The Times of Zambia reports that Equinox Mineral's Lumwana Mining Company (LMC) is seeking clarification from the Government on whether changes to the mining fiscal and regulatory regime in the 2008 Budget will affect the development agreement signed two years ago. Lumwana managing director, Harry Michael told the Times, "If the development agreement is intact, then we can continue with our obligations". Mr Michael said Lumwana and the 12 international banking institutions lending to the US $762 million project were doing separate internal financial revaluations on the changes. He said with shareholders having used up their money, the project was now depending on the international banks, which were spending $1.5 million per day.
The original 'For Whom The Windfalls?' report did not discuss the situation at Lumwana because it is a greenfield development rather than a result of the privatisation of previous state assets. Do readers think they have any case for special treatment?
2 comments:
Hi. I am a U.S. investor in Equinox Minerals. For the record, I do believe that Zambia should stick to the DA it signed with Equinox Minerals. International law forbids the unilateral termination of the DA. Further, Zambia's intention to undermine the DA sets a poor precedent for further investment by international companies.
I am aware that the DA may have been "unfavorable" towards Zambia. However, this calls for discussion and negotiation - not outright revocation of the DA.
This would never happen in a Western country. Africans need to realize that this type of behavior further amplifies western investors' perceptions of African governments as lawless kleptocracies.
- nyctrax
Well, I haven't seen the deatil of the Equinox DA, but it is clear that most of the other DAs involved the companies breaching the terms of the OECD convention on investment that outlaws seeking special concessions from nationally approved tax regimes. Naturally shareholders have a responsibility to hold accountable the management of the companies in which they invest and from which they profit for minimally ethical standards such as those laid out by the OECD. Perhaps their failure to do so is why many Zambians see foreign investors and their shareholders as parasites? I am not saying they are right to, but certainly no more wrong than anyone promoting offensively sweeping stereotypes about an Africa full of lawless kleptocracies.
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