Zambia targets copper fortune
By Paul Moss
BBC World Tonight, Zambia
Andrew Hickman sits at his desk and passes over a copy of his company's latest annual report. The tax has been imposed in breach of internationally binding agreements Andrew Hickman, First Quantum Minerals
You do not have to be an accountant to get the basic message: First Quantum Minerals are doing well out of Zambia's copper. It is no great surprise. Demand from China has pushed the price of copper to record levels; it is four times what it was just a few years ago. And with the copper mines' productivity up as well, money is rolling in.
"Since privatisation," Mr Hickman says, "several billion dollars of private investment has gone into Zambia's copper mines.
"It is still a poor country, but people are more prosperous than they were 10 years ago, and that's largely down to new investment in the mining industry."
Uneconomic mining
But the Zambian Government is not convinced that the mining companies have brought enough wealth into the country.
This is one of the poorest in the world, with high unemployment, and low life expectancy.
So last April, to fund its programme of poverty reduction, the Government introduced a series of new and higher taxes on the international companies that come here to mine.
"The tax has been imposed in breach of internationally binding agreements," insists Mr Hickman, "and to a large extent, it's making the mines uneconomic."
Unfit for humans
That may be, but it is wildly popular.
This water is contaminated and mosquitoes breed here, causing malaria
Mwenda Immanuel, trade union activist and volunteer for debt forgiveness campaigners Jubilee
President Levy Mwanawasa's decision to introduce the tax last April was supported by politicians of every ideological hue.
And for those working on poverty reduction, it seems self-evident that the money generated by Zambia's natural resources should be used to make life better for all its citizens.
Mwenda Immanuel, trade union activist and volunteer for debt forgiveness campaigners Jubilee, arranges a trip to the shanty town of Kantolomba, just a few miles from Quantum's copper processing plant.
Many of the people here are clearly malnourished, their homes decrepit and overcrowded. Pigs are bathing in a muddy pool that serves as a water-source for locals.
"This water is contaminated and mosquitoes breed here, causing malaria," Mr Immanuel says emphatically.
"There is no healthcare. The mining companies have to pay more tax to pay for clinics, schools. The Government needs the money for development."
Changed conditions
Mr Immanuel's view is backed by the man regarded by many as the father of Zambia.
Kenneth Kaunda nationalised the mines when he was President. The later decision to reverse this is one he bemoans, and he is convinced that if mining companies are to profit from Zambia's copper, their tax contribution should increase.
"Copper is changing in value, and therefore everything must change," he insists.
"Are we expected to say that what we agreed upon yesterday is valid today?"
Countered with the suggestion that, yes, that is how a contract works, and that if Zambia abrogates the deal, other mining companies will be put off investing here, he merely laughs.
"India wants copper, China wants copper - there's a wide market," he says.
Spooked investors
But others in Zambia are not so sanguine.
The Chamber of Mines has warned it is not only mining companies that will be put off, but that all foreign investors will see the country as high risk if the new tax is imposed as promised.
They also say that copper mines require constant upkeep and upgrading, and that this process will be put in jeopardy as well, if the mining companies are more heavily taxed.
But the Zambian government shows no sign of backing down right now.
And some observers believe its actions as just one sign of a more general movement now spreading through Africa.
"I'm seeing this in Malawi, in Uganda," says Robert Mtong, a political campaigner and seasoned observer of how foreign companies operate in Africa.
"People are asking 'where is the money that belongs to us?' In the Niger Delta in Nigeria, people are asking, 'where is the money that comes from the oil?'
"It's early days yet, but a wind of change is blowing, and it will blow more and more."
Labels: ANDREW HICKMAN, FIRST QUANTUM MINING, WINDFALL TAX
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First Quantum profit doubles
By Rob Delaney
Tuesday May 20, 2008 [04:00]
First Quantum Minerals Ltd., the Canadian miner of copper in Zambia and the Democratic Republic of Congo, said first-quarter profit more than doubled because of higher output and prices. Net income climbed to $182 million, or $2.65 a share, from $78.3 million, or $1.14, a year earlier, Vancouver-based First Quantum said yesterday in a statement. Net sales nearly doubled to $512 million.
First Quantum Chief Executive Officer Clive Newall is increasing copper output to take advantage of rising demand from China and other developing countries.
Copper on the London Metal Exchange was 30 per cent higher, on average, in the first quarter compared with a year earlier, and reached a record $8,880 a metric tonne on April 17.
First Quantum’s total copper output may rise 32 per cent to 310,000 metric tonnes in 2008, from 226,693 tons in 2007, Newall said on January 22.
