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EXCLUSIVE EXPOSED: Mining Giants Glencore And First Quantum Are Commiting Serious Fiscal Crimes In Zambia

In 2009 officials from the Zambian Revenue Authority decided to contact Norwegian tax auditors Grant Thornton and Econ Poyri to assess, with assistance from the Norwegian government, the income generated by tax revenues from the mining industry, which has been the biggest source of revenue for the country since it gained independence in 1964. Zambia remains the 25th poorest country in the world, and is still afflicted by an average life expectancy of just 47 years. Officials from the Zambian Institute of Chartered Accountants (ZICA) had noticed some anomalies in the behaviour of the biggest mining company in Zambia, known as Mopani Copper Mines Lpc.

Having gained access to the confidential report, several groups including Mining Watch, the French NGO SHERPA, the Zambian Center for Trade Policy and Development, the Switzerland-based Berne Declaration and Canadian l’Entraide Missionaire have now filed a complaint against mining giants Glencore International and First Quantum Minerals Ltd. before the Swiss and Canadian National Contact points for violating the OECD guidelines for multinational enterprises.

Mopani was acquired by Glencore in 2000. It employs 7600 miners, controls four underground mines, a concentrator and a cobalt plant in the town of Kitwe and an underground mine, a concentrator smelter and a refinery in the town of Mufulira. Mopani has been a prominent corporate player – in fact the second largest mining company in Zambia – since Glencore acquired it in 2000.

Now that this issue has been unearthed, it can’t be just as easily swept under the carpet. Since it gained independence, Zambia’s economy has heavily relied on the copper-mining industry. According to the Central Bank of Zambia, the country earns 70% of its foreign currency from copper exports – despite the fact that the mining industry only contributes 10-15% to all fiscal revenues in the country. According to the audit report, most of the taxes for these revenues are effectively paid by the miners themselves. The corporations actually pay less taxes than the workforce, adding up to a mere 4%.

These revelations become even more striking when considering that on February 2005 Mopani received a €48 million grant from the European Investment Bank to develop its activities and contribute further to the development of the region. Since then, the Zambian government had been incredibly generous, nesting what is tantamount to a fiscal paradise for the mining industry. During the financial crisis when the country was plagued by a dramatic fall in copper prices, the government decided to eliminate the windfall tax. Despite prices recovering, the windfall tax has not been re-introduced. Given the benevolence of the Zambian government, it may come as a surprise that their management of revenues has come under attack from none other than Mopani’s CEO, Emmanual Mutati. In what looks like a pre-emptive move to stifle attacks once the audit report was leaked to the press at the beginning of the year, Mutati spoke out against the lack of welfare systems and public infrastructure in the impoverished state, implying that the Zambian government was not using its revenues wisely. He is reported to have said: “It is imperative for government to share the burden with mining companies to improve the livelihood of people.”

The mining publication SteelGuru published the following account:

“Despite the reports, which the company clarified, Mr Mutati stated that the mining company has not declared a dividend for its shareholders because it has had to reinvest profits to improve production of the metal in various units it operates in Zambia. He stated that the ploughed investment is planned to extend the lifespan of the company by another 25 years, a strategy which he claims is more tangible than declaring dividends.

He also defended against the findings of the auditors’ report by claiming that the practice to recapitalize operations was intended to ensure more job creation for the local people during the stipulated time. Hence the need for the government to reciprocate “by ploughing back the tax profits into communities to better the people’s lives many who are living in squalor despite hosting key mining companies.”

read more revelations here.

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Posted by on August 31, 2012. Filed under HEADLINES. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

18 Responses to EXCLUSIVE EXPOSED: Mining Giants Glencore And First Quantum Are Commiting Serious Fiscal Crimes In Zambia

  1. friday chellah Reply

    August 31, 2012 at 3:20 pm

    foolish zambian people….. You only think of your stomach’s…you have no plan for tomorrow hence no development. Blind and stuiped. Agreed and corruption thats the oparation of your leaders.

  2. zambian Reply

    August 31, 2012 at 3:28 pm

    please ba sata let this thievves called mopani pay back what they’ve stolen from zambia

  3. Lord farah Reply

    August 31, 2012 at 3:35 pm

    More money in our pockets??? When r we going 2 hve a government in place which really has the wellbeing of its citizenry at heart? Ndelolesha fye!

  4. zambian Reply

    August 31, 2012 at 3:50 pm

    Please HEAR me. If you critically look at the happenings on the world seen today it is all about the fight for natural resources. It is no doubt you see no peace in countries endoured with abundant natural resources eg Angola-oil, Congo DR-gold, diamonds, copper etc, The Middle East-oil and the list is endless. It is a shame to see a country with so much in natural resources failing to put policies in place to ensures that it’s people receive maximum benefits from their mineral wealth.

  5. zambian Reply

    August 31, 2012 at 3:58 pm

    Zambia will only be developed by Zambians. I am yet to visit a country which has been developed by foreign investors to the satisfaction of the locals. All investors’primary objective is to maximise profits. The way we have managed the affairs in the mining sector as a country as been a shame.

  6. Mafukeni Mutondo Reply

    August 31, 2012 at 4:00 pm

    Nationalise today!

  7. zambian Reply

    August 31, 2012 at 4:30 pm

    mutati shameless liar.

  8. katongo kennedy Reply

    August 31, 2012 at 4:32 pm

    let mopani brings back the stolen money

  9. KAJINTA Reply

    August 31, 2012 at 4:53 pm

    world over sovereign states are protecting their natural resources but us we are being cheated and duped…shame..shame…shame in this age and era see take a study case what happens in the oil fields of the Middle East…Our Leaders please help us!!!!!

  10. Banda Reply

    August 31, 2012 at 6:22 pm

    ZAMBIA YOU KNOW HOW TO
    OPEN YOUR ANALS !

    TOMORROW IF GRZ COMES UP
    WITH A MINIMUM WAGE FOR
    MINERS SAY K54MILLION ,
    AGAIN YOU’LL BE THE ONE
    AGAIN UKULAMANUNUKA !
    MWABA IFYATILE!

  11. Boxale Reply

    September 1, 2012 at 7:34 am

    Banda, Ala shitala teka amatako panshi!! Iwe koma fye insele?? Iwe e chibemba wa sambililako fye??

  12. PEMPS Reply

    September 1, 2012 at 9:54 am

    God help us

  13. Mike Reply

    September 1, 2012 at 7:56 pm

    Freeze the companies account untll the total amount has been paid.This is millionsof dollars and can help in other projects.And it will be an example for the rest.

  14. Bric Brac Reply

    September 1, 2012 at 8:00 pm

    This news is months old, where were you foolish Tumfweko?

  15. SHALL FIRE STOP BURNING BECAUSE IT IS FREINDLY WITH WOOD? Reply

    September 3, 2012 at 8:10 am

    BA TUMFWEKO NEWS FROM ARCHIVES

  16. Zambian Lady Reply

    September 3, 2012 at 12:13 pm

    Shame on you MMD, how can you sit on such an important report. Or were some of you thieves given kicks-backs in order keep quiet? Thieves all of you. PF please do something and get our money back WITH INTEREST! We trust you.

  17. Abene Bakasensa Reply

    September 3, 2012 at 5:54 pm

    Mwebakwa besu pano tulukuya pi? Let the listening govt eal with these investors once & 4 all.

  18. bernard Reply

    December 17, 2012 at 12:08 pm

    lets fight for the wrights of us poor people

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