Numerous international news sources (including the BBC here) have confirmed that Zambian President Levy Patrick Mwanawasa has died in a French hospital following prolonged convalescence from a stroke.
The news will inevitably lead to speculation about Zambia's political future and the likely impact on mining, including tax negotiations and labour legislation making its way through Parliament. We can say a few things with certainty.
1 - The constitution mandates a Presidential election within 90 days - in other words by mid-November. This will result in a completely new set of Ministers and quite likely some shifts in policy.
2 - The Patriotic Front, extremely strong in the last elections in 2006, particularly amongst mineworkers on the Copperbelt, were scheduled to hold their first ever party congress in the next few weeks. This was likely to have been an extremely rumbustuous affair.
3 - In anticipation of Mwanawasa's passing the ruling MMD and all major opposition parties (the Patriotic Front, UPND, FDD and UNIP) have been subject to increased politicking as potential candidates have jockeyed for position over the last month or so and rumours of new parties, splits, coalitions and alliances have circulated. The most significant, I think, is today's suggestion in The Post of a potential PF-UPND alliance. Given the last election results, any such configuration would likely prove tough to beat. A potential electoral transfer of power between parties would be the first since Zambia's return to multi-party politics in 1991 and would test the country's democratic institutions and culture.
In the light of point 3, it will be very interesting to see if party congresses and the election happen to the timetable above. It will also be interesting to see whether the ruling MMD's undoubted moves towards PF positions since the last election (imposing new mines taxes and starting to do something on environment, labour, sourcing and immigration) have done anything to either neutralise these issues in the election, or to weaken PF's appeal in urban settings. For the moment, everything is in the air.
An article I co-wrote with Miles Larmer on the last elections is available to download at:
http://afraf.oxfordjournals.org/cgi/content/abstract/106/425/611
Tuesday, 19 August 2008
Friday, 15 August 2008
Prof Lungu attacks growth without development in Solwezi
This article in The Post this morning. I have posted further details on the meeting rationale, agenda and participants below the message, and will post up a final report on it when it is ready. It's wonderful to see such pro-active minewatching going on from Zambian civil society. Surely this is precisely the kind of pressure needed to ensure the 'New Copperbelt' turns out better than the old one.
'Zambia's growth lacks development'
By Mulimbi Mulaliki in Solwezi
Zambia is experiencing growth without development, Copperbelt University (CBU) lecturer in the School of Business Professor John Lungu has disclosed.
Presenting a paper dubbed ‘The old Copperbelt and the new Solwezi Copperbelt’ at a round table mine watch discussion jointly organised by Caritas-Solwezi and German Technical assistance to Zambia (GTZ), Prof Lungu said growth must be accompanied by development.
Prof Lungu said the old Copperbelt’s development was led by developmentalist corporations such as Anglo American Corporation (AAC) who obtained licences to mine copper in the whole area.
“The situation was helped by the fact that the companies had a long-term perspective of copper mining. Guided by this view, they invested in both the social and economic sectors,” Prof Lungu said.
He said the corporations invested in the social sectors, education, health centres, hospitals, recreation centres and housing for miners and they also provided food rations and maintained roads and water infrastructure in the townships.
“They provided training for the miners recognising that skilled people were rare apprentice; they transformed an area of bush to modern towns and paid taxes to the state,” he said.
Prof Lungu added that communities were given access to mine facilities such as sports facilities and also sponsored sports - football, rugby, tennis and swimming.
“What is taking place currently is that the country is experiencing growth without development. I have not seen any basic change, access to shelter, health and education, these services are still lacking,” he said.
Prof Lungu explained that this model failed because of falling copper prices on the international markets leading to lower revenue.
“This led the country into heavy borrowing and entangling itself in the debt trap because of low forex earnings and borrowing led to debt crisis of 1980s,” he said.
Prof Lungu said the development agreements signed between the government and mining companies were illegal as they were above the Constitution.
