Chamber of Mines president Nathan Chishimba has dismissed as malicious nonsense allegations that “Zambia loses about US$3 billion annually through illicit financial flows (IFF) mainly perpetrated in the minerals sub-sector”.
The allegations were made in an article in the Daily Mail (24 July 2017), featuring Centre for Trade Policy and Development (CTPD) director Isaac Mwaipopo. The article purports to be based on the findings of the latest Financial Intelligence Centre (FIC) report.
“Even a cursory reading of the 2016 report will show that there is no substance to the allegations,” said Chishimba.
Chishimba proceeded to dismiss the allegations, point by point:
1. The FIC 2016 report records a figure of potential loss of ZMW 4.6 billion, or approximately $400 million. Whilst this is a large amount, it is a fraction of the $3 billion regurgitated in the article.
2. The report is not on the mining industry, but on the general Zambian economy and covers all industry sectors. There is no mention anywhere in the report that “these losses are mainly perpetrated in the minerals sub sector”.
3. The allegations imply that it is corporate multinationals that are behind most of the suspicions of irregular transactions. However, the FIC report states that the majority (84%) of them relate to transactions by individuals; only 16% are from corporations.
4. It is corruption that is the big-ticket item, not alleged mineral theft. The report says the amounts linked to suspected corruption are “significant” – over ZMW 3 billion, 76% of the total potential losses. “Analysis revealed that these were predominantly linked to public procurement contracts,” the report says.
5. The report shows that the number of suspicious transactions has declined by 6% on the previous year; and the findings suggest that the number would have been even lower if it had not been for an unusually high volume in August, which the report says might have been linked to the Zambian general election.
6. If the allegations of billions of dollars of annual theft by the mining industry were even remotely plausible, then the report should logically have uncovered evidence of this in their trend analysis. There is no such evidence.
7. The report notes what it calls “a practice in which Asian nationals purchase copper ore from small-scale miners on the Copperbelt, which they subsequently export to entities that are known to be shell companies or are registered in tax havens”. However, there is no indication in the report that this is a major problem, or that the amounts involved are in any way significant. More importantly, it is an activity confined to particular individuals, rather than Zambia’s established mining companies.
“The portrayal of the mining industry as robbing Zambia of billions of dollars is dramatically at odds with the actual findings of the report,” said Chishimba. “CTPD, and civil society generally, have a key role to play in highlighting corruption, so it is a real pity that they have not got to grips with the actual contents of this report, which indicates large-scale corruption in public procurement.”
Chishimba said the alleged theft of $3 billion of refined copper stretches the bounds of credibility because of the sheer volume of metal involved.
Assuming an average price of $5 000 a tonne for 2016, it equates to some 600 000 tonnes of refined copper annually. To put that in perspective, all Zambia’s copper mines together produced around 750 000 tonnes in 2016. These figures therefore suggest that nearly 50% of Zambia’s annual copper production is unaccounted for. Firstly, it would require two massive ‘ghost’ smelters, each the size of the one at Kansanshi, to secretly process this additional quantity of copper; secondly, to transport it out of the country would require between 50 and 200 trucks leaving the country unnoticed every single day of the year.
“These allegations are so implausible, that even a hardened conspiracy theorist would think twice before believing them,” said Chishimba. “I challenge the CTPD, or anyone else, to produce the evidence.”
He added that the Chamber of Mines was not the only organisation in Zambia to question these constantly recurring allegations that the mining industry was stealing $3 billion in mineral production every year that doesn’t show up in official statistics.
In an interview with the online mining publication Mining for Zambia earlier this year, the allegations were roundly dismissed both by Mooya Lumamba, Director of Mines at the Ministry of Mines and Mineral Resources, and Ron Smit, chief consultant on the Mineral Production Monitoring Support Project, a four-year programme funded by the European Union.
“These allegations are wholly untrue, and come from a position of ignorance – not just about how copper is mined and produced, but how our mineral monitoring systems work,” said Lumamba in the interview. “It’s alarmism.”
Smit agreed. “We have noticed that this particular allegation has been recycled in the media for several years now, but no one ever offers any proof.”
Thanks for putting the record straight, HOWEVER, much as the figures did not tally, WE ARE STILL LOSING A LOT THROUGH POORLY ACCOUNTED OR UNACCOUNTED mineral constituents that could be getting exported as copper concentrates! FURTHER, We are NOT SO WELL INFORMED ON HOW MUCH IS EARNED FROM GOLD and other minerals mined alongside copper! And then MAY BE the Report had focused so much on copper BUT I THINK WE LOSE QUITE SOME INCOME FROM ILLICIT EXPORTS OF EMERALDS and OTHER PRECIOUS STONES that our Government does not seem so much concerned with, may be waiting to donors to tell them!!
What is $3billion ?. To me that is not a lot of money.
$3Billion is not much my dear, but Hon. Mutati would be smiling in his sleep if the IMF gave Zambia a loan of that amount.