That estimate was higher than the 300,000 tons previously forecast because of better-than-expected performance at the Kansanshi mine in Zambia.
Kansanshi yielded 52,303 tonnes in the first quarter, accounting for 69 per cent of the company’s total copper output in the period. Commercial copper production at First Quantum’s frontier mine in Congo, which began in November, will be about 84,000 metric tonnes in 2008, the company stated.
Labels: FIRST QUANTUM MINING, MINING
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Buried vehicles at First Quantum raise environmental concerns
By By Mulimbi Mulaliki
Friday March 21, 2008 [03:00]
FIRST Quantum Mining Operations Limited (FQMOL) mining division at Kansanshi Mining Plc has buried some vehicles raising environmental concerns among workers and stakeholders in Solwezi. Handing over a refurbished Toyota Hilux double cab to Zambia Police Service in Solwezi on Wednesday, FQMOL project manager Ron Day confirmed that the company buried vehicles which had outlived their lifespan within the mine area.
“The vehicles buried were just scrap and they could not be sold that is why we decided to burry them. If they were in a good condition we could have auctioned them to either members of the public or to our workers,” Day said.
Day said the company followed procedure in disposing of the vehicles, adding that the method they used was not going to pose any effect on the environment.
Solwezi Council spokesperson Kingsley Mutayachalo expressed concern by FQMO decision to burry the vehicles.
Mutayachalo said it was not safe to burry the vehicles because they remained an environmental hazard.
“They should have found a better way of disposing off the scrapped vehicles other than burying them,” Mutayachalo said.
But some workers said the buried vehicles were still running. The workers indicated that their management refused to sell the vehicles to workers fearing that they would be stealing spare parts from the ware house to be servicing the same vehicles.
“We drove those vehicles to the site where they were buried and they have decided to refurbish one of those still remaining and donated to police as a way of avoiding criticism,” the workers said.
During the donation, Kansanshi Mine public relations manager Philip Msiska said the population increase in Solwezi had brought a number of challenges for the police to cope with.
Msiska said the vehicle donated to police would help to enhance police operations.
“It is common knowledge that the renewed economic operations in Solwezi have also attracted criminals.
This means that police now has to work even harder to contain crime in Solwezi. However, these efforts on the part of the police are sometimes hampered by limited availability of operational vehicles when the police desperately need to cover several areas at the same time,” Msiska said.
And in receiving the vehicle, North Western Province police commanding officer Fabian Katiba appreciated Kansanshi Mine’s continued assistance to police operations in the district.
Katiba said the vehicle would assist police in policing crime by increasing night patrols.
Labels: FIRST QUANTUM MINING, KANSANSHI MINING PLC, POLLUTION
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First Quantum seeks solution to its future investment uncertainity
By Kabanda Chulu
Friday February 29, 2008 [03:00]
FIRST Quantum Minerals, the holding company of Kansanshi and Bwana Mkubwa copper mines, has urged the Zambian government to resolve the uncertainty over its future investments following the introduction of windfalls taxes. Last month, the Zambian government proposed a number of changes to the country’s tax regime relating to the mining industry.
First Quantum president Clive Newall yesterday stated that there was urgent need to hold talks with government officials in order to resolve uncertainties over the future of its investments.
“Among other things, the government is proposing an export levy on concentrates, a windfall tax that is triggered by higher metals prices and increases to the royalty rate and standard income tax rate, Newall stated. “And the impact of the changes, if they were enacted into law, on the company, is not clear yet, but they can be material, so First Quantum would like to have discussions with a number of government officials, both to assess the situation and to attempt to influence the outcome.”
First Quantum Minerals had six operational mines, including the Kansanshi open pit copper and gold mine, the Nkana underground copper mine and cobalt refinery, the Mufulira underground copper mine, smelter and copper refinery, the Bwana Mkubwa mines in Ndola, the Lonshi open pit and Frontier copper mine in the DR Congo and the Guelb Moghrein copper-gold mine in Mauritania.
Labels: FIRST QUANTUM MINING, WINDFALL TAX
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ACC stalks permanent secretaries
By KASUBA MULENGA
THE Anti Corruption Commission (ACC) says it may institute investigations into financial irregularities among controlling officers following revelations of misappropriation of public funds by the Parliamentary Public Accounts Committee (PAC), which is currently sitting.
ACC Director-General, Nixon Banda, said at a press briefing in Lusaka yesterday that his department would investigate permanent secretaries if it became apparent that they were involved in corrupt practices.
"Clearly, these are matters which have taken place and in some cases we have recommended that they be dealt with administratively. But where corruption is involved, we will definitely move in," Mr Banda said.