“These agreements were just done in State House and our National Assembly had no power to legislate. The agreement can’t be above the Constitution,” he said. “These agreements have been accorded special status. They are protected from alteration for periods ranging from 15 to 20 years from the time they were signed. They established the terms under which mines were sold.”
Prof Lungu urged the civil society to capture government from powerful business organisations who were currently controlling the running of the economy.
He said despite the government reforming the laws in the mining sector, there were concerns on how it would handle the additional revenue.
“What does it do for the new Copperbelt especially Solwezi where Kansanshi has no obligation for social service provision? Should government handle Lumwana the same way as other companies? Should the government end at reforming the tax regime? What of other aspects of development agreements?” asked Prof Lungu.
He suggested that the government should adopt a differentiated approach to the mining companies depending on their corporate social responsibility policies and reward companies that were socially responsible.
“The new Copperbelt must avoid some pitfalls of the Old Copperbelt. Diversify the economy of the province, take government to task on how they are using money realised from these mining companies,” said Prof Lungu.
++
Round Table on “Mining Watch” Workshop by CSPR in Conjunction with Caritas Solwezi and GTZ
Solwezi has become synonymous with the new Copper Boom in Zambia. Kansanshi and Lumwana mines have poured billions of investment dollars into the district, resulting in far-reaching social, economic, and environmental impacts in an area in which such impacts were minimal just three years ago. As a seemingly endless influx of investors and job seekers arrives in Solwezi, economic growth is evident. There is, however, little sign of the pro-poor development that such growth has the potential to create.
Within this context, civil society and scholarly researchers have turned their attention to the impacts of the mining sector in the Northwestern Province. Relevant findings and recommendations including a pilot assessment by CSPR and an academic study by CK Haanyembe have recently become available. Caritas Solwezi is on the threshold of a multi-year project aimed at strengthening the voice of impacted communities.
The upcoming one-day workshop “Mining Watch” will gather key actors (30 participants) from the angles of civil society, research, government, traditional leadership, the private sector, and the media in order to meet the following three
Workshop Objectives:
· to facilitate the dissemination of available research findings (by CSPR, C.K. Haanyembe, Prof. Lungu)
· to strengthen the network and synergies between key CSOs pro-active in “mining watch”
· to enrich ongoing and future mine watch work (research and pro-poor advocacy) through dialogue, feedback and inputs by all speakers and participants
Date: Tue. 12th August 2008
Venue: The Boma Conference Hall, Solwezi
Morning sessions will emphasize recent findings, conclusions, and recommendations. The afternoon sessions will focus on upcoming research initiatives and advocacy activities.
Agenda: Round Table: Northwestern Mining Watch, Tuesday, 12.8.2008
8:30 hours: Registration
9:00 hours: Welcoming Remarks (Mr. K. Kakunta, CSPR)
Opening remarks (Bishop)
Official Opening (PS) Introduction (CARITAS Solwezi)
9:30 hours: CSPR NWPPMT; Pilot Assessment on the Impact of Mining on living conditions and livelihoods of the poor in Solwezi and Kasempa Districts (Mr John Kinuna)
10:00 hours: Cheelo Kingsley Haanyembe; “Behind the economic figures: Large-Scale Mining and Rural Poverty Reduction in Zambia - the Case of Kansanshi Mine in Solwezi”
10:30 Plenary Discussion
11:00 hours: Teak Break
11:30 hours: Prof. John Lungu; "Old Copperbelt vs. New Solwezi Copperbelt"
12:00 hours: Chief Mumena: Experiences with Lumwana (TBC)
12:30 hours: Plenary Discussion
13:00 hours: Lunch Break
14:00 hours: Caritas Solwezi; "ZEIP - Zambia Extractive Industries Project"
14:30 hours: CSPR: upcoming assessment on “Mining and Food Security”
15:00 hours: Final Plenary Discussion: the way forward
16:00 hours: Closing
