copperbelt tells the whole story; all roads leading to all major mining towns are in deplorable state and are death traps," Chikwanka said.
"The government needs to start governing instead of protecting the interests of investors."
He called on the government to involve everyone in the country's development agenda.
"Our greatest challenge is the unclear tax system for the country. Firstly, there are so many taxes in the sector, some of which are conflicting, and are responsible for the misunderstanding that is created when companies start giving their total contribution to the treasury. We need tax policies and systems that can be understood by all; at the moment, there is a system that works for and is only understood by government and sector investors. The current discourse is confusing to the common Zambian who is left to wonder how tax experts have failed to agree on this concept," Chikwanka said.
"So the challenge is for Zambia to harmonise its tax system that will be clear for all because at the moment, only the government and investors claim to understand what taxes are collected and how much.
"Any tax information that is coming from civil society and other interest groups is disputed."
He further noted that the other compounding factor to the whole tax debate in the mining sector is the secrecy surrounding the mining agreements.
International Monetary Fund country representative Perry Perone recently revealed that the Zambian government had agreed to conduct a comprehensive review of the mining tax regime.
"Until the government comes in the open to state the nature of the mining agreements, Zambians are justified in their speculations and cannot be blamed for concluding there is corruption and abuse of authority in the whole process," said Chikwanka.
Labels: CSO, DEVELOPMENT AGREEMENTS, IMF, MINING, TAXATION, WINDFALL TAX
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COMMENT - Not only the corrupt deals with LAP Green should be looked at, but so should the Development Agreements.
Give to Caesar what belongs to Caesar
By The Post
Fri 06 Jan. 2012, 14:00 CAT
THE decision by Michael Sata's Cabinet to reverse the clearly corrupt sale of Zamtel to Libya's Lap Green is not a small one. It is clear that under Michael's government, it may be very difficult for corrupt elements to retain the fruits or benefits of their corruption.
It was very well known from the very beginning that the decision by Rupiah Banda's league to sell Zamtel was not in the public interest but for the benefit of those involved in it.
And it may not be difficult to trace the personal benefits from this deal accruing to Rupiah himself and his sons and to Dora Siliya.
They were all warned about the consequences of what they were doing. But they were very determined, they were not ready to listen to anyone or indeed to forego the gigantic personal benefits that this deal provided for them.
This deal started with a clearly corrupt engagement of RP Capital by Dora with the help or participation of Rupiah's son, Henry. We questioned what Henry's interest or role was in this matter since he was not even a government official. Henry's name also came up at the tribunal that was set up to probe complaints raised by some members of the public on this matter.
That tribunal proved to be a sham. But in saying this, we cannot ignore the spirited fight that we are told by insiders to have been put by Justice Dennis Chirwa to protect public interest. But he was out-numbered.
It will also be interesting to review the decisions that came from our courts of law when this matter was taken there and the quality of decisions that were arrived at by the adjudicators as to whether they were truly anchored on law or things were twisted to suit a desired or decided outcome.
Clearly, what is coming up in this matter is starting to raise serious questions about the competence and probably the integrity of our judicial officers. And there should be no pulling punches. Every decision that was made by anyone, judicial or otherwise, on this matter calls for a review, for a critical analysis.
The decision and conduct of the tribunal that was set up to examine this matter requires a critical review. And equally, the decisions that were arrived at on this matter in our courts of law must also be subjected to critical analysis. If, in the final analysis, it is found that those who adjudicated in this matter lacked certain characteristics required by their offices, the public should be made aware of this so that we all know what type of adjudicators they are and what confidence and trust we should place in them.
And reading the findings of the commission of inquiry, it is clear that Lap Green knew very well that they were engaging in a corrupt deal with some officials of the Zambian government. But this was not strange. It was a way of doing business in Africa under the Gaddafi regime.
This regime corrupted weak African leaders with gifts or rather bribes. We know Libya under Gaddafi acquired properties and businesses all over Africa. Who doesn't know how they corruptly acquired some state-owned hotel in Kenya! This was the regime that the Zambian government of Rupiah was dealing with. Who doesn't know how Gaddafi used money to get what he wanted from some African leaders?
