A row over new Zambia mining taxes has deepened after foreign mine owners rejected the proposed fiscal regime and threatened to seek international arbitration to resolve the stand-off, officials said on Tuesday.
The foreign firms told a watchdog committee of the parliament that they were rejecting the proposed windfall profit tax at a minimum of 25 percent and an increase in mineral royalty to 3.0 percent from 0.6 percent because the government had not consulted them over the proposals.
Attorney general Mumba Malila however, told Reuters that there was no need for litigation because the new tax regime was “fair for the mining companies to continue making profits.”
“We hope they will not drag the government into an expensive litigation exercise. There is no need for litigation because the new regime still allows them to make profits and they will soon see that,” Malila told Reuters.
In January, the government also introduced a variable profit tax at 15 percent on taxable income above eight percent and raised corporate tax to 30 percent from 25 percent in a move that will effectively raise mining taxes to 47 percent from the previous 31.7 percent, starting from April.
First Quantum Minerals country manager for Zambia, Chisanga Puta-Chekwe, said the Canadian-based firm would seek to renegotiate its 15-year agreement on low taxes with Zambian authorities.
“We are really eager to renegotiate with the government, but if this fails, it will be difficult to avoid invoking (a clause on) international arbitration over the matter, although this is not our preferred course of action,” Chekwe-Puta told Reuters.
He said the government had assured First Quantum Minerals it would not increase existing taxes or introduce new taxes during the 15-year stability period.
“The reason First Quantum raised money to invest in Zambia was because there was a guarantee that for 15 years, tax agreed upon would not go up and that there would be no new tax introduced,” Puta-Chekwe said.
Chekwe-Puta said the proposed taxes would prevent First Quantum Minerals from conducting expansions at its mining units.
Managers of the major copper and cobalt mines also told the parliamentary committee that they wanted to renegotiate contracts they signed with the government, which awarded them exemptions on taxes for periods between five and 20 years.
Senior managers of Mopani Copper Mines, a joint venture of Swiss firm Glencore International AG and First Quantum Minerals, Chibuluma Mine Plc, a unit of South Africa’s Metorex , Chinese-owned Chambishi Copper Mine complained over the new taxes.
Others were from Luanshya Copper Mines and Lumwana Mining Plc, owned by Australia’s Equinox Minerals Ltd. .
“The stand-point is the approach the government has taken (because) they told us we have to renegotiate the development agreements and up to now we are waiting to be spoken to,” Frederick Bantubonse, the head of Zambia’s Chamber of Mines, a think-tank on mining, told Reuters.
“This (stand-off) means that Zambia will not be credible to foreign investors and it will discourage further foreign direct investments,” Bantubonse added.
Head of operations at the country’s premier Konkola Copper Mines (KCM), C.P Baid, said the proposed taxes would ‘jeorpadise’ KCM operations.
“The new taxes will make Zambia uncompetitive, unattractive and will lead to destruction. There is need for meaningful dialogue before new taxes are implemented,” the state owned Zambia daily Mail quoted Baid as saying to the parliamentary committee.
Yeah ryt go ahead & sue then will see who is going win.What a shameless bunch.
If they think they wont make profits anymore,then wind up business.They r disgusting.
I THINK I MSS KK. its at times like this when a true leader needs to show his mettle!
They are ungrateful bunch of fools!
These chaps are very silly and stupid.very selfish chaps.if they are aggrieved,let them pack their bags and go.our minerals will still remain.
I feel that for once let us support the Government on this issue!! We have to benefit as a nation
Let them just pack and go and leave our minerals in the ground, me and my grand kids will mine the minerals when I have raised enough capital since these chuchu’s banks would not give me capital but rather spend their money on govt bonds
Lets challenge them do the calculations at the current copper prices and show us how much losses they will incurr according to their claims then we will see if they are making sense. We know the current prices, and we record their exports so it easy!….why are they just talking without doing evaluations?
