By Peter Sinkamba
We as the Green Party believe Mopani Copper Mines (MCM) has now crossed the red line by cancelling 300 contracts for Zambian suppliers and contractors in addition to its planned retrenchment of 4,700 miners.
If Government has failed to veto the absurd MCM management through the Golden Share scheme, then it is high time that President Edgar Lungu invoked Emergency Powers Act to end the impunity of the company. Section 3 Regulation 2 of the Emergency Powers Act empowers the President to take over, on behalf of the Republic, any undertaking in an industry which has been declared a strategic industry by the President. Mines are classified as strategic industries, and therefore eligible for compulsory acquisition if the manner in which management of the mine is running the company is inimical to State security and national economy.
As the Green Party, we expect President Lungu to move in and deal with the issue of MCM personally. Parliament gave him the powers through the resolution which was overwhelmingly supported. Those power should not be only seen to used to harass ordinary citizens at markets and for loitering (shishita) purposes. The powers should be used for economic sabotage acts such as the MCM case which have more serious and widespread local, regional and national impacts.
It is pointless for the President to venture into shuttle diplomacy by sending his Ministers to MCM, when the company has shown serious disrespect for his government and the people of Zambia.
There is absolutely no reason for his government to continue pleading with Mopani, unless his government is compromised through state capture corruption. This level of corporate impunity by MCM only manifests when Government officials captured by the Company, whereby the ruling elite and powerful businessmen manipulate policy and influence rules of the game to their own advantage. A captured economy is thereby trapped in a vicious circle in which the policy and institutional reforms necessary to improve governance are undermined by collusion between powerful firms and state officials who extract substantial private gains from the absence of clear rule of law and interventions by government officials. At the end of the day, a small group of people is able to extract considerable profits from those distortions.
We believe government is in a state of capture because there is no excuse why MCM operations should not be compulsorily acquired.
First, this company, which has been operating for 17 years has not paid any dividends for the 20% government stake but keeping all profits to itself.
Second, this company has pruned workers from 30,000 at privatization in the year 2000 to 8,000 at the moment, and wants to reduce that further to 4,000.
Third, the company has been giving petty businesses to Zambian suppliers and contractors. The bulk of businesses are given to Peruvians and South Africans. Even for the petty businesses, 300 such contracts has been terminated.
Fourth, the company has hedged it copper sells at $3,000 per tonne. Even if the price of copper reaches $10,000 or more, Zambia will get nothing because the hedged $3,000 per tonne is less than the production cost of $4,000.
Fifth, the company is failing to pay for electricity and owes CEC $15 million yet it making a big kill from copper sales now fetching $6,500 per tonne. We the poor members of the public are paying even high cost reflective tariffs upfront through prepaid scheme. Why should a foreign firm making big profits fail to pay. The company wants to cling on to the so-called Power Supply Agreements which were cancelled by the late President Mwanawasa. Those agreements have no legal leg to lean on.
Sixth, the company owes the Zambian people more than $80 million in environmental liabilities which it has failed to cover through bank guarantees.
Seventh, the company has failed to provide key documents to ZRA to fully assess its VAT returns and and its copper sales, whereby civil society estimates indicate Zambian has been defrauded by the comapny in excess of $10 billion. The company denies but the only way it can be vindicated is to provide documentation in a transparent manner but is refusing to do so. Why should government continue tolerating such a fake company?
Eighth, this company was acquired from ZCCM “at a song” and not through a cash transaction but credit or “nkongole”. Government gave it tax exemptions running in hundreds of millions of dollars. Why should government fail to re-acquire it through similar fashion?
Ninenth, from company documents posted through the “Mopani Way” public relations, it appears this company plans to abandon operations in Zambia in 2023. Why should we wait until the copper reserves are exhausted?
Tenth, the multi-billion question then is: Why should a responsible government continue allowing a foreign company to rape natural resources to the extent of Mopani if it is not captured?
If the PF Government is not captured, we demand that the President moves in immediately to acquire the MCM assets forthwith. We also demand that all contracts for Peruvians and South Africans are cancelled forthwith. We finally demand that all work permits for MCM expatriates and contractors are cancelled forthwith.
Green Party of Zambia