Last Wednesday, the Parliamentary Committee on Estimates presented its report on the Revision of the Mines and Mineral Development Act. Parliament also voted to take the revisions to a second reading, which will be heard tomorrow, Wednesday 28 March at 1430 (minewatcher will be in the gallery and will report back on this blog - if you are in Lusaka, join me!).
The committee’s report recommended removing the exemption in the draft legislation that leaves current investors outside of forthcoming tax rate hikes for mining companies. The debate on the report featured Finance Minister Magande in a one-man battle against hostile questioning from the Chairman of the Committee and several opposition MPs. Parliamentarians raised many arguments supportive of the critical line developed in ‘For Whom the Windfalls?’. In particular, the focus on just 3% as a new target for mineral royalties was questioned. It was also suggested that the Anti-Corruption Commission be tasked with investigating the process by which Development Agreements were negotiated, and that such an inquiry might provide leverage to re-open the discussion with companies. I imagine that both the report and the transcript of the debate will be available on the Parliament website at some point, but I can’t find them for the moment.
The Post newspaper reported today (as always, you need a subscription to access this link) that Justice minister George Kunda told Parliament, "At the time the development agreements were being negotiated in 2000, the bargaining power of government was very weak, we were more or less desperate and we needed to sale the mines or else they would collapse." The Post also states that he warned that the consequences of breaching the agreements would lead to harsh penalties and that Zambia could be taken for arbitration in London and lose more money. However, Kunda said the development agreements signed provided for renegotiations, which government would embark on. Minewatcher is unclear what clauses of the Development Agreements, published for the first time on this website, that claim refers to, but would be interested in any comments from readers who have legal skills or have studied the agreements in detail.
The same article also quotes several business leaders entering the. Significantly, all argued that Government was within its rights to seek a renegotiation, and that investors should accept an invitation to renegotiate since circumstances have changed (i.e. prices have risen) subsequent to contracting the Development Agreements. Those quoted include Zambia Association of Chambers of Commerce and Industry (ZACCI) executive director Justin Chisulo and Economics Association of Zambia (EAZ) national secretary Chibamba Kanyama. Kanyama also argued, "The current international requirement is that governments and investors in sectors like mining should adhere to the Extractive Industry Transparency Initiative… This requires governments to always show to the public the usage of any such revenues arising from royalties and taxes while at the same time, investors should fully declare their actual contributions to host countries." This type of transparency is a long way off in Zambia at the moment.
Engineering Institute of Zambia (EIZ) chairman Charles Sakanya, University of Zambia (UNZA) School of Mines Professor Imasiku Nyambe and Zambia Association of Manufacturers vice president Oswald Mwewa were also quoted backing renegotiation. Mwewa questioned why Government was repeatedly promoting the figure of three per cent for mineral royalties. "I don't know how government arrived on that," he said. "When you say three per cent is the world average, what are the highest and the lowest?"
4 comments:
why 3% :
perhaps a solution consist to increase the wages of the minors
and or
to give to the Zambian minors actions zccm-ih
then in 2008 , when the investissement are finish to be pay ....the GRZ can receive a lot of tax of bénéfits nearly 25% fom 500000t of copper with 4000$ before taxes : then 1000$/t ...500M$ for GRZ
and you can add the dividend that ZCCM-IH can pour !!
with increasing the wages of minors , you can be sure than minor profites of the copper !
Thanks for the contribution Fabrice. If I understand you rightly, you are suggesting that we should focus on labour rights issues as much as on Government revenue. If so, we are in agreement. The Executive Summary of 'For Whom the Windfalls?' concludes: "The Government seems to believe that the local population will come on board if the companies pay a little more tax and engage in a few more charitable activities. No doubt
both of these things should happen, and probably will as government and companies attempt to respond to the 2006 election. However, evidence gathered for this report suggests that well-founded popular complaints about the mining industry are based on bread and butter issues: poverty wages, insecure terms and conditions, resistance to the legal right of trade unions to organise, inadequate support for retrenched and retired workers and a failure of attention to safety measures and environmental protection by the mining companies. The companies have shown little interest in solving these problems since each of them results from purposeful cost-cutting policies undertaken to maximise profits and dividends to shareholders. This implies that, alongside collecting more tax and encouraging more corporate social responsibility, the Government may need to break free of an obsession with ‘investor-friendly policies’ and use their regulatory and legal powers to prioritise the need and rights of workers and communities."
yes alastair ,
I think , when the différent society finish to pay their investissement , the GRZ receive a lot of money from the TAXE and from ZCCM-IH . ZCCM-IH in 2008 must receive about 300M$ from the dividend pour by the mining society.
So i think it's no good to change the law for the mining privitised ( rothchild) but ask to the major to INCREASE the worker ...In this case every minor can profite ... and can paid more tax to GRZ !
thanks fabrice
I also think that two importants points are to be underlined:
A: to increase the pay of the minors
B/if the government wants to increase the purchasing power of the minors, the government have to create a trust for the whole of the minors, and give share ZCCM-IH which will make possible to the minors to benefit from the incomes of their work the next year.
but this trust must be set up quickly because the minors could be impatients....
georg
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