The mines are ours, let us benefit!!!!
The mines are horrified at the prospect of having to pay taxes like everyone else. 😛
They pay no taxes, they don’t share profits (as would happen with joint share ownership by the government), they don’t have to pay their workers a living wage, abide by environmental legislation, and they don’t have to invest in the community. All this because of corrupt pressure from the IMF and World Bank to privatise, back in 1999.
But they threaten to leave. 🙂 Where are they going to go, where they don’t have to pay taxes either? Chile? The DRC? Their threat (or is it a promise) sounds hollow, no matter how you look at it. Check out MineWatchZambia.com.
Shame on these Zambian M.D.s who are siding with multinational crooks. Wake up and know that you only have one Zambia for your children who need the wealth you are trying to steal from them. Dont narrow the benefits only to your families, from soil you came, and to soil you will SOON go, WHAT DO YOU HAVE FOR POSTERITY you shameless crooks. LEVY, DEAL WITH THESE SHAMELESS CROOKS. They cant even provide SOCIAL AMENITIES. KK, COME BACK IN THE NAME OF LEVY AND NATIONALISE IF THEY CANT MAKE PROFITS. We are ready for an UPRISING against these crooks. A CITIZENRY UPRISING HAS MORE POWER THAN THE JUDICIAL COURTS, TAKE NOTE LEVY HAS NO TIME TO PLAY BUT TO LEAVE A LEGACY for us as a challenge. TO HELL
Hi Zambia!
They sued us? Great, now in can own a mine!
Well, I understand that tempers are high right now, i advise that we look at both sides of the coin. Government needs to engange these mines and get their side of the story. if it is profits the mines are worried about, then that is ridiculous because we all know that copper prices have been high.
Its rather selfish for the mines to resist, well no one is above the law. I am perhaps more taxed than the mines and some of these foreign companies.
I need to be relieved!
Govt. WE ARE BEHIND YOU, GO AND DO US PROUD!
“We hope they will not drag the government into an expensive litigation exercise…” Malila told Reuters.
Bwana AG, don’t hope, i’m sure you knew what you were doing by pulling a fast one on these chaps. Perhaps we should just do a bob mugabe on them and just expel the whole lot, huh? U see, like most bloggers here, I hate the fact that these foreigner’s receive better tax concessions than any zambian would, but let’s not act irrationally here otherwise wina azalila. I’m sure there’s a clever way to squeeze the investor’s balls without a costly litigation? i’ll wait and see…
Let them just pack and go. They’ve had enough. We shall dig and sell for ourselves.
We are starting to behave like Zimbabweans now. Lets not overreact when we havent heard mines side of the story. This mess has been created by us. When we brought them in, we gave them conditions that suited them and signed agreements that lasts for yrs. They are rejecting this tax because govt assured them they will be safe for yrs to come without any abrupt, unconsulted raise. If they pull this fight to litigation, they are likely to win. The sensible thing to do here is to compromise and find a suitable line for both parties to agree on. If they leave, we will be another Zim…dont pretend you can run mines
We’re better off if they leave and leave our minerals intact than having them around for no benefit. For how long are they going to be enjoying this paradise on earth? We also need to enjoy our own paradise.
I heard the sad news about Simone pnssiag away and wish to express my condolences foremost to her family, but also her friends and colleagues. On the other hand also I would like to congratulate you us for having had the happiness of knowing her. From the little I knew her, she was a wise, brave and kind woman who probably died with more courage than most of us dear to live. What she taught with her way of being will live on in everyone she inspired.
Venezuela and Zim have maganaged to grab wealth back to their people, Super Ken did it, Levy can also do it. There is no international court which has the mandate to reverse a sovereign govt law once it is passed! infact I was thinking of a law to immediately re-nationalise instaed of merely increasing tax. These chaps are greedy, Kupusa, Shaaaaa! Balije dango bose mbazeleza! There are a lot of guys who wana come and mine including the 100+ chinese on the waiting list! Ati suing, let them try, they will not achive anything! Abash exploitation, Abash empty threats, Vava 50% tax, Viva Zed, Long live Levy, Long live Magande, Zed wamuyayayaya!