Participants:
CSPR: NWPPMT (five members, Provincial Coordinator), Saul Banda (Secretariat, LSK),
Rt. Rev. Dr. Alick Banda, Bishop
Caritas Solwezi: Mr. P. Phiri, Mr. F. Nabanda, Mr. J. Weber; Michek Kaonda, Diocose Ndola, Paul Macek, Peter Sufeli, Felix Ngose, CRS, Sam Mulufuluta, Edmond Kamangozi, Caritas Zambia,
Albert Chifita, DC Solwezi,
Cheelo Kingsley Haanyembe (Researcher, Provincial Planning Department),
n.n., District Agriculture Coordinating Committee, Municipal Council,
Prof. John Lungu (CBU),
Chenga Kaputo, n.n., GTZ LSK, Andreas Kahler, DED
Brenda Tambatamba, n.n., Lumwana Mine, Richard Zyambo, Kansanshi Mining,
ZCTU, Ian R Mkandawire, MUZ?, ACC,
Community members from Solwezi-Mushitala or Kafukuma,
SNV,
Senior Chief Mumena
Media member
'Zambia's growth lacks development'
By Mulimbi Mulaliki in Solwezi
Zambia is experiencing growth without development, Copperbelt University (CBU) lecturer in the School of Business Professor John Lungu has disclosed.
Presenting a paper dubbed ‘The old Copperbelt and the new Solwezi Copperbelt’ at a round table mine watch discussion jointly organised by Caritas-Solwezi and German Technical assistance to Zambia (GTZ), Prof Lungu said growth must be accompanied by development.
Prof Lungu said the old Copperbelt’s development was led by developmentalist corporations such as Anglo American Corporation (AAC) who obtained licences to mine copper in the whole area.
“The situation was helped by the fact that the companies had a long-term perspective of copper mining. Guided by this view, they invested in both the social and economic sectors,” Prof Lungu said.
He said the corporations invested in the social sectors, education, health centres, hospitals, recreation centres and housing for miners and they also provided food rations and maintained roads and water infrastructure in the townships.
“They provided training for the miners recognising that skilled people were rare apprentice; they transformed an area of bush to modern towns and paid taxes to the state,” he said.
Prof Lungu added that communities were given access to mine facilities such as sports facilities and also sponsored sports - football, rugby, tennis and swimming.
“What is taking place currently is that the country is experiencing growth without development. I have not seen any basic change, access to shelter, health and education, these services are still lacking,” he said.
Prof Lungu explained that this model failed because of falling copper prices on the international markets leading to lower revenue.
“This led the country into heavy borrowing and entangling itself in the debt trap because of low forex earnings and borrowing led to debt crisis of 1980s,” he said.
Prof Lungu said the development agreements signed between the government and mining companies were illegal as they were above the Constitution.
“These agreements were just done in State House and our National Assembly had no power to legislate. The agreement can’t be above the Constitution,” he said. “These agreements have been accorded special status. They are protected from alteration for periods ranging from 15 to 20 years from the time they were signed. They established the terms under which mines were sold.”
Prof Lungu urged the civil society to capture government from powerful business organisations who were currently controlling the running of the economy.
He said despite the government reforming the laws in the mining sector, there were concerns on how it would handle the additional revenue.
“What does it do for the new Copperbelt especially Solwezi where Kansanshi has no obligation for social service provision? Should government handle Lumwana the same way as other companies? Should the government end at reforming the tax regime? What of other aspects of development agreements?” asked Prof Lungu.
He suggested that the government should adopt a differentiated approach to the mining companies depending on their corporate social responsibility policies and reward companies that were socially responsible.
“The new Copperbelt must avoid some pitfalls of the Old Copperbelt. Diversify the economy of the province, take government to task on how they are using money realised from these mining companies,” said Prof Lungu.