Briefcases of money used to be given to many weak and corrupt African leaders by Gaddafi. And Rupiah's government, in this matter, cannot claim to have sold Zamtel to Lap Green in a clean, transparent and honest manner. The deal was a corrupt one. And it is only right for Lap Green to give back to Caesar that which belongs to Caesar, to the Zambian people that which belongs to them.
Of course, those with evil minds, those with corrupt inclinations will tomorrow accuse Michael of nationalising foreign private enterprises and scaring away investors. This will be nonsensical. There is no country with decent people and decent leaders in the world that couldn't have taken the decision and action Michael's government has taken. Go and do the same in the United States, UK, Germany, Sweden, Denmark, Finland, Holland or France and see what will happen to you and your deal.
Honest investors, businessmen of goodwill, would certainly welcome this decision and support it. We want foreign investment but only honest foreign investment. It is not foreign investments at all costs that we are looking for. Those who want to do honest business have great opportunities in Zambia. But there are many corrupt elements masquerading as businessmen and doing all sorts of corrupt deals with some of our weak and corrupt leaders.
Probably this calls for us taking a slightly different approach in fighting corruption by also going for corrupt businessmen, those who corrupt our public servants. We say this because if we don't go for those who pay bribes to get government business and assets on the cheap, our fight against corruption will not succeed. And we will be changing one corrupt regime after the other to be corrupted by the same elements.
People should know that the era of corruption and impunity in Zambia is gone. And there should be no one protected from prosecution for corruption. And this includes foreign investors, former presidents and their ministers and even judicial officers who corruptly abuse their positions to adjudicate in a certain way because it is in one way or another beneficial to them. We should start seeing law enforcement officers and judges who are corrupt being arrested and prosecuted for betraying a public trust.
Michael's government is taking very tough decisions. And if they continue on this path, they will soon come under serious attack from evil people, from corrupt elements. We therefore need to sharpen our awareness, politically and otherwise, and be ready to take on corruption and its agents when they start to hit back.
Michael and his government deserve the support of all of us in these endeavours. Michael alone will not be able to win this gigantic war for us. We have to participate. We have to enlist as soldiers in it and be prepared to fight under his command and leadership.
For all his mistakes, for all his weaknesses, Michael is taking the right decisions in the most important areas of the political, economic and social life of our country. Let us give him the support and of course, the criticism when it is necessary to do so.
Criticising wrongdoing is another way - a reversed way - of supporting someone, of supporting something.
As for Rupiah, his sons and Dora, among others, let the law take its course in the most just and fair way. If they are found wanting, let them go to jail like any other criminal. We have to end corruption. We have to end impunity.
Let us cleanse our nation of corruption and of all other vices that accompany it.
Labels: CORRUPTION, DEVELOPMENT AGREEMENTS, DORA SILIYA, LAP GREEN, RP CAPITAL PARTNERS, RUPIAH BANDA, ZAMTEL
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‘Govt should reveal mine tax terms’
By Chiwoyu Sinyangwe
Thu 02 Dec. 2010, 03:59 CAT
THE government should disclose the terms under which it has agreed the new tax regime with the foreign mining firms, says the Economics Association of Zambia. Last week, finance minister Dr Situmbeko Musokotwane announced that the government had reached a deal with foreign mining companies whose long-term agreements the government had cancelled in 2008 to introduce higher taxes.
Dr Musokotwane said mining companies agreed to pay taxes based on the current tax regime and to pay K413 billion more in tax arrears than estimated in the 2011 budget.
EAZ president Noel Nkoma said the failure to disclose the contents of the agreement raised suspicion among key stakeholders.
“For the purpose of transparency, the government should be able to come out publicly and say we engaged the mines…” Nkoma said.
He warned that the lack of transparency might lead to a repeat of the one-sided Developmental Agreements (DAs) which suffocated the country’s ability to raise mining tax revenues even in face of record high metal prices.
“As EAZ, we equally share concerns that have been raised by various interest groups,” Nkoma said.
“What we are interested in as Zambians is we want to see the things that have been adjusted in the tax regime. Which taxes have they adjusted? Is it the mineral royalty or what other interventions they are able to put in place to realize equitable deal.”