Kalaki # 13 tawakwata amano. who ran the mines before these infestors?
Did you see what happened in china two weeks ago, without copper and cobalt from Zambia millions could have died. Please respect us because are friendly and we can share. So if you understand our proposes and accept them then leave us alone and we shall see who will lose. Africa has survived all hazards that much they know!!
Today I heard the very sad news.As board mmbeer for the FabLab Foundation BeNeLux, I would like to extend my condolences to her family and friends on behalf of all the Dutch and Belgian FabLabs.I never met Simone in person, but felt her presence as driving force behind the FabLab Luzern clearly in the wider network. I am very sorry that now that the opening of the FabLab Luzern is so near, she won’t be able to celebrate the moment.I wish her husband and children, as well as all others that stood near her, lots of strength.
FDI + 50% benefits or you leave us in peace!!!
This should serve as a lesson that in future those in the negotiating teams should always aim high. The government should not be dancing to the tune of investors. Can someone explain to us why the govt accepted such low figures. And what made the people in govt wake up from their slumber? This is surprising indeed. Zambia should be the main beneficiary of its minerals and not the investors and their countries. Let the people in govt remain awake henceforth.
Yea! The suckers are now exposed. These infestors must realize that we have many Zambians that can run the mines. Just because they have met Levy and think that all ZAmbians are as unimaginative as he is, they are wrong. Let them pack up and go. We will do our own mining. We have enough citizens world over that have skills to do the job. Just because they are not white does not mean that they are unable to run our mines.
When are they taking off for their home countries? I cannot wait to see their backsides.
Alakwena now you know that these guys are there for the money to benefit their own country. You should have done that in the first place. Iwe ka Puta, its beacause your mouth is full, thats y you speak like that. 3.0% comeon what is that? for a nation like Zambia. we should even charge more.
Zambian are now waking up Thank God.
Zambian MDs you are crooks and you deserve death. for death of few people is better compared to the many innocent Zambians who have not benefited to your economical sabotage.NOW LISTERN!!!TO HELL..ZWAA MASHOLI.
Our friends in the middle east have absolute control of their oil resources but still use foreign expertise in sustainable public-private partnerships while developing their own local talent. This is what the gr8 KK tried so hard to do. But alas, Kafupi the dribbler, gave away our wealth for a song. Let’s get back what’s rightfully ours, but let’s do it in a civilised way, not monga ni Idi Amin
Chuchu deserves all the support on this path and those bastards should go-ZWAAA-stupid *****s-infesters. Zambians are more than able to run the mining sector like we have done before. Its high time Chuchu nationalised the mines! Unfortunately someone may has set their eyes on Zambia’s reserves in the UK £2bn and may have offered their support because they will represent government and gobble the 2bn plus other legal fees,, by which time Chuchu will have been at Teka farms for 5yrs enjoying the commission- in a Twalibombele Mwisho style!! The unfortunate thing in this noble issue is lack of quality leadership in the management of this process; special services should have done their home wor
I think you bloggers are a bunch of legal illiterates.First of all the Miners have a right to sue the Goverment.remember when these mines were sold the Goverment was desperate to sell the mines and thus offered good incetives to the new mine owners.That was legally binding.Its like if you are bloke and you sell a house to me thre is no way you can come back and say am increasing the price.bwana law is law.Even if the goverment have changed or rather amended the mining taxe regime.The mine owners are also protected by international law.At the end of the day it will be the Goverment who will loose out coz they will have to conpensate the new mine owners.so before you blog think.