++
Round Table on “Mining Watch” Workshop by CSPR in Conjunction with Caritas Solwezi and GTZ
Solwezi has become synonymous with the new Copper Boom in Zambia. Kansanshi and Lumwana mines have poured billions of investment dollars into the district, resulting in far-reaching social, economic, and environmental impacts in an area in which such impacts were minimal just three years ago. As a seemingly endless influx of investors and job seekers arrives in Solwezi, economic growth is evident. There is, however, little sign of the pro-poor development that such growth has the potential to create.
Within this context, civil society and scholarly researchers have turned their attention to the impacts of the mining sector in the Northwestern Province. Relevant findings and recommendations including a pilot assessment by CSPR and an academic study by CK Haanyembe have recently become available. Caritas Solwezi is on the threshold of a multi-year project aimed at strengthening the voice of impacted communities.
The upcoming one-day workshop “Mining Watch” will gather key actors (30 participants) from the angles of civil society, research, government, traditional leadership, the private sector, and the media in order to meet the following three
Workshop Objectives:
· to facilitate the dissemination of available research findings (by CSPR, C.K. Haanyembe, Prof. Lungu)
· to strengthen the network and synergies between key CSOs pro-active in “mining watch”
· to enrich ongoing and future mine watch work (research and pro-poor advocacy) through dialogue, feedback and inputs by all speakers and participants
Date: Tue. 12th August 2008
Venue: The Boma Conference Hall, Solwezi
Morning sessions will emphasize recent findings, conclusions, and recommendations. The afternoon sessions will focus on upcoming research initiatives and advocacy activities.
Agenda: Round Table: Northwestern Mining Watch, Tuesday, 12.8.2008
8:30 hours: Registration
9:00 hours: Welcoming Remarks (Mr. K. Kakunta, CSPR)
Opening remarks (Bishop)
Official Opening (PS) Introduction (CARITAS Solwezi)
9:30 hours: CSPR NWPPMT; Pilot Assessment on the Impact of Mining on living conditions and livelihoods of the poor in Solwezi and Kasempa Districts (Mr John Kinuna)
10:00 hours: Cheelo Kingsley Haanyembe; “Behind the economic figures: Large-Scale Mining and Rural Poverty Reduction in Zambia - the Case of Kansanshi Mine in Solwezi”
10:30 Plenary Discussion
11:00 hours: Teak Break
11:30 hours: Prof. John Lungu; "Old Copperbelt vs. New Solwezi Copperbelt"
12:00 hours: Chief Mumena: Experiences with Lumwana (TBC)
12:30 hours: Plenary Discussion
13:00 hours: Lunch Break
14:00 hours: Caritas Solwezi; "ZEIP - Zambia Extractive Industries Project"
14:30 hours: CSPR: upcoming assessment on “Mining and Food Security”
15:00 hours: Final Plenary Discussion: the way forward
16:00 hours: Closing
Participants:
CSPR: NWPPMT (five members, Provincial Coordinator), Saul Banda (Secretariat, LSK),
Rt. Rev. Dr. Alick Banda, Bishop
Caritas Solwezi: Mr. P. Phiri, Mr. F. Nabanda, Mr. J. Weber; Michek Kaonda, Diocose Ndola, Paul Macek, Peter Sufeli, Felix Ngose, CRS, Sam Mulufuluta, Edmond Kamangozi, Caritas Zambia,
Albert Chifita, DC Solwezi,
Cheelo Kingsley Haanyembe (Researcher, Provincial Planning Department),
n.n., District Agriculture Coordinating Committee, Municipal Council,
Prof. John Lungu (CBU),
Chenga Kaputo, n.n., GTZ LSK, Andreas Kahler, DED
Brenda Tambatamba, n.n., Lumwana Mine, Richard Zyambo, Kansanshi Mining,
ZCTU, Ian R Mkandawire, MUZ?, ACC,
Community members from Solwezi-Mushitala or Kafukuma,
SNV,
Senior Chief Mumena
Media member
Thursday, 14 August 2008
Has Zambia blinked first in tax battle?