Nkoma said there was room in the current structure to raise mine taxes without stifling growth of the country’s mainstay. He said given the current copper prices, Zambians could benefit more if the government increased the revenue from the mines.
“In no way are we suggesting that we should be able to suffocate the mines to a point whereby they are not able to operate profitably,” said Nkoma.
Labels: DEVELOPMENT AGREEMENTS, NOEL NKOMA, WINDFALL TAX
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S/Africa NGO condemns MMD’s ‘secret deals’ with mines
By Kabanda Chulu
Mon 08 Nov. 2010, 04:00 CAT
SOUTHERN Africa Resource Watch (SARW) has accused mining investors of lacking a human heart and care for environmental and human rights issues.
The South African-based civil society organisation has also condemned the MMD government for having tied the country into
‘secret deals’ such as 20-year contracts that have allowed mining companies investing in Zambia to
pay virtually no taxes or royalties, claiming that the mines were undergoing
recapitalisation.
Out of the K15.23 trillion projected as revenue to support expenditure in 2011, K1.85 trillion will come from mining tax while mineral royalty revenue will be K404.7 billion, with K554.8 billion coming from mining tax arrears.
Currently, copper prices have maintained a 27 month-high selling at over US$8,300 per metric tonne but the MMD government has remained adamant to reintroduce windfall taxes, claiming that it is a disincentive to mining investment.
In its report titled Copper boom in Zambia: boom for whom? SARW through its researchers, Chola Mwitwa and Claude Kabemba, stated that Zambians were not adequately rewarded from the boom in copper prices because new investors lacked a human heart.
“Undoubtedly, the mining of copper has impacted both positively and negatively on the lives of Zambians. The copper mining industry employs over 40,000 Zambians directly and contributes over 10 per cent to GDP. The mining industry has contributed less than US$1 billion in corporate taxes, less than US$30 million in mineral royalties but relative to corporate taxes and mineral royalties paid elsewhere in the world, these figures are very low,” it stated.
“Despite the huge return on their activities, mining companies are not investing in local communities or workforce in areas in which they mine, as such, Zambia’s economy has been growing at a rate of five per cent a year over the past few years but this growth has not been passed on to the Zambian people.”
It observed that before privatisation of the mines, the government used the assets of ZCCM to diversify the economy.
“ZCCM established subsidiary firms that focused on tourism (Kasaba Bay and Manchinchi Bay lodges), agriculture (Mpongwe Farms), agro-processing (Mulungushi Milling) and transport (Mulungushi Travellers). Copper mining companies, both in private hands before independence and in public hands after independence, developed and maintained social infrastructure such as schools, hospitals and sports facilities since investors then knew that it was in their best interests to motivate workers in some measure,” it stated.
It stated that the selling of the mines to foreign investors in a somewhat haphazard fashion had its own advantages and disadvantages.
“However, negative effects seem to have outweighed the positives. Furthermore, the new mining investors are not contributing as much to the local social infrastructure, although Lumwana Mines is proving to be the exception,” it stated.
“A comparison between copper mining towns before privatisation and now during the boom will show that conditions have not changed for the better. The roads have potholes and are in poor condition, training programmes for artisans have been abandoned, football fields are unkempt and the new mine owners no longer operate hospitals and schools.”
It stated that it was not surprising that Zambians were challenging the entire economic model espoused by the MMD government.
“People are aware of the inadequate maintenance of social infrastructure left by investors in the mining townships and argue that as much as the country needs foreign investment it must also ensure that it is self-sustaining,” stated SARW.
“It is not judicious for the Zambian government to allow foreign companies to operate without having to pay import or value added taxes indefinitely.
When will the finance minister levy taxes on minerals that will eventually result in decent salaries being paid to Zambian civil servants?”.
Labels: CORRUPTION, DEVELOPMENT AGREEMENTS, NGOs, SOUTHERN AFRICA RESOURCE WATCH, WINDFALL TAX
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Paradoxes in mining sector
By Business Post Editor
Tue 13 July 2010, 09:10 CAT
Zambia has over the years been a recipient of substantial foreign investments especially in the mining sector. This has been necessitated by the privatisation of the mines a couple of years ago by Frederick Chiluba’s government. It cannot be denied that since then, mining has been one of the most favoured sectors by the government in Zambia.