He said investigations into alleged corruption at the Ministry of Lands had reached an advanced stage and the culprits might be arrested in the next few weeks.
Mr Banda said some of the officers involved had already been punished, suspended or dismissed while others would soon be appearing in court.
Mr Banda said a combined team of officers from ACC, the Drug Enforcement Commission and police were working hard to ensure that investigations were concluded in good time.
"Investigations have now reached an advanced stage to an extent that cases have been isolated, possible offences identified and decisions are soon to be made in the next week or two on effecting arrests on the suspects," he said.
Mr Banda also warned companies against engaging in corrupt practices because they risked being blacklisted.
On the glaring financial irregularities at the Ministry of Community Development and Social Services raised in the 2007 Auditor-General's report regarding imprest, Mr Banda said since the allowance was retirable, ACC recommended that such matters be dealt with administratively so that the funds could be recovered.
And Mr Banda was worried about the escalating number of corruption cases in various Government departments.
He said out of the 466 reports, which ACC received between January and March 2007, about 347 were complaints against public officials while 99 were recorded from the private sector.
Mr Banda feared that the sensitisation workshops ACC conducted might be misunderstood, especially among public officers.
He said ACC would start re-strategising to ensure that the number of corruption cases in Government departments was reduced.
According to statistics, Lusaka recorded the highest number of corruption complaints totalling 168 while the lowest in the country was Mongu with 12.
Out of the 466 reports, 195 were categorised as corruption complaints while 251 were non-corruption related complaints and were treated as information received.
"From the 195 corruption complaints, only 141 cases were authorised for investigations while 54 were deemed not to be pursuable," he said.
Mr Banda said the total number of cases closed in the first quarter, including those brought forward from the previous year, was 119.
He said ACC closed investigations on some cases because of lack of evidence and non-availability of witnesses.
Mr Banda also announced that ACC recorded seven arrests for various offences of corruption in the first quarter of 2007.
He said during the first quarter, the commission registered seven new prosecution cases, which resulted in four convictions while two were acquittals.
The other case is still pending.
Meanwhile, Civil Servants and Allied Workers' Union of Zambia (CSAWUZ) general-secretary, Darison Chaala, has advised his members countrywide against involving themselves in misappropriation of public funds.
Mr Chaala said in a statement in Lusaka that CSAWUZ was concerned about the revelations of the Auditor-General's report and the submissions to PAC that substantial amounts of funds were being misappropriated in Government.
"As a union, we are disturbed by the many issues of abuse of public funds, unretired imprest and other financial irregularities reported in the Auditor-General's report during the on-going sittings of the Public Accounts Committee of Parliament," Mr Chaala said.
He called on members to take the responsibility of fighting the growing scourge in public offices and ensure that funds allocated to their departments in this year's budget were properly spent.
http://www.daily-mail.co.zm/press/news/viewnews.cgi?category=2&id=1128063107
Clerk nabbed over K1bn.
By REBECCA CHILESHE
AN ACCOUNTS clerk at Police Service Headquarters in Lusaka has been arrested for allegedly stealing over K1 billion. This allegedly happened between January 2005 and August 2006. Ministry of Home Affairs Permanent Secretary, Peter Mumba, revealed this yesterday when he appeared before the Public Accounts Committee (PAC) sitting at Parliament.
Mr Mumba said the officer allegedly failed to account for K215,695, 400 million between June 2005 and August 2006. He also said the accounts clerk further failed to deposit an amount totalling K976, 661,400 into Control 99 between January 2005 and August 2006.
"The officer who failed to account for the K225, 695,400 has been arrested. He is the same officer who failed to credit an amount totalling K976, 661,400 into Control 99 as the credit slips relating to this amount had a fake stamp purporting that it was from the Bank of Zambia," Mr Mumba said.
He said, he felt, that there were weaknesses in the office of the Accountant General as it took about five months to confirm deposits, adding that in this case, the cashier had enough time to work out a plan for himself.
He appealed to the Ministry of Finance and National Planning, especially the office of the Accountant-General, to address the issue of confirmations so that they were received on the same day.
Auditor-General, Anna Chifungula, said her office received a letter from a police officer who asked her to take action against the accounts clerk in question, as it was her office that had raised an audit query regarding the missing funds.
Commissioner of Police, Francis Kabonde, said he would investigate the matter because it was embarrassing for an officer to write to the Auditor-General's office advising her to probe the matter.
The committee, chaired by Luena independent member of Parliament (MP), Charles Milupi, heard that an amount of K2.1 billion at the immigration department headquarters was under-banked and could not be detected and that it was possible that this could have taken place between January and December 2005.
"This was the period we experienced some problems with the former cashier who was later recommended for transfer due to some irregularities,” Mr Kabonde said.