Doomed! For as long as they want, they’ll drag this issue until such a time that they’ll be able to leave. They are simply playing to the rules they signed to. Why didn’t whoever was coming up with the new taxes sit these people down so that they are a part of whatever nonsense was presented as national budget?
ba Legal Expert, LLB,PhD #26 thanks for schooling us and calling us legal illiterates, but for a person with a Phd (Matero University, class of ’98), your grammar is appalling! what the hell is “bloke”, “conpensate”, “taxe”? surely, these are not simple typographical errors but evidence of poor grammar. You call me a legal illiterate but i’ll correct you as follows; “broke”, “compensate” & “tax”. Useful tip – google some of these words b4 u use them, it will automatically correct you, free of charge. My gosh, some clowns on this blog…, spare us the agony of reading your incoherent posts!
hahaha…ala rhodespark #28, walipena boyi! lesson learnt – let’s not try to appear smarter than we really are. We are all here to share & learn a thing or two.
haha ati Matero University, class of ’98?
I think the Bob Mugabe process is the only way to deal with these infestors. For you information, zambians are more than capable to run these mines. Let the infestors go, but i know they will go no where, so lets get what is rightly ours. Viva zambia, Go chuchu.
Legal expert # 26, you have been rightly exposed by Rhodespark # 28. You seem not to know what u r talking about. that example of selling a house is sick. increasing tax and increasing the price r two different issues. who tod u that if we sell mines, then they shd not be paying tax? is that wat the DAs say? comeon mwana……the DAs do not give a maximum tax threshold, it does not specify the limit of taxing the mines…infact we should be taxing these mines not less than 10% instead of newly proposed 3%.
Gentlemen and Ladies it is good that the taxes have been raised however before we condemn the mines let us our selves as to who drafted and signed those agreements, which Hon Kunda once said were above the law.
Brethrens the agreements are so horrible they have given all the powers to the mines such that even if we revoke them we will cough out more money than we could raise from the taxes for five years.
I curse the architects of these agreements, and find out where most of these architects are you will be surprised.
#13 & 26; You are the only ones who are making sense on this issue here. Its a pitty to see how many of the bloggers are exhibiting blind patriotism even when they know that our Gvt created this mess by back peddling on the promise they made to these investors without engaging them in prior dialogue. Zambians, you failed to run these mines before, what makes you think you have the finances and knowledge based capabilities to profitably run them this time assuming the current owners pull out? Mind you, the litigation costs plus compensation which they are likely to win if it comes to that would have cripling effects on the economy. Think guys before you support incompetent political moves
Let me give my views from inside(the mines)very objectively.
-The current cost of production(for some minning Comapny) for Jan 08 is $7958 per tonne against the average LME price of $7061,meaning this is not a profitable operation.
-Production of finished cathode has seriously deteriorated and such low production can not support the high costs of prodution.
-For some minning Companies to remanain in business,less produtive units will have to be done away with so as to accomodate taxes meaning some people will definately loose their jobs
-Conclusion
The proposed tax regime is very idealistic low cost with high production and a favourable LME price.I think this shud’v been done in phases.
It’s true that education has failed to educate some of the educated people like legal expert #26. Your LLB,PHD reflects nothing but myopic senseless law expert. By the way, which University produced a useless material of your caliber? Your faculty sounds so cheap and undermine the Law faculty. You are the worst product of any school of thought has ever produced. You deserve to go pa Chinama apo pafupi.ATA!!!!!!!!!!!!!!!!!!
ONE ZED ONE NATION
Zozo Vyasuzya #15 wanisekeska Ivivibanthu nivindele vinambunu Zautesi. Vyazyobela kutapapo chuma chitu. Akwa, vilutenge kwawo pala vikukhumba. Nivinkhungu chomene. Uheni wanyinawo.
26 SO CALLED LEGAL EXPERT
Don,t you know that even when the council has sold you a house they still charge you land rates and can change them depending on land use . If you start using your house as a commecial premises the council charges you different rates.
