S/Africa NGO condemns MMD's 'secret deals' with mines

SOUTHERN Africa Resource Watch (SARW) has accused mining investors of lacking a human heart and care for environmental and human rights issues. 
The South African-based civil society organisation has also condemned the MMD government for having tied the country into 'secret deals' such as 20-year contracts that have allowed mining companies investing in Zambia to pay virtually no taxes or royalties, claiming that the mines were undergoing recapitalisation. 
Out of the K15.23 trillion projected as revenue to support expenditure in 2011, K1.85 trillion will come from mining tax while mineral royalty revenue will be K404.7 billion, with K554.8 billion coming from mining tax arrears. 
Currently, copper prices have maintained a 27 month-high selling at over US$8,300 per metric tonne but the MMD government has remained adamant to reintroduce windfall taxes, claiming that it is a disincentive to mining investment. 
In its report titled Copper boom in Zambia: boom for whom? SARW through its researchers, Chola Mwitwa and Claude Kabemba, stated that Zambians were not adequately rewarded from the boom in copper prices because new investors lacked a human heart. 
"Undoubtedly, the mining of copper has impacted both positively and negatively on the lives of Zambians. The copper mining industry employs over 40,000 Zambians directly and contributes over 10 per cent to GDP. The mining industry has contributed less than US$1 billion in corporate taxes, less than US$30 million in mineral royalties but relative to corporate taxes and mineral royalties paid elsewhere in the world, these figures are very low," it stated. "Despite the huge return on their activities, mining companies are not investing in local communities or workforce in areas in which they mine, as such, Zambia's economy has been growing at a rate of five per cent a year over the past few years but this growth has not been passed on to the Zambian people." 
It observed that before privatisation of the mines, the government used the assets of ZCCM to diversify the economy. 
"ZCCM established subsidiary firms that focused on tourism (Kasaba Bay and Manchinchi Bay lodges), agriculture (Mpongwe Farms), agro-processing (Mulungushi Milling) and transport (Mulungushi Travellers). Copper mining companies, both in private hands before independence and in public hands after independence, developed and maintained social infrastructure such as schools, hospitals and sports facilities since investors then knew that it was in their best interests to motivate workers in some measure," it stated. 
It stated that the selling of the mines to foreign investors in a somewhat haphazard fashion had its own advantages and disadvantages. 
"However, negative effects seem to have outweighed the positives. Furthermore, the new mining investors are not contributing as much to the local social infrastructure, although Lumwana Mines is proving to be the exception," it stated. "A comparison between copper mining towns before privatisation and now during the boom will show that conditions have not changed for the better. The roads have potholes and are in poor condition, training programmes for artisans have been abandoned, football fields are unkempt and the new mine owners no longer operate hospitals and schools." 
It stated that it was not surprising that Zambians were challenging the entire economic model espoused by the MMD government. 
"People are aware of the inadequate maintenance of social infrastructure left by investors in the mining townships and argue that as much as the country needs foreign investment it must also ensure that it is self-sustaining," stated SARW. "It is not judicious for the Zambian government to allow foreign companies to operate without having to pay import or value added taxes indefinitely. When will the finance minister levy taxes on minerals that will eventually result in decent salaries being paid to Zambian civil servants?"