A Vedanta Resources-owned copper mining company is selling Zambia short while generating huge profits from the country’s finite natural resource, according to evidence in a report published today. It calls on Vedanta and its major UK investors to rectify the situation before current contract re-negotiations with Zambia are concluded.
The joint report, Undermining Development? Copper Mining in Zambia, by three international development organisations, SCIAF (Scottish Catholic International Aid Fund), Christian Aid, and ACTSA, examines the record of Zambia’s largest copper producer, Konkola Copper Mines (KCM).
The report calls on the UK government to make amendments to the Companies Act 2006 to ensure that UK businesses are held to account for the social and environmental impact of their activities in vulnerable developing countries.
KCM is majority-owned by Vedanta Resources – a UK-based FTSE 100 company backed by household names such as Standard Life, HBOS, and Barclays. Such investors ‘talk the talk’ on corporate social responsibility but during the research period held major stakes in a company with a questionable record on sharing the benefits of its operations with the host country, the environment, and its impact on local communities.
The report authors say KCM is ‘short changing’ Zambia with royalty fees of just 0.6 per cent instead of the 5 to 10 per cent industry average in developing countries. Whilst legal, this rate of royalty implies that, in 2006/07, the Zambian government would have received mineral royalties of only US$6.1 million from KCM, while the company extracted copper ore worth over US$1 billion.
Zambia’s copper generates 75 per cent of the country’s foreign export earnings but according to the report the government is not receiving its fair share of the income generated at a time when life expectancy in the country is 37 years, one in three children do not go to school, and 68 per cent of the population live in extreme poverty. Last year KCM made a net profit of US$310 million which is more than Zambia spent on healthcare. If the country continues to receive such a raw deal, it is likely to remain the ninth poorest country in the world according to UN rankings.
The international development organisations are calling on major investors in Vedanta/KCM to put pressure on the companies during the current negotiations. Specifically, they argue, Vedanta/KCM should:
* pay 30 per cent of profits in income tax (up from 25 per cent);
* pay mineral royalties of at least 3 per cent, up from 0.6 per cent;
* pay the Zambian government a larger share of the difference between the actual copper price and the trigger copper price in the price participation scheme.
According to the Zambian finance minister at the time, the government was put under considerable pressure from the World Bank, IMF and other donors to privatise its copper mining industry in the 1990s; privatisation was a condition for debt relief. This contributed to the Zambian government having a weakened bargaining position during negotiations with the private mining companies.
SCIAF Policy Analyst Abi Dymond is the principal author of the report and states that whilst private companies in developing countries are there to make a profit and do provide social benefits such as employment, Zambia is not receiving a fair proportion of the money raised by its copper resources.
“Evidence suggests that Zambia is drowning in poverty whilst a rich mining company is running away with its greatest natural resource. It is vital that Zambia is given a fairer share of the profits from its natural assets to help combat crippling poverty in the country. SCIAF, Christian Aid, and ACTSA are now calling for Vedanta/KCM management and UK investors to use their influence to make sure Zambia gets a fairer deal. This is a great opportunity for Vedanta and the big UK-based investors to put their much-vaunted corporate social responsibility policies into practice, and we look forward to their support.”
Joyce Nonde, President of the Federation of Free Trade Unions of Zambia (FFTUZ) said: “We endorse this report and are encouraged by the international pressure being applied on the company (KCM) and the support for Zambian Civil Society calls for improved development agreements, labour rights and environmental protection. It is time that companies operating in Zambia started paying fair taxes and mineral royalties and commit to assist the development of our country rather than undermine it.”
Kato Lambrechts, Christian Aid’s Senior Policy Officer for Africa added: “This report challenges mining companies operating in Zambia to clean up their business, pay living wages, adhere to Zambian environmental laws, and pay a fair share of their profits to the Zambian government. The revenues collected from the production and profits of mining companies, especially in view of skyrocketing international copper prices, could help Zambians improve their lives, boost economic development, and bring greater independence from international donors.”
Simon Chase, Campaigns Officer at ACTSA commented: “Corporate accountability and social responsibility in the Zambian Copperbelt are being badly ignored as the evidence shows in the report. Zambian people are suffering at the hands of companies like Vedanta and this is their opportunity to implement real and positive change.”
The report also focuses on the welfare of those who work at the KCM mines. Some sub-contracted skilled labourers claim that they are paid as little as £37 per month when it is estimated that the average Zambian family needs at least £151 a month to meet their basic needs. Concerns over the pollution arising from KCM’s activities, and its effect on local communities are also highlighted. An investigation by The Environmental Council of Zambia found the ‘grossly negligent’ behaviour of ‘KCM management’ resulted in rivers used by local communities for drinking water being ‘significantly polluted’.
