Message Lun 10 Sep 2018 22:54

DRC deals with multinational copper looters harder than Zamb

http://newsdayzambia.com/?p=4767

A group of people calling themselves Friends of ZCCM-IH have launched a social media campaign to expose how the looting of mineral wealth and the deliberate government laxity enjoyed by multinationals are far worse in the PF-led Zambia than the Democratic Republic of the Congo.

In a comparative write up posted on its sponsored Facebook page, the Friends of ZCCM-IH stated that the most shady country when it comes to the multinationals’ plunder of mineral wealth was not the one most people had imagined all along.

“The most shady country is not the one you imagine,” the comparative analysis opened as some followers of the page encouraged Friends of ZCCM-IH to submit their data to those who want to have President Lungu impeached. “Many people think that the looting of mineral wealth and the intentional laxity enjoyed by the multinational companies are far worse in the Democratic republic of Congo (DRC)… Evidence is mounting that the contrary is happening.”


They stated that while the neighbouring DRC was determined to put the multinational plunderers on the right track and to recover the diverted money, Zambia was strangely lax.

“The Congolese State revoked First Quantum Minerals’ licences and kicked them out for wrongdoings in 2012. It made pression on Katanga Copper and its parent Glencore and has recently got a $150 million transactional indemnity and dividends whose accumulation is estimated at more than $2 billion during the next 10 years,” the lengthy write up read. “At the same time, the GRZ and the board of ZCCM-IH refuse to sue Glencore for the looting of Mopani Copper Mine despite of irrefutable evidence. They are strangely unable to recover more than $800 million kept by FQM in Kansanshi Mine while President Lungu and his ministers play beggar and want to borrow as much as US$1.6 billion from the International Monetary Fund (IMF).”

The Friends of ZCCM-IH then laid the background to their comparative analysis.
“The Zambia Consolidated Copper Mines Ltd (ZCCM Ltd) was a consolidated copper mining conglomerate majority owned by the Government of Zambia. The Gécamines, or La Générale des Carrières et des Mines, is a state-owned mining company in the Democratic Republic of Congo (DRC). They had the same profiles. In 1990s, these two giant conglomerates faced financial difficulties when copper prices started declining to about $1,500/tonne in 1998 and remained at this level until 2003. The Congolese and Zambian States were obliged to sell a considerable portion of their mining assets for a song,” they stated. “Former Zambian finance minister Edith Nawakwi has revealed that the IMF and the World Bank pressured the Zambian government to privatise the mines on the pretext that copper prices would never increase in 20 years.”

Friends of ZCCM-IH quoted Nawakwi:
“We were told by advisers, who included the International Monetary Fund and the World Bank, that not in my life time would the price of copper change. They put production models on the table and told us that there (was) no copper in Nchanga Mine, Mufulira was supposed to have five years life left and all the production models that could be employed were showing that for the next 20 years, Zambian copper would not make a profit…
“Conversely, if we privatised we would be able to access debt relief, and this was a huge carrot in front of us like waving medicine in front of a dying woman. We had no option (but to go ahead).”

They pointed out that while both GECAMINES and ZCCM-IH were holding companies, the former was still a copper mining operator while its Zambia peer was no longer in that category.