Thursday, 17 June 2010

I Write What I Like....

By Daimone Siulapwa

Guest Writer: Nkonkomalimba Kafunda

Proposal over use of mine dividends causes uproar
Concerns over the distribution of proceeds from Zambia’s mines have continued to take centre stage with the latest coming from prominent North Westerners angry that their province, already lagging in development, will not benefit from money raised from local mining operations.
Zambia Consolidated Copper Mines Investment Holding ZCCM IH, the holding company for government interests in the country’s mining sector announced early in May that an US$18.1 million dividend paid by First Quantum Minerals from profits made at Solwezi’s Kansanshi mine, would be invested in agriculture in Central and Copperbelt provinces, much to the chagrin of natives of the North western province.

Leading the onslaught was former republican Vice President Enock Kavindele who said there was no way resources of the province could be used to develop other regions when the province itself was in dire need of development.

He revealed that local chiefs had surrendered about 200,000 hectares of traditional land to government for purposes of development so if ZCCM-IH was interested in agriculture they could develop that land.

Kavindele compared the suggestion by ZCCM-IH to the Federation of Rhodesia and Nyasaland practice of using Northern Rhodesia’s resources to develop the South. “We cannot go back to the federal government where copper mining in Zambia was used to develop other capitals,” he emphasised.

The former vice President was supported by local chiefs and several other politicians from the area. It is widely accepted that such problems are merely a symptom of a greater dilemma as locals have little or no say in distribution of wealth as they do not control the means of production. Since the demise of ZCCM at the hands of the privatisation process all major mining operations are foreign owned and controlled. Coupled with the fact that these investors are allowed to retain 100% foreign exchange of their earnings anywhere they see fit, only operations money remains in Zambia. In 2007 the Mwanawasa regime introduced a windfall tax to mitigate this problem but this was scrapped, ostensibly due to the global economic crunch which hit a year later, by the Rupiah Banda regime, a move condemned by most industry experts.

The concerns raised by the North Westerners have been echoed by the country’s mine workers union. Union General Secretary Oswell Munyenyembe in a recent press statement urged government to implement already existing legislation which provides equitable share of resources from the mines as well as the reintroduction of mineral royalty tax.

He said there was need for government to particularly implement key provisions of the Mines and Minerals Development Act to enable communities benefit from mineral earnings and to clearly define policy on the use of resources in order to promote national development.
“We are aware that the recent debates over the resources received from First Quantum Minerals Kansansanshi mine is about mineral royalties. We are also aware that companies like Mopani Copper Mines and Konkola Copper Mines pay as much as US$2 million to government coffers per month in taxes. There is need in this regard to come up with clearly defined policies in the use of resources to provide all round national development and laying a strong foundation for the expansion of the Zambian economy,” said the unionist.

Such arguments have brought back to the fore the rationale behind the scrapping of mineral royalties and more recently the refusal by the Zambian government to reintroduce the tax despite recovery of commodity prices with copper trading at almost US$ 8000 per tonne. Experts have said that as the royalties only come into force after prices rich a certain threshold it is irresponsible for government to refuse the reintroduction of these taxes.
The mineworkers union has observed that while other resource rich countries such as Australia and Congo DR were currently in the process of implementing new higher super tax regimes, Zambia was dragging it’s feet adding that the government fears that taxation would scare away investors did not hold water as the union firmly believed that “serious and genuine investors “ could not be scared off by royalties.

This government indecisiveness is not endearing the Banda regime to voters. As the Union observes, employment figures are way below ZCCM Levels and this in the politically volatile copperbelt province. Additionally conditions of service and salaries were significantly slashed during the financial meltdown and have not been restored even though metal prices have been resurgent.

All in all the government is seen to be more pro foreign investor than pro Zambian citizen a perception that could be the undoing of President Banda at elections due towards the end of 2011.

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