A Corporate Accountability Group headed by Anne Moffat MP is currently investigating the implications of the Companies Act 2006 and how it is applied by British companies abroad. Vedanta’s operations will be assessed as a case study of the group.
Source: Christian AID
Full Report:http://www.christianaid.org.uk/Images/Mining%20Report_final_tcm15-27834.pdf
I think I have time and again pointed out on this blog that Zambia would have come out of its doldrum if she had intellectuals who are able to think between lines. we dont need some foreign experties to tell us how much we are loosing from the copper revenues. Mr Mwanawasa should put his foot down and think twice about the investment policies in Zambia rather than getting excited over his margianal achievements. There is more to it than just demanding respect from the people.We dont need to…
What intellectuals are you yapping about those from the moon where none among the present have been? Attracting investment of the assured risky aversive was not easy under the then prevalent circumstances.You should understand both short and long term economic trade offs involved under such arrangements.Now that the situation has changed, terms of negotiation are taking place. This economy had hit its trough yet GRZ still had the obligation to provide.I will you understood Govt. responsibilities
continued from #1
Royalties any where in the world are not subject to negotiation. When you were calling these investors you were desperate to extent of dancing to their tune. UK has stolen a lot from us and its unfair for them to continue urinating over our heads telling us that it is rainning. Dont forget that mineral are a wasting asset if we can’t make a fortune out of them now Zambia will never see development. ABAAASHI SHORT SIGHTED LEADERS!.We need leaders who will take a bull by its horn
you dont attract investors to come and plunder the economy but to build. which country in the world have ever heard negotiating for 0.6% royalty what kind of a senior citizen are who is mentally reterded. Your I.Q 7.
Mwinepabo,
Bull by the horn leadership beyond this is your exercised freedom of wishful thought. Freedom of speech does not impinge any dreaming retard to fool himself. The 15 years 0.6% bracket blander of those Katangise brothers of yours is rightly visited in a sober and realistic way by the current visionary leadership you are bound see reign beyond 2015.
has it not been that zambia was in debt wil could have owned thos mines ..but see muzungu will not give you somethings for free…look at how most countries in africa though it was a debt relieve and yet ,they asked you you to sell them those mines so that they can reap their monies through natural resourses…hehehehe…
thats why we need to be our own investorsd…we need to educate all people in rural areas so that they dont remain in doldrums or object poverty
I totally agree with #1..Why do we have a government that does’nt seem to realise that we are getting ripped off..Do they not know how to negotiate??..or are they blinded by the short term freebies these corporations hand out to them!!!!..COME ON LPM..CRACK THE WHIP and get rid of all the dead weights around you…!!!!!
These are the contracts that were negotiated by the likes of Nawakwi, Kayope and Sata, while they were busy commiting adultery, snoring (Kayopering) and receiving Taiwan “dyonko”. Nearly all these people the Zambian government sent to negotiate all these stinking terms and conditions were people who before coming to government had never ever seen a business contract before. The only qualifier was that they needed to be “TUBULU – abanyina pamushi”. Now you see, ni masalamusi nu shuwa!
This is most shameful, even Lewanika well over a century ago negotiated a better deal on royalties than Chiluba’s tailed primates from the Ituri forest masqurading as upright modern men. Somepeople in this country are surely stinking thieves, they should just be servered from the country to link up with Katanga, they can have Katebe Katoto and mkaladi wa Chani fisheries as their govenors.
This is all Levy’s weakness. As long as Levy is on the throne Zambia will always have a raw deal from the mines. He has been the manager to a point where he conducts Mineworkers Union meetings at statehouse in Lusaka. What a shame. And now we have even seen the influx of Chinese labourers. Go to Chingola in the evenings or weekend you will see thousands in the streets walking bear feeted. You even wonder how they sleep because they fill up houses which they rent.
Ubupina nabo bubi!! sic
I will be much happier if Levy was threatening his much beloved investors with treason for plundering the wealth of innocent Zambians who are wallowing in extreme poverty and not threatening Zambians who want to have a share of the cake he has given to every foreigner including his beloved China who he is prtecting and not to us the natives, what a shame! We elected you and not the so called investors.