It looks like crunch time (again!) in the drawn out battle over mine taxes, but contradictory reports are emerging. The Post reports that Zambia Revenue Authority (ZRA) has collected about K255.6 billion in mine taxes on account of all mining companies in the country complying with the new fiscal regime. This is roughly what was expected. Sources have been telling me that even KCM, which made a big political show of accepting the new tax regime, are trying to renegotiate in the background. Nonetheless, no company has thus far been willing to launch legal action or to refuse to pay. The political opposition Patriotic Front promised mass action against any company that took such steps. After initial grumbles it looked like the companies were going to slowly adjust to political realities, accepting that even with the new regime they remained massively profitable, and take the new taxes on the chin.
Nonetheless, First Quantum, which has been the most truculent company in terms of threatening legal action, hiring lawyers and claiming to hold legal advice on the enforceability of their Development Agreements is now making claims that they hold a letter from ZRA suggesting the state may be offering a compromise, capping windfall tax rates that apply to the company at 25% as an interim measure while negotiations continue. A 25% rate would be much lower than what the companies, including First Quantum, have already started paying as a result of legislation passed by Zambia's sovereign parliament. This sets windfall taxes at 50% or 75% depending on the price of copper. First Quantum claims the letter instructs that the Company "will with immediate effect be required to pay windfall tax on a provisional basis at a flat rate of 25% at any price above the first trigger price for both copper and cobalt". The Company's accounts for the period ended June 30, 2008 reflect tax liabilities consistent with the legislation passed by parliament, although a payment of windfall tax made on July 14, 2008 in respect of the June quarter was calculated using a capped 25% windfall tax rate.
What authority ZRA has to offer individuated short-term exemptions to the law is not clear to me. The company reports, "Currently, the Company, along with other mining companies operating in Zambia with similar agreements, is engaged in discussions with the GRZ to find an alternative solution to arbitration or litigation. The timing and outcome of these discussions is uncertain." The company put out a detailed notice yesterday which is available on the First Quantum website. A webcast of the related press conference is here.
First Quantum's negotiating strategy has long been to threaten but not launch international arbitration or legal action over Zambia's new mining legislation, which overrides the 'stability clauses' in the companies' Development Agreement. These promised investors long-term tax exemptions. Just yesterday, key state negotiators of the corrupt privatisation process were jailed with hard labour for their part in the sales which are widely regrarded to have been profoundly unfair to Zambia's interests. Most of the companies have not pushed too hard on this issue as a) the corrupt process of the original negotiations is widely known, b) most companies have failed to live up to even the incredibly lenient terms of these original contracts.
Nonetheless, First Quantum's press release ups the ante in its claims on the enforceability of its Development Agreement. “The Company has, following the recent tax changes, obtained legal advice on its rights under the Development Agreements. This advice has confirmed that the Company has rights of recovery for any taxes which are levied in excess of those permitted under the Development Agreements... In the light of the detailed advice received, the Company has assessed there to be a high probability of recovery from the GRZ (Government of the Republic of Zambia) of certain payments made in respect of these taxes.” The company estimates it has thus 'overpaid' and is owed $67m as at end-June.
First Quantum posted a healthy increase in interim profit despite the new tax regime. Net profit for the interim period nearly doubled to $390m from $201m a year before. Its tax expense ballooned to $233bn from $77m over the same period, admittedly off a higher production base.
Mining MX claim 'the market' sees the letter from ZRA and the legal advice the company has received as positive developments. This may help us to understand what is going on. Is the companies' constant ebullience about its chances of avoiding the tax regime designed to artificially inflate a controversial and troubled companies' share price? As reported in previous blogs, First Quantum has a record of extremely optimistic, maybe naive, interpretations of what is going on politically in Zambia.
