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HomeNewsZambia: Opposition urges govt. to scrutinise KCM debacle, taxation of mining sector

Zambia: Opposition urges govt. to scrutinise KCM debacle, taxation of mining sector

The opposition United Party for National Development (UPND) says it is essential that government increases its understanding of how best to deal with mining corporations using blackmail and deceit in covering up costs of mining projects and equipment that are brought into the country.

The evasion resulted in mining corporations not paying anything to government by exaggerating costs, UPND alleges.

The opposition said the recent shock revelation by Anil Agarwal, chairman of the UK-based Vedanta Resources, on how he is making huge profits from its Zambian subsidiary, Konkola Copper Mines (KCM), should be a wake-up call to Zambians and a concern that should make government work at strengthening the Ministry of Mines which lacks the capacity to adequately supervise the exploitation of the country’s mineral resources.  

Zambians have sharply criticised remarks made by Agarwal, the chairman, for Vedanta shown on Youtube boasting of raking US$500 million annually from KCM. He also bragged about buying KCM at a cheap price of US$ 25 million instead of the asking price of US$400 million.

“For us, the scandal is not in selling KCM at US$25 million. Those charged with the responsibility of disposing the asset may argue and even prove that, at the time that was the best price they could get,” UNPD deputy spokesperson Edwin Lifwekelo said Wednesday.

“The scandal is not words coming from KCM owner, the scandal is in government’s failure to benefit from the high copper prices that have been prevailing since around 2006 despite that being a campaign promise,” said Lifwekelo who called for the re-introduction to windfall tax.

UPND urged the ruling Patriotic Front government to take immediate steps that will address concerns of the stakeholders, if Zambia is to get any meaningful benefits from the exploitation of the country’s mineral resources.

Lifwekelo noted that the late president Levy Mwanawasa administration was able to bring in US$480 million in one fiscal year at the introduction of windfall tax, pointing out that when this was collected, the county was producing less than 600,000 metric tons of copper per annum.

“The mines are projecting to hit one million tons a year by 2015, which means Zambia could easily get US$1billion if we reintroduced windfall tax from the mines,” he added.

According to Lifwekelo, the mines need well trained and highly experienced engineers and economists who are able to interpret feasibility studies of these mining companies. This experience, he said, is needed to analyze and bring out issues which will benefit the country.

“We therefore urge government to consider the introduction of the windfall tax to address the ever rising youth unemployment in the country instead of engaging in rampart borrowing to cover for government inadequacies of addressing the economy which is currently in I.C.U (Intensive Care Unit) going by the raising cost of living,” Lifwekelo stated.

According to Mines Minister Christopher Yaluma, the technical audit committee by the government to audit operations at KCM revealed that the mine was mismanaged as the total liabilities exceed the current assets by US$123 million.

Yaluma, who ruled out the possibility of repossessing KCM, said the video clip depicting Agarwal boasting of getting US$500 million per year from KCM would require investigations and that government would ensure that at the end of the day, Zambians would get a fair share of their mineral wealth.

Finance Minister Alexander Chikwanda has in the past called advocates of the windfall tax as lunatics.

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