UK NGOs urge Vedanta to accept new tax regime

The British campaign groups, ACTSA, Christian Aid and SCIAF, who were behind the 'Undermining Development?' report on Konkola Copper Mines, have welcomed the announcement of Zambia's new mining tax regime, and are asking their supporters to write to Vedanta Resources, the company that owns KCM, insisting that they accept the new arrangements and do not seek any compensation from the Zambian Government. In a moment I will also provide a link to the groups' analysis of how the tax proposals will work. This is the most detailed analysis I have seen. The text of their press release is available on the ACTSA website. I reproduce it in full here:
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Zambian government tell companies to pay fair share

"Two months after ACTSA campaigners called for Zambia to get a fairer deal from their huge copper reserves, the Zambian government has announced new measures which help ensure just that.

Last week the Zambian Finance Minister used his budget announcement to introduce new tax measures which, if accepted by the mining companies, would result in an additional $415 million dollars for Zambia in 2008 alone - double what it would have earned under the current mining tax regime.

Now your help is needed again.

Zambia’s biggest mining company, KCM (the focus of our recent report) has not yet responded to these proposals, but another mining company has threatened legal action if the Zambian government if it goes ahead with these measures.

We are calling on KCM to accept these new arrangements and refrain from seeking compensation. Please write to Kuldip Kaura—Deputy Chairman of KCM and Chief Executive of Vedanta, its parent company—asking him to ensure that KCM and Vedanta abide by the new tax regime and do not seek compensation from the Zambian government.

Whilst not all of the details have been announced, we expect the proposed measures to be balanced and in keeping with internationally accepted norms. The budget announcement has received international praise from informed observers; the World Bank has noted the potential of the ‘mining tax…(to be) spent on projects that will benefit poor people’. Members of Zambian civil society and Zambian academics have also welcomed the move. Leading academic Professor John Lungu has said that ‘the government has taken a brave step worthy of supporting. This money could provide a massive boost to areas such as health and education. But if Zambia is to benefit, mining companies, including KCM, must respect the new law as part of their corporate accountability practices’.

Your campaigning is working and is having a significant impact. Please keep up the pressure and help one of the world’s poorest countries get a fair deal from its natural resources.

Campaign Success
This is a huge success for both Zambian civil society and for ACTSA campaigners, who have helped push the issues of unjust taxes, enviromental damage and labour rights onto the political agenda both in the UK and in Zambia.

The government has announced that it will use the money to ‘implement vital programmes in health and education’ and the additional resources have the potential to make a huge difference. For example, it would allow the government to nearly triple its expenditure on healthcare in a country with an average life expectancy of 37 and would be sufficient to halve poverty by 2015.

The Zambian government has also committed to “transparency in the accounting and utilisation of mineral resources” which should involve making public the payments received from the mining companies and how these payments are spent. In a separate announcement, the Mines and Minerals Development Minister has also committed to improve the environmental and safety laws which apply to mining companies. These were key asks of the Undermining Development report and, if implemented, will be a historical step forward for Zambia.

However, this new tax regime is just one piece of the jigsaw and still leaves some mining companies free to pollute the environment beyond internationally accepted levels and to refuse employment rights to large numbers of workers shifted to badly paid and insecure temporary contracts, without union protection.

Please keep following the developments of the campaign by subscribing to ACTSA e-news and Mine Watch Zambia which provides regular and informed updates on the situation.