Impact on trade Liberisation and Privatisation in Zambia

By Brenda Zulu
Despite the copper price being at peak at the London Stock Exchange the profits in the mining sector have not trickled down to the ordinary Zambia citizen.

In an interview with the Civil Society Trade Network of Zambia (CSTNZ) Linda Banji Kalima said based despite the Mines and Mineral Act specifying that mineral royalties should be at 3% for those holding large scale mining licenses, the rate negotiated by most mining companies was 0.6% of the gross revenue of the mineral produced in the mining area.

She said according to the report “For whom the wind falls “ the agreement allows companies to avoid paying a good deal of corporate tax by carrying forward assets for period of between 15 and 20 years. She added that massive unemployment and retardation of local manufacturers have been the order of the day due to domination of not only foreign investors but also South African investors.

She explained that between 1997 and 2000, Zambia Consolidated Copper Mines (ZCCM) was split into seven different units and sold off. The units were initially bought up by seven multinational mining companies, including Anglo- American which chose to exercise its pre-emptive rights, taking on 65% of KCM, a package which included the right and expectation to develop the massive new Konkola Deep Mining Project (KDMP).

Kalima said the Anglo America only waited until 2002 for the copper price to rebound before deciding that it was not going to and there was not as much money to be made in the short term from the KDMP as they had hoped. Anglo, along with other minority investors in KCM- the Commonwealth Development Corporation (CDC) and World Bank’s International Financing Corporation (IFC) completely pulled out of Zambia, handing the mine back to state ownership and in the process, threatening to bring a halt to production at the country’s biggest asset.

Kalima explained that Zambia’s industrial sector has undergone a major shift since the government instituted the structure adjustment programmes in the early 1990’s. The copper mining sector was not spared. Copper mining industry has played a major role in infrastructural development especially on the Copperbelt province. The Zambian Copper Mining industry has gone through three major phases. From their establishment to 1969, the mines were in the private hands under the control of Roan Selection Trust (RST) and Anglo-American corporation (AAC). In the period after 1969, the mine were first nationalized and then merged to form ZCCM. Although ZCCM was a state enterprise, Anglo-American through its subsidiary Zambia Copper Investment (ZCI) continued to hold 27% of the shares and a pre-emptive right to buy back share that the government offered in ZCCM at a later date before they were offered to anyone.

It was however clear that through advocacy on Development agreement was done by CSO and resulted in the Mining Bill of 2008. The development agreements had been kept secret 1990’s to 2006 agreements now availed to the public and accessible.

Kalima said there is no tax holiday campaign as result 2008, tax on all mining companies have been revamped.