We as the Green Party are skeptical that Mopani Copper Mines (MCM) will pay the outstanding US$15 million which the company owes Copperbelt Energy Corporation (CEC) within the agreed timeframe of six weeks, including payments at new ZESCO cost-reflective tariffs which all other mining companies are paying.
We are also unconvinced that with the agreed timeframe, Mopani will provide to Zambia Revenue Authority (ZRA), and other relevant stakeholders, all the relevant documentation to resolve the VAT impasse and also facilitate a credible forensic audit to disprove strong allegations that suggest the mining company has defrauded the Zambian government in excess of $10 billion through transfer pricing and in-house hedging.
Mopani is believed to have hedged copper sales at $3,000 dollars using its parent company Glencore. Through this scheme, the Zambian government loses on all revenue when copper price on the world market exceeds the hedged amount. For example, now that the copper price is approximately $7,000, this means the Zambian Government gets zero from the $4,000 revenue which is in excess of the hedged amount.
We are also doubtful that Mopani will pay dividends which the company has failed to pay in the last 17 years of operations at Nkana and Mufulira mines. Should Mopani provide all the documentation, we believe the forensic audit will establish that Mopani owes ZCCM-IH and Government dividends running in millions of dollars from 2000 up to date.
We are also skeptical that Mopani will provide financial cover to secure its more than $80 million in environmental liabilities which since 2008, the mining company has failed to cover through bank guarantees.
Finally, we are distrustful that Mopani will restore the all the 300 contracts for Zambian suppliers and contractors which were cancelled last week, as well as retaining all the 4,700 miners the mining company planned to retrench. We will nonetheless keep our fingers crossed and monitor the situation closely.
Furthermore, we urge our colleagues in the PF Government to refrain from the tendency of going to the mines each time there is an issue to be sorted out. This culture belittles the status government and promotes state capture corruption. We instead implore our colleagues in Government to develop an arms-length culture whereby the President and his ministers merely summon management of the mining companies to respective government offices… not for government leaders patronizing corporate offices.
Green Party of Zambia