Placing the mines in private hands meant that any income to the state will not directly be from sales and profits from the mines, but rather from any taxes that can be levied on the companies – in the form of income tax for employees, VAT paid on services purchased by the mines, border taxes paid on imports and exports, corporate taxes on profits, and mineral royalties on sales of copper – although
these are paid just by a few mining companies.
However, as we saw not too long ago, in their Development Agreements, the mining companies managed to negotiate exemptions from paying most of these taxes. Therefore, mining contributions, in general, to total tax revenues are extremely small. This is a source of significant resentment among most well-meaning citizens of this country as the government has been known to be favouring international investors over local business owners.
It is clear that the mining industry only contributes to government revenue through the taxes paid by its employees in form of income tax. However, in their Development Agreements, companies negotiated to pay lower corporate tax rates than apply to other industries. Because they are also able to roll losses from previous years forward and to write off profits that would have been taxable, the mining sector barely contributes at all. We are aware that mining contributes less corporation tax than smaller sectors such as the financial services and telecommunications sector.
The mining sector also claims back from the Zambian government all of the VAT that it pays on goods that it buys locally. Since the company from which these good were initially bought will have paid the VAT aspect of the price charged to the government, and the government then pays that back to the purchaser, VAT contributions show up as a minus figure – a subsidy from government to the mines.
And as Situmbeko Musokotwane, the Minister of Finance and National Planning, has stated in his Letter of Intent to the International Monetary Fund, mining sector contributions to Zambia’s Gross Domestic Product (GDP) over the last decade have not been matched by commensurate contributions to domestic revenues. This is very correct. And it is sad that those charged with the affairs of managing our country’s resources have allowed this to happen for such a long time. Dr Musokotwane himself, as our Minister of Finance, therefore has the duty to ensure that the mines’ contribution to domestic revenue is in line with their GDP contribution. But we wonder if this is an easy task for the current regime owing to their strong opposition to the windfall taxes.
We are aware of the fact that most of these mining companies in Zambia today do not meet most of their tax obligations. Dr Musokotwane says the government has commenced discussions with the mining sector aimed at resolving legacy issues related to the Development Agreements as well as the mines’ adherence to the current tax regime.
But we wonder what the outcome of these discussions will be. We say this because our people have not been part of these agreements that government enters into with the mines although the mining activities take place in communities where people live. In extreme cases, people have been displaced and end up suffering. We have not forgotten that at the time when Development Agreements were still in force, these were highly guarded documents whose contents were considered top secret – only known to the mines themselves and the top government officials.
It is, therefore, sad that the mines continue to contribute minute amounts from their earnings out of our mineral resources despite making enormous profits. This is all as a result of this government’s decision to scrap windfall taxes which would have seen these mines paying reasonable amounts for our mineral resources. But this is what we expect from leaders whose main interest is to satisfy their own needs at the expense of the many suffering citizens of our country who survive on less than a dollar a day.
Labels: CHILUBA, DEVELOPMENT AGREEMENTS, MINING, PRIVATISATION
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COMMENT - So you have one mining specialist who is stating the obvious, and one mining industry apologist. Give me a break. Zambia needs development and services now, not 20 years from now. The money is needed to diversify the economy, and claiming government corruption as the reason why foreign mining companies should rob the country blind and on top of that get refunds for taxes they don't pay is pathetic. We can always deal with the government later on, but meanwhile those revenues are leaving the country, never to be seen again. And the windfall tax isn't going far enough. Just drop all taxes on the mines except mineral royalties tax on turnover, and raise it from 3% to 20%. Which is both substantive and easy to collect. Or just nationalize them.
Mining firms are claiming tax refunds from ZRA - Dr Mpande
By Chiwoyu Sinyangwe
Tue 29 June 2010, 03:20 CAT
MINERAL economist Dr Mathias Mpande has disclosed that mining firms are claiming tax refunds from Zambia Revenue Authority (ZRA), rendering the mining sector contribution the country’s Treasury in negative.
Dr Mpande, who described tax compliance by mining firms as voluntary, said only Chinese-owned mines were up to date with tax remittances for fear of being executed when they go back to their country.