It is a question of seeing who was in the negotiating team of all these funny deals.It was better to hire Real Consultants with solid negotiating financial skills to negotiate for us at a fee of USD 2 million or so, and obtain better royalties than dispaly ignorance and pay through the nose. A lesson for Levy, being a lawyer or a “Doctor” does not make you know it all. “Mwenyes” are making money in our eyes. From Kamwala to the mines, what a shame indeed.
As early as March this year, the World Bank advised theZambian Government to re-negotiate the mining contracts as we have
been getting pissed on. This is the end of the year and we are still negotiating or we haven’t even started yet?
As early as March, the World Bank advised the Zambian government to re-negotiate the mining contracts as, to misquote #3, we have been getting pissed on. This is the end of the year and we are still negotiating or we haven’t even started yet?
Ladies and gentlemen, let us be practical. IF anyone feels strongly about this issue of Zambia not benefiting from the mines then I suggest that All Zambians in the diaspora should hold peaceful protests outside every major embassy around the world on the same day to press this current administration to renegotiate a better deal for Zambia faster than they are doing right now. Similar peaceful protests should be held in Zambia on the same date as the diaspora peaceful protests.
These infestors are really laughing at us. These are enjoying the raising metal prices while Zed is sinking in poverty. Levy and his indel bwanas are watching hopelessly. This country really needs a leader. A strong leader, who will say no to all this injustice by the infestors. Levy and company have failed to provide that leadership. Things are just riding by the wave. We need to rise above the wave but unfortunately Levy and company are just too heavy.
Striker (16),
How do you do that when the majority of you are illegal immigrants or just broken off from your arranged marriages of convenience if not running away from some child support? In that case where will be the activated Law enforcement officiers, that used woman or those abandoned Negro kids?
Mwanya Zesmanjemanje # 8,
You seem to have some human brains and a mind of realism than that Mwinepabo # 1 retard. He yaps of intellectualism which he lacks an ounce of in the real world by results. He yaps of bull by its horn option in a vacuous academic way without a clue of the mechanics. He is a retard with some inert dreams.Any situation has a point of correction.Levy is legally outdoing the criminal acts of the Katangise in the 20 year stupid contract in the face of international law.
LPM and his suboardinates are just promoting economic determinism where they know that they can only negotaite for such deals knowing they will be the major beneficiaries. There is no economic empowerment at all. “Bale tulila amasuku pa mutwe”
Anomalous Royalty taxes are negotiable if not serving desirable mutual benefits. And the Mwanawasa Administration is doing just that. International contracts of that magnitude are not like those of commitment to be buying some used cars for resale in another locality. International based Government contracts come with complex obligations and transferable consequences which any responsible Government would not overlook or work around in a hasty but prudence. In this vein, the best Zambians of all
….. In this vein, the best Zambians of all motives should do is support the assembled team of best Zambian brains embedded with international contracts negotiators.May we should have a detailed discussion of Taxation and Government sources on these threads time allowing.We could help some of the clueless bloggers in those lines.
In Zambia, we are good at talking but hopeless when it comes to action. This is the “scourge” of iferiority compless that Nevers Mumba talks about. When Mwnawasa assumed office, he was aware of these ridiculous royalty terms, so if he really wanted to improve the economy of Zambia, that should have been his starting point side by side with the fight against coruption. Blaming the Chiluba Gvt. will not take us anywhere. We should instead from guys like Hugo Chaves who tells investors that…
continued..
they can piss off if they are not happy with terms that ensure maximum benefits for the local economy. I zambia’s case, its the other way round and our negotiators have no negotiation skills, they accept terms at face value. LESSON: This is the result when you allow Politicians to handle serious issues that require a certain level of intellectual quality, next time, let genuine young technocrats deal with the re-negotiations otherwise, we will continue to be ripped off!!
The people of Zambia are quite fed up with this anti-China racist vitriol. The contrast between Mwanawasa’s clarity of vision and Sata’s Taiwanise hodgepodge utterances were too obvious for comfort. The PF itself is a mixture of strange bedfellows. Little wonder that they have no coherent policies and no “center” that can hold beyond machination. The best that the PF can do for Zambia is to accept defeat in all elections till they realize that Sata is no Presidential material to field, then go b
….then go back to the drawing board and put their house in order with a sober candidate.
#21 FactLESS
Leka ubufi mwaice wandi FactLess.Dr Chuchu regime to hold on the increase of mining royalty tax from 0.1% to 3% since Feb by the mine invaders/infesters.Chuchu adm is now asking when it will be appropriate to perk up the proposed %.Honestly,do u ask “bamwisa”in time need of tax increment? After all, resources belong to Zed all revenue must be pocketed for Zed and not ifyakucita share indalama shensu na bamwisa.
sncbns,
#25&26 PragmaFi Imposter.