The architects OF THE DAs ar the ones who have just woken up.the negotiating team were merely advising and all the mmd stooges were making the proposals.they ar the onlz players in the game.cäbinet must have seen these so called agreements and nOdded them.the proposal 2 renegotiate is a political gimmick
#35,21,28 I know the truth hurts and this will continue to haunt the people of zambia.By the way am a busy man to start dwelling on petty issues like typographical errors.anyway thanks for your correction.as regards my education,am a proud graduate of Harvard law school and am a proud legal adviser to a top company in the states.
No 26 – Seeing that you claim to be a legal expert, why don’t you suggest a legal angle we can explore instead of being so smug and negative?
I therefore would like to suggest that we (the govt & people of Zed) pressurise the company’s to create and adopt effective “Corporate Social Responsibility” policies and procedures. They ought to have a code of corporate conduct if they intend to have long lasting profitable relationships with Zambia.
These Agreements were never ratified by parliament they are illegal. 50% of Vedanta profits were realised from KCM. Vedanta has no brought any money into Zambia. All the expansion projects are been funded from KCM profits!
You guys dont put the blame on the investors. It was Levy and his minors who actually made a mistake.They where in a hurry to signing the agreements.what the GOVT should have done now is to engage the investors into dialogue otherwise it will be the nation that will loose out.Remember gentlemen the investors have also obligations to the shareholders and there is no way the Govt can just change the goal posts without dialogue.Currently a lot of investment is been pumped in developing ventures like the Konkola deep mining project and the Lumwana mine.These will create employment for many Zambians.
#40 pse consult widely who told you that the agreements where supposed to be ratified by parliament.
am ready to come to zambia and offer free legal advise to the Govt.I dealt with the same problem in chile and am speaking from experience.If the Govt dont handle this issue properly the mines development in the mining sector will be halted.Remember guys ba Zungu can pull strings here and there and zambia may become like zambabwe
I will write a letter to zambian Govt to inquire if i could be co-opted as part of the legal team in this delicate matter.I hope i will receive a favourable response from levy.
Gov’t is on the right path. It will be good if mining is disrupted briefly because this will push the prices up and increase demand for various minerals. I hope gov’t is thinking of re-nationalisation bcoz magande also wants money to pay back the guys running Zambia Railways so that gov’t can get back the railway lines.
#45, Iwe witness, what have you been smoking? what kind of reasoning is that? With people like you, Zambia will never move forward. On this issue, Gvt has messed up, just like FTJ messed up with his hurried privatisation process which was not well thought through. I wonder which foreign investor would want to invest in Zambia after seeing this gross institutional failure. This is a delicate matter, if we are not careful, we will end up worse than Zimbabwe.
What the government should do is to stick to there plans. If the infestor wants to go let them go. Then the GRZ should let the Zedian with enough resources to run some of the companies well the remaining companies should be in the hands of the Govt. Lets not act too desperately or else we are doomed. Let some of the Zedian home and abroad come together and cooperate with the govt and run these mines. After all am plannin to start my small mine in eastern when i come home. Let them leave some 4 me too.
So called Legal expert you seem to have a cheap chip on your shoulder. Do you know that these so called DA’s were done outside the then Mines and Minerals ACT? Second do you know that the only body santioned by Parliament to privatise the Mines was the Zambia privatisation Agency? Third can you now explain to me what powers Chiluba had to constitute another parallel privatisation team under the chairmanship of Francis Kaunda? The whole process my dear was corrupt and you as a so called legal expert should be cognizant of these facts! Francis Kaunda and his team screwed up your country.Young boys and girls from the IMF and World Bank apparently convinced him that the copper will run out in 7 years! To imagine that this is the same ***** who was Chairman and CEO of ZCCM! The irony! Only in Zambia!
Can any of you folks in Zambia establish whether we can access the DAs and see what the contents are? Surely these cannot be confidential documents seeing as all Zambians are stakeholders to the mines? We might have a more informed debate about his matter seeing as not all of us are legal experts LLB PhD types. We must also bear in mind that commodity prices flactuate in price cycles, the chinese boom is keeping metal prices up for now but there will be a rainy day so while we are on about revisiting this matter govt needs a long term approach. But surely the mines must pay more whichever way you cut it now.