Constant hallucinations require serious medical check up. $3bn is not a lot of money? You are a mental patient!
You have no clue of the quantum of money that is.
INCIDENTALLY PEOPLE ARE NO MORE TALKING ABOUT ZAMBIA BEING A CHRISTIAN NATION! WHY?
Mr Chishimba u are the one saying nosence. Do you know how much money u loose from UN declared emerald and Gold sales? You speak like you are not Zambian.
After watching the video on YouTube entitled “Stealing Africa–Why Poverty?,” I would be inclined to believe some of the allegations. Zambia has lax laws, which are hardly enforced, when it comes to dealing with corporations. And this maybe because of corruption. These mines mistreat Zambians by working them like slaves. They also routinely ignore safety regulations, pollute our rivers by dumping toxic waste into them, damage the environment, release poisonous gases into the atmosphere, causing lung diseases to develop among our vulnerable poor Zambians. On top of that, they refuse to pay their fair share of taxes, thus literally ripping off the Zambians. They’re constantly looking for ways and means to avoid paying taxes they owe. And they do all this with impunity, knowing that…
(continued)… no one has the fortitude to hold them accountable. So we’re literally losing our precious resources for nothing. A few years from now, all we’ll have left in the country are empty gaping holes in the ground, with nothing to show for them. What a shame.
This guy is paid a a front for the multinational cooperations that pay taxes much lower then they should.
Nathan that for the effort, but Zambia is one the few countries in which the tax paid by the extractive sector fall well short of the norm. This is due to base erosion and profit shifting (or manipulating the books). Some of the interest payments made by the mines are for fake loans for the mother companies.
Do not be deluded the culture of theft in Zambia is deeply entrenched that theft and thieves are glorified in the nation and honoured. Any attempt to challenge it is aggressively rebuffed without shame. Thieves include the head of the nation.
Please do not insult our collective intelligence or try to think we are not over burdened with PAYE to cover the budget. We as ornidary Zambians are already subsidizing the mines who pay for power below cost recovery.
The Zambian people are in hospitals without medicine and poor education and the Chamber of Mines is trying to dispute the fact that they underpay tax! Really?
Does your meager contribution even include post-mining expenses ease the cost our kids will carry when you are done leaving holes in the ground?
All we are saying is that we shall get our rightful share, once Visionless Lungu stop making costly policy reversals on royalties and corporate tax.
Apart from the holes and the pollution, there is a lot of damage to the roads. There should be a percentage that goes maintain roads and other public amenities. Not forgetting a diversification programme to sustain the mining areas after the decline of production. Local leaders and stakeholders need to pressurised into forwarding these agendas. Its very easy for all of us to line our pockets, lets think of the future generations.
Soosa mune Chishimba, beebe otherwise ama Donkeys will be misled since they dont analyse issies or even at all. Just look at the 14 days petition limit, underfive himself himself understood that fact when he went to plead with Concourt Judge president that night to allow him to scout for non-existent evidence for another two days. Now it is a chorus by UPNDonkeys that the petition will be “heard”. Even within those 14 days not a shred of evidence was offered by the clearly lost lawyers.
…..typographical correction: Soosa mune Chishimba, beebe otherwise ama Donkeys will be misled since they dont analyse issues or even think at all. Just look at the 14 days petition limit, underfive himself understood that fact when he went to plead with Concourt Judge president that night to allow him to scout for non-existent evidence for another two days. Now it is a chorus by UPNDonkeys that the petition will be “heard”. Even within those 14 days not a shred of evidence was offered by the clearly lost lawyers.
The Pf rats still having nightmares at the thought of the petition…they can not sleep thinking about that petition and what HH is thinking..
@ Terrible..Imwe bayama imwe you’re really terrible. We’re talking about holding corporations doing business in Zambia accountable, and you bring up some unrelated issues. Go Watch “Stealing Africa–Why Poverty?” on YouTube and see what’s happening to your country–that is if you even care.
K. R. Z (Kleptocratic Republic of Zambia) not at all surprising.
First you have to ask yourself who the Chamber of Mines represent?
The way forward in zambia is to form a political party that would take the interests of the youth and the poor old Zambians.
The president of that party should never been more than 50 years old.
If you want to know how much money zambia is losing from mining ask Bashi Maeni. They know the truth.
My biggest problem is that zambian journalists are not properly trained to do investigative journalism.
Zambia is rich but poor thinking makes the country poor.
Copper very soon will finish because the rate the Chinese are digging it is very fast.
Thank you for introducing due citizenship because some of us we won’t return home now. Cry for my beloved country zambia.
This is a toothless organization, CHAMBER OF MINES REPRESNTS NOBODY and can say nothing to mine owners, disband it please
Worldwide, generally accepted corporate multinationals are behind most of the corruption that take from the poor and the poor lose out because of this. Think of these corporations as renegade world citizens with no borders.
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