Tepapa nomba ibange lyamu duvet upepa lyainduka at a wrong time. Shikulu pragmaFI leka insuko nokundobola dobo kwati ni Ndife cimufana ca nyau dance.
#19
Leka ubufi mwaice wandi Fact.Dr Chuchu regime has been told to hold on the increase of mining royalty tax from 0.1% to 3% since Feb by the mine infesters.Chuchu adm is now asking when it will be appropriate to perk up the proposed %.Honestly,do u ask “bamwisaâ€in need time of tax increment? After all, resources belong to Zed and revenue must be for Zed and not ifyakucita share indalama shensu na bamwisa
#5 Senior Citizen
Am surprised. You call yourself Snr citizen with that rotten mind set that seems to be fixed in a low gear is dangerous especially on cyber. Try to shake your head a bit and fill up your empty spheres brain that operate in folly mode. I commend you to go for refresher courses in PS before you go astray.
ZCCM-IH exist and don’t receiv dividend from KANSANSHI MOPANI etc
OK KCM is no good but it’s not the only to practice of the sort …
ZCCM-IH must be the milk cow of zambia
she has 100000t of copper at 3000$ mini if benefits
the all ste must pay dividend to zccm- ih
zccm-ih its 300million us$ of benefits soon …. Grz must touch 86%!!
# 31,
Impersonate another one not that retard with multiple brain disabilities. I don’t undertand his Portuguese.
this is deeply disturbing…the deliberations that take place must be so backward there are no words to describe them.Just who signs these contracts? how can you get 0.6% royalties on a booming minerals market? Western companies are so full of shit, always with an insatiable profit making motive and shady dealership. We need proper negotiators and eeconomists to overlook these trade negotiations.
1991 October 5th- Sata at the MMD Kabwata rally undresses his outfit and surrenders to Mwanawasa SC the UNIP T-shirt & badge hidden under his shirt. Instantly he offers his soul as a hired gun.
1991 October 10th -Sata composes a song Chiluba mpeleko Wheelbarrow nsendelepo Kaunda ishilu.
1991 October 15-He recommends to Chiluba XF Chungu for a junior district officer for an irregular high level appointment.
• 1991 October 5th- Sata at the MMD Kabwata rally undresses his outfit and surrenders to Mwanawasa SC the UNIP T-shirt & badge hidden under his shirt. Instantly he offers his soul as a hired gun.
• 1991 October 10th -Sata composes a song Chiluba mpeleko Wheelbarrow nsendelepo Kaunda ishilu.
• 1991 October 15-He recommends to Chiluba XF Chungu for a junior district officer for an irregular high level appointment.
• 1996 – Change to constitution effectively barring Kaunda from future elections. Chiluba re-elected. Sata and Nawakwi take to the floor in celebration of the engineered constitution in Parliament
• 1997 – Chiluba in contempt stages his own supposedly attempted coup.
• 2001 July – Paul Tembo, former campaign manager for Chiluba who joined the opposition, is murdered shortly before he is due to testify against three ministers among them Sata and Mwila in a high-level corruption case.
• 2001 September- Sata revolts to form his own tribal party PF after being found retarded and unfit for Presidency.
• 2001 December- He is rejected by Zambian at the booth
• 2005 – Sata in a multiple letters to foreign missions offers his soul for hire to any willing Foreign Government against it rival
• 2006- Taiwan responds and offers him a Us $ 230,000.00 contract against China payable in 3 installments
• 2006-Dr.Kaunda highlights the dangers of voting Sata in plot one. He withholds details of Sata’s mental status but some smuggles it and accesses.
• 2007 September- Taiwan threatens him for the money he got.
• 2007 October- He writes Harvard in solicitation for a honorary degree to match Mwanawasa SC.
• 2007 October- Harvard responds in denial of a Honorary Degree but a speech opportunity to highlight his rhetoric on China.
FACT you forgot about 1956-1957 Sata is arrested for stealing of a bicycle.
FACT wilanya ifikunya!!
Fact you also forgotten the demolishing of the Msisi compound without alternative for living during the rainy season. The sacking of junior doctors at UTH as Minister of Health. What wrong leader is this who can even go to any extend of betrailing his own country. This is treason how can you to outsiders and talk about sensitive natioanl matters. If the police is serious Sata should be arrested upon arrival from USA. He wants to cause aranchy in the country. If has any complaints why not go to..
par to usher them.