He said the issue would be followed up to ensure that the funds are paid back and appropriate action taken against officers found wanting.
And Mr Mumba said most of the audit queries at the Lusaka International Airport were as a result of some "unfaithful officers " who had been involved in illegal transactions.
He said a female immigration officer formerly based at the airport fled to the United States of America after it was discovered that she had not receipted VISA fees amounting to US$9,626 and 435 British Pounds, respectively.
He said six other officers were transferred to various stations and that the situation at the airport had gone back to normal.
Another cashier at the immigration department in Kapiri Mposhi misappropriated K83, 920,000 and allegedly fled the country after the scam was unearthed.
At the passports office headquarters, a cashier and her immediate supervisor have allegedly misappropriated K885,507,800.
"The matter of the cashier and her supervisor are before the disciplinary committee, and this committee will be informed of any action that will be taken at the end of the disciplinary hearing," he said.
Siavonga MP, Douglas Syakalima, said although the submission by Mr Mumba had not been defensive, the events were depressing because over K20 billion of public funds was in people's hands.
Mr Milupi said there seemed to be a crisis in the ministry where revenue collection was involved.
http://www.times.co.zm/news/viewnews.cgi?category=4&id=1176546902
State aims at stimulating economic activities
By Times Reporter
VICE-President Rupiah Banda has said the Government in this year’s national Budget has provided incentives aimed at stimulating economic activities in critical sectors of Zambia’s economy.
And Zambia Federation of Employers (ZFE) president, Danny Musenge, has commended the International Labour Organisation (ILO) for the tremendous support to the tripartite social partners in fostering social dialogue.
At the official opening of the 41st annual general meeting of ZFE in Lusaka yesterday, Mr Banda said the Government had pronounced its intentions to improve the business and investment climate in Zambia to motivate private sector development.
He said in line with the proposed expenditure priorities outlined in the fifth National Development Plan (FNDP), it was envisaged that expenditure would be biased towards reinvestment in agriculture, fisheries and livestock.
The Government had committed itself to actively participating in activities of the regional bodies like Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) to create an enabling environment for increased investment in the industry.
“The existence of the export processing zones (EPZ) is another measure that provides a jump-start on the road to economic recovery. These structures will help broaden the export base and improve Zambia’s competitiveness in the region,” Mr Banda said.
The ZFE leadership should ensure that it performed its intended role through promoting policies that encouraged creation of productive, decent and sustainable employment.
“You will agree with me in observing that poverty levels pose major developmental challenges to the people both in rural and urban areas. The best way of responding to this challenge is the creation of sustainable employment.
“The New Deal Government will continue to provide a conducive environment for employment creation through various policies and ensure poverty reduction programmes are fully implemented,” he said.
ZFE was an important partner of the Government and the labour movement in the consultative process on issues affecting the workplace. The federation continues to collaborate with institutions to exchange views and contribute to the maintenance of peace and harmony in Zambia.
And Mr Musenge has commended ILO for ensuring that fundamental principles and rights of the employers were fully respected.
He said the federation had continued to purse the realisation of its mission through promoting and projecting employers’ interest in industrial and commercial services.
“The federation is happy to note that in 2006, the Government continued to support the agriculture sector through the Fertiliser Support Programme. The country managed to record a bumper harvest of 1.4 million tonnes of maize. The Government’s efforts in this regard are highly commendable,” Mr Musenge said.
Meanwhile, Mr Musenge has said the increasing prices of fuel have kept prices of commodities sky-rocketing and slowed down the business activities in areas of economic activities such as agriculture and the manufacturing industry.
http://www.times.co.zm/news/viewnews.cgi?category=4&id=1176547034
First Quantum Minerals makes provisional tax payment
By Times Reporter
THE First Quantum Minerals Limited group of companies have made provisional tax payments to the Government amounting to US $100.18 million for 2006 from its operations in Zambia.
First Quantum Minerals Limited group of companies director, Kwalela Lamaswala, said in a statement in Lusaka yesterday that Kansanshi Mining Plc provisional tax payments for the year ended December 31, 2006 was $29.75 million, bringing the total for the year 2006 to $72.33 million.
First Quantum Mining and Operations Limited (Bwana Mkubwa Mine) provisional tax payments for the quarter ended December 31, 2006 was $11.91 million, bringing the total for the year 2006 to $27.85 Million.
The copper production for the group was 179,067 tonnes comprising 127,178 tonnes from Kansanshi and 51,891 tonnes from Bwana Mkubwa Mine.
Labels: ACC, EPZ, FIRST QUANTUM MINING, MINING, PAC, TAXATION
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