But private consultant John Kasanga said increasing revenue earning from the mining sector was not likely to translate into improved social delivery by the government but instead augment fiscal spending to promote consumptive expenditure.
The duo was speaking last week during the Centre for Trade Policy and Development (CTPD) discussion forum organized in collaboration with Economic Association of Zambia (EAZ), Caritas Zambia and Evangelical Fellowship in Zambia (EFZ) at Mulungushi International Conference Centre in Lusaka.
Dr Mpande, who is also University of Zambia (UNZA) senior mining economics and engineering lecturer, said the net contribution of the mining tax revenues as a product of the total national revenue collection had consistently continued to be in negative terms.
He based his findings on the recent study he undertook with Kasanga on “How to do with the mining taxation” and the contribution of the mining tax revenue in the country.
“It is all negative. No positive to the tune of -13 per cent…the mining industry is getting out of Zambia Revenue Treasury instead of contributing to it,” Dr Mpande said.
“…the mining companies are duty exempt, VAT Value Added Tax exempt and then they have tax holidays of up to 10 to 20 years. How do you allow somebody who is not paying…somebody who is not whatever it is to go and claim from what other people have paid?”
He said poor tax collection from the mining sector was not only impacting negatively on the operations of ZRA but also the county’s revenue position as a whole.
“They don’t pay duty these mining companies…some of them are not paying income tax because they are tax exempt,” he said.
“But every month, they are going to ZRA to claim their VAT for which they are not supposed to pay and as a result ZRA is insolvent, bankrupt…from your little taxes you are paying, mining companies are taking back. That is not fair.”
Dr Mpande said there was need for the reintroduction of the 25 per cent windfall tax on copper to help the country to tap into the high profits mining companies were enjoying owing to the current high international metal prices.
H explained that with the current buoyant international metal prices, coupled with the projected output of 700, 000 metric tonnes of finished copper cathodes, the mining sector would have this year contributed tax revenues of about US $1.2 billion from projected earnings of US $4. 8 billion.
Last month, finance minister Dr Situmbeko Musokotwane said the country expected mining revenues to rise to about 30 per cent of the nation's total revenues by 2013 from around four per cent last year after mining firms “start making profit”.
He described as a scandal revenue collection by ZRA from foreign mining firms in the country.
“…There is purely voluntary compliance and only the Chinese are complying to pay because they fear that the Chinese government will go and execute them if they are not paying some taxes in Zambia,” he said.
Dr Mpande, who said taxes should be simple to administer, said ZRA did not have the capacity to administer the disputed variable profit tax.
“Nobody is willing to disclose voluntarily his income. What about mining companies that are even more sophisticated and can hide gold and say it is dusty. Whatever we collect is purely by voluntary compliance,” said Dr Mpande.
“So, if you think you can collect variable profit tax with complicated formulas to collect revenue from the mines, you will never collect tax. There is nobody in that ZRA office according to our investigations who can supervise those mining companies. No mining engineer, no geologist, no metallurgist, purely public administrators and customs officers. They don’t understand how the mining industry works and so, they can’t collect it properly. So, the easier, the better…”
But Kasanga opposed calls for the reintroduction of the windfall tax, arguing that the country’s debate should be anchored on how it spent money from the mining sector.
He said increased revenue from the mining sector was not going to guarantee the country’s improved fiscal space for social spending and investments aimed at making a dent on current weak infrastructure.
“Copper industry is not seen as strategic in this country but just as a source of revenue, and that is part of the problem,” Kasanga said.
“The debate on windfall tax can easily detract the nation from determining what the government ought to be doing with earnings from the copper industry. With improved earnings from the copper industry, it is easy to start building larger government, we see bigger cars, increase in gratuities for MPs members of parliament…we simply have got no strategy.”
He said the issue surrounding windfall tax had been used to whip peoples’ emotions when the country runs out resources and that it had never been debated in a sober manner.
He said there was need for the country to take a longer view of the mining sector to improve Zambia’s ranking among the major global players in copper exporting category.
Labels: CORRUPTION, DEVELOPMENT AGREEMENTS, JOHN KASANGA, MATHIAS MPANDE, MINING, WINDFALL TAX, ZRA
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