Iwe ci Easy leka ifye ukunya, you very well how mean your chuchu is and how many houses has he demolished during the last term and this term of offices, walaba shani KALIKILIKI, KANYAMA, most recently MAZYOPA and the misplaced street vendors who are now cutting innocent pipo’s ear and saying go and give Chuchu maybe he will listern with dead person’s ear. Chuchu is the most heartless person this side of the equator when its comes to caring of the poor pipo.
THE PROBLEMS OF ZAMBIA WILL NOT BE RESOLVED BY INTELLECTUALS. WE HAVE SEEN A LOT OF INTELLECTUALS COME IN GO WITHOUT ANY MEANINGFUL CHANGE.
OUR MAJOR PROBLEM IS TO FIND HONEST AND PARTIOTIC MEN.
Keen (45),
I hope that fool in # 1 hears you loud and clear though as a non intelligentsia he yaps what he will never be. Hope he doesn’t error to call you retard in face of your blatant advice. That is typical of clueless nonities battling in wishful thought of ever walking in the realm of Governance power. We were there until we retired leaving the mantle to our credible and tested identified young people to handle it way into the next 15 years non- intermittently.
#46 You seem to be a bitter man.Who told u that pa blog apakupwishisha stress?. Bushe #1 nakutuka for you start passing demeaning remarks? You chap must grow up and stop ukudobola nokulya inseke shebange.
Typical of Zambians. We have all the time to do all the talking about non-issues. But fail miserably to discuss technical solutions to real problems. Sata is expressing his personal vews about growing chinese influence in Africa. But is this an issue to move the entire machinery of govt?
Francis,
Surely know well that no GRZ machinery has moved on Sata but forewarning him of the toll his mercenary carries in a liberalized and diverse world. GRZ has responsibility to remind and protect its citizens over their acts even in the path of self invoked danger.GRZ is equally worried that some overzealous individual may pump 5 pullets into Sata’s head against its wish.You know that the tag of hatred is horrendous.Now is better than late.Some people are better advised in non cryptic term
Fact,you know what no political party is a tribal party because all parties are formed to save the pipo and not the tribe.No tribe is bigger than our nation. Only pipo like you are so driven by expeculation and extenuation.This only expose how naive you are through extorttions.I think your MMD propaganda machine doesnt save the purpose of unity.
Fact, again you sound like an assain used by your chuchu gvt.why should you defend your govt when Gen Shikapwasha spoke about arresting Sata.If anything will happen to Sata the Govt will pay a huge price.
Ba Boss bandi ba Sata has caught in a web of lies.
This is not fair now Ci Fred nachi joina Ci FACT in a Gang of damaging the future Presido.
Look at their dirty propaganda;
We did not expect Michael Sata to be ashamed of his questionable dealings with Taiwan …blah blah, blah
As usual, we are digressing, typically Zambian. The issue at hand is mining contracts, not your xenophobic President Sata …
Ba blogger ba Zed, yah! Muletukafye abantu abashimitendeke. Ati ‘retard’ ninshi mwalanda? Muleikalafye nga tamukwete fyakulanda. Amano ububi mwebakalamba so.
Please blog with respect and you shall be respected. Lekeni ukusebanya Zed with silly semantical pointless contributions twapapata.
If the shoe fits you, it’s yours!
Shebo, thats right, a few sane people will realise what the topic is however we have alot of PF Cadres who are busy praising their Boss !!!!!!!!
FACT, i was referring to the story quoting Mpombo as saying Sata worries the mmd govt. And as suggested above Shikapwasha has had some things to say as well. What this means is that the ministers are spending hours at state house telling the President what should be done about Sata’s behaviour. And then of course addressing other meetings and press conferences to talk about this. I just dont agree this is how they should be spending our tax payers money.
Mwinepabo right. Foreign experts for what? Dont we know what we want? Didnt a similar kind herd GRZ into giving away the mines for a song? If GRZ has real men (not those we see kneeling for other men). IT MUST PUT ITS FOOT DOWN. Here is the FORMULA. New mineral royalty (5% to 10%, price related) and 30% corporate tax or FACE NATIONALISATION. Dont waste taxpayers money on experts yet we know what we want. Is GRZ afraid of investors? Would Zambia have won independence if it had such TIMID leader
Bushe kanshi ubuyantanshi bulikwi? I see a situation were our children will start fighting for independence from the so called investors. We are turning our children into future freedon fighters, when we already have the freedom.
hey ankol danny
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