#48 it seems we are presenting the same views except that we are tackling different angles.I have analysed your comment its good.But who is to blame is ti the investors or Govt.and pse dont call me so called PHD.I worked for it and i didnt get it on a silver plate like Levy.
#50 You sound like a person desperate for recognition. Your friends with genuine PHDs are movers and shakers and their contributions are a far better than yours! This is a not a right forum for you consolidated your requirements for paper presentations,,, please try other venues such as Matero Taverns!
#51 ha ha ha.fighting for recognition.my friend i cant fight for recognition.at my age i have achieved a lot financially and academically.Wait and see.when i come to Zambia i will also announce my canditure for 2011 elections.
pse guys let us not dwel on personal attacks.Let us contribute in a positive way.This is a legal issue so u should leave it to the legal fraternity to discuss
The mines issue is always emotive. I still suggest that the DA be reviewed and all clauses be re-examined and then let us anticipate what it would cost government when the mining investors take these matters to court. If I was in government, I would have done this. This is what International Buisness is all about. This is what opening up an economy means. If we are not careful government costs may be higher as happened in the past. So let us cool down and park our emotions aside and come up with responses that will ultimately translate into the benefit of the poor in Zambia. Litigation costs could be used to build hospitals, schools etc let us remember that.
Taonga chomene subweni a Kachenjede, #35, aba banthu mbazeleza. You see, Kapupi et al had brain concussion as they were very pressed to sell de mines. Mbwenu bakhungu bati bafika batifyenya pa singo. Kafupi gave in, but now ni nyengo yithu yakubafyenya, copper price yichali kukwelelako subweni, bangachimbila balutekhu mwanyithu? Boteta boza, tiyeni nase tilyemo mu dongo copper yina malonda! Infact what we should do is to form a cartel and sell copper in quotas. Chile and Zed come together bwenu LME can be done away with. Yayi taonga usange mbawemi bose mubape moni!
Abena RSA/NY? #5 & #6,if you don’t like a particular story,pls skip to another.You can’t dictate anything for LT readers, otherwise start your own blog!
This case may appear simplistic but has many lessons to draw 4rm.Mulyata scarificed his political career for what? just to appease that thug GBM? Since GBM claims to be Zambia’s biggest tycoon(who can bring the Queen of England to Zambia!),I hope he will formally adopt Mulyata & his family,seeing that the man is now screwed? Public servants,muletekanya pls,just look at singogo,musengule,funjika & the rest of Kafupi’s pals! hot soup bambo, with balls tightly squeezed in a vice
Liebe SimoneWenn Innovation und Kreativitat bei uns an der Hochschule Luzern einen Namen hat, dann ist es auch dein Name. Du hast viel in die Welt gahrecbt und viele von uns gefragt was bringst du in die Welt ? Du hast uns gefordert! Schau ab und zu als Schutzengel zu uns.Vreni
Na ba Mwine ba Chuchu almost got BP when he arrived ku airport yesterday!!!!!!!!!!please ma Investors be careful Chuchu will get annoyed ka , we are not happy coz you so selfish and greedy.
These infestors (sorry investors) always play hard ball. We ve got to play hard ball. No need to be be scared about suing. It will be a political/PR blunder for them to sue not to pay taxes to a third world country whose resources they are exploiting. Besides some bolggers have highlighted legal irregularities surrounding DA’s which can be used in court. This should give all an idea of difficult it was to win political independence and we are still far from achieving economic independence. Freedom fighters had to be brutal and resolved. The die is cast and there is no backing down.
Even if they sue what is the Zambian government going to compensate them for? If they claim that they have made a lot of investments in the mines on the basis of the so called DAs…I have a simple solution for that …let them sell the mines and recoup their monies.