The Post gives a sense of the degree to which the new regime is already bringing new revenues into state coffers. ZRA commissioner general Chriticles Mwansa told journalists yesterday during the end of second quarter media press briefing that the biggest contribution from mining taxes came in from windfall tax which stood at K109.5 billion. Mwansa explained that the mineral royalty in the review period stood at K70.54 billion of which, K6.39 billion, K29.67 billion and K34.48 billion were collected in April, May and June respectively. He said the mineral royalty paid so far in the last two months under the new mining fiscal regime had averaged K25.75 billion per month compared to an average of K5.2 billion per month that the mines used to contribute to the treasury in 2007.
"However, other tax returns such as provisional company income tax returns, windfall tax return were due on 30 June 2008," Mwansa said. "To this effect, in July 2008, a total of K255.6 billion was paid in mining taxes of which windfall tax stood at K109.5 billion, company income tax was K105.1 billion and mineral royalty contribution was K41.0 billion."
Asked whether there were some mining companies that were still resisting the new mining fiscal regime, Mwansa said: "The mine have, by and large, complied with the new regime. They have met with us; they have met with government to indicate the effect of that regime. We intend to continue meeting them to make further clarification should there be failure on their part mines to understand other details involved, but I must say that mine is to implement the law. If the law demands that the mines pay, then I go and effect."
How seriously we should take that final statement depends on First Quantum's ability to demonstrate that the state is already compromising. Some of the media houses carrying the story claim to have seen the letter from ZRA. I have not and it is not on the companies' website. If anyone has a copy, do forward it and I'll post on the site. Reading the whole thing, not just First Quantum's favourite quotes, could be very interesting.
Wednesday, 6 August 2008
Tax, production and profits - what is the relationship?
The Post reports that Finance minister Ng’andu Magande has said the government is likely to net the projected US $415 million (about K1.3 trillion) extra income from mining taxes as copper prices remain bullish on international markets. In other words, the new tax regime does not seem to have decimated production, investment and jobs as the critics suggested it might. Companies that had threatened legal action all now appear to be paying up. Presumably they will say we haven't waited long enough to make an assessment and no doubt there's something in that.
Some mining companies recently made their initial payment of windfall taxes to the government, with Kansanshi Mines, owned by First Quantum, one of the companies that had threatened rebellion, declaring a disbursement of US $30 million (approximately K101.2 billion), almost 10 per cent of the projected annual income from the mines this year.
“There is a formula that government came up with in calculating the windfall tax and looking at the current prices of the metal, the Ministry of Finance and National Planning is optimistic that the projected US $415 million in additional revenue from the mines will be collected at the end of the year,” Magande said in an interview. “I am very hopeful that we will get there because we are remaining with a few months before the end of the year.”
The government this year came up with a new tax regime in the national budget, with a projected US $415 million (approximately K1.3 trillion) in additional revenue to the treasury in 2008. “As long as mining companies continue producing, they will be obligated to pay the new taxes to the government,” said Mines and Minerals Minister Dr Mwansa.
Nonetheless, the news came in the same week that Zambia's biggest mining company reported a fall in profits that it linked to the new tax regime. The Post noted that Vedanta Resources Plc has announced a decline in profits at Konkola Copper Mines (KCM). First quarter earnings before interest, taxes, depreciation and amortisation declined to US$71.1 million compared with US$106.2 million gained in the corresponding period last year. "The decrease in profitability was primarily due to higher costs and higher royalties," Vedanta Resources stated. "Operating costs remained under pressure due to higher manpower costs, higher energy prices and lower production."
Vedanta stated that mine output from the Zambian mines was around 21,000 tonnes, marginally higher than the corresponding period last year and significantly higher than the immediately preceding quarter.
The estimates in terms of the expected additional revenue from new mining taxes is significantly higher compared to what the government has been collecting from the mines through taxes. In 2006, government collected slightly over K35 billion from mineral taxes when other copper rich countries like Chile gained around US $1.7 billion (approximately K6.3 trillion, half of Zambia's national budget) as tax contributions from its 17 largest privately held mines in just one quarter of 2006.
