MineWatchZambia, the website that brought the Zambian public access to previously secret Development Agreements between the state and international mining houses, is proud to announce another coup. We have received from an anonymous contact what we believe to be a genuine copy of one of the contracts we did not previously have access to. Unlike some of the other contracts previously leaked to us, these contracts are not signed so they should be treated with mild scepticism. On the other hand, they look pretty convincing to me!
The documents appear to be the Development Agreement between the Zambian state and Vedanta Resources, which took on a 51% stake in Konkola Copper Mines (KCM), and was signed in 2004.
The document is posted at http://www.minewatchzambia.com/reports/KCM2004.pdf .
Readers' analysis and discussion of the document would be extremely welcome. This site works best when readers get stuck into discussion.
I have not attempted a close reading of the whole thing, but a couple of things interested me:
1) Page 2, paras 6-11: discusses the 'call option' for ZCI's shares, which the company is currently trying to exercise, but the contract as a whole does not clarify the detail of this deal. The document refers to the call option, "Vedanta holds an option over ZCI Holdings' shares in KCM, exercisable in certain circumstances." That's not very helpful without access to the Call Option Deed. Any readers feeeling like leaking this further document would be making an important contribution to freedom of information in Zambia! Contact me if you want postal detals - otherwise use the email address on the site.
2) Sections 21-24: As previously discussed on this blog, some of the DAs contained clauses specifying that any arbitration between the Government and companies over the new mines taxes would occur under the World Bank's ICSID. In this updated KCM agreement, a different system is proposed, the "UNCITRAL Arbitration Rules" overseen by a sole arbitrator. UNCITRAL is a UN body with a mandate similar to that of ICSID. The document continues, "The appointing authority the Secretary General of the Permanent Court of Arbitration at the Hague. The place of arbitration shall be Johannesburg and the language of the arbitration shall be English." This helps explain comments made by some commentators during the politicised discussions over possible 'legal action' relating to breaches of stability clauses. I am currently assuming the companies are going to take the new tax regime on the chin and will not pursue their previous threats of legal action. Nonetheless, if we find ourselves having to revisit the issue, this might be relevant. So might the comments under Section 23 where the Government appears to waive its own sovereignty. Mr K's previous comments on the legality or otherwise of DAs might be relevant here, particularly since the following paragraph places the whole thing under 'Zambian law'. Interestingly confusing - can we call in the lawyers!
I look forward to others' comments.
Alastair
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