Meanwhile KCM continue to face criticism from local politicians that they do not do enough to support local communities around the mine. The Post cover criticism from local town clerk of Chingola township, Charles Sambondu: “About 60 per cent of Zambia’s copper comes from Chingola but there is really nothing to show on the ground. People compare with the days of Zambia Consolidated Copper Mines ZCCM when they used to take care of water supply, street lighting and all; in my view, the criticism is justified.”
In better news, The Post also reports that KCM is improving its environmental management practices. Company spokesman told the paper that the company remains on target to massively increase production by 2010, as the Konkola Deep projest and the new Chingola Smelter come online. “All these are indications that this country will meet the 2010 target of producing one million tonnes of copper and KCM will produce half of that projection,” he said.
The Chingola smelter which is expected to produce about 300,000 tonnes of finished copper. The new smelter is being built with Finnish-invented Outokumpu flash smelting technology would be able to capture about 95 per cent of sulphur dioxide thereby releasing little into the atmosphere.
Some mining companies recently made their initial payment of windfall taxes to the government, with Kansanshi Mines, owned by First Quantum, one of the companies that had threatened rebellion, declaring a disbursement of US $30 million (approximately K101.2 billion), almost 10 per cent of the projected annual income from the mines this year.
“There is a formula that government came up with in calculating the windfall tax and looking at the current prices of the metal, the Ministry of Finance and National Planning is optimistic that the projected US $415 million in additional revenue from the mines will be collected at the end of the year,” Magande said in an interview. “I am very hopeful that we will get there because we are remaining with a few months before the end of the year.”
The government this year came up with a new tax regime in the national budget, with a projected US $415 million (approximately K1.3 trillion) in additional revenue to the treasury in 2008. “As long as mining companies continue producing, they will be obligated to pay the new taxes to the government,” said Mines and Minerals Minister Dr Mwansa.
Nonetheless, the news came in the same week that Zambia's biggest mining company reported a fall in profits that it linked to the new tax regime. The Post noted that Vedanta Resources Plc has announced a decline in profits at Konkola Copper Mines (KCM). First quarter earnings before interest, taxes, depreciation and amortisation declined to US$71.1 million compared with US$106.2 million gained in the corresponding period last year. "The decrease in profitability was primarily due to higher costs and higher royalties," Vedanta Resources stated. "Operating costs remained under pressure due to higher manpower costs, higher energy prices and lower production."
Vedanta stated that mine output from the Zambian mines was around 21,000 tonnes, marginally higher than the corresponding period last year and significantly higher than the immediately preceding quarter.
The estimates in terms of the expected additional revenue from new mining taxes is significantly higher compared to what the government has been collecting from the mines through taxes. In 2006, government collected slightly over K35 billion from mineral taxes when other copper rich countries like Chile gained around US $1.7 billion (approximately K6.3 trillion, half of Zambia's national budget) as tax contributions from its 17 largest privately held mines in just one quarter of 2006.
Meanwhile KCM continue to face criticism from local politicians that they do not do enough to support local communities around the mine. The Post cover criticism from local town clerk of Chingola township, Charles Sambondu: “About 60 per cent of Zambia’s copper comes from Chingola but there is really nothing to show on the ground. People compare with the days of Zambia Consolidated Copper Mines ZCCM when they used to take care of water supply, street lighting and all; in my view, the criticism is justified.”
In better news, The Post also reports that KCM is improving its environmental management practices. Company spokesman told the paper that the company remains on target to massively increase production by 2010, as the Konkola Deep projest and the new Chingola Smelter come online. “All these are indications that this country will meet the 2010 target of producing one million tonnes of copper and KCM will produce half of that projection,” he said.
The Chingola smelter which is expected to produce about 300,000 tonnes of finished copper. The new smelter is being built with Finnish-invented Outokumpu flash smelting technology would be able to capture about 95 per cent of sulphur dioxide thereby releasing little into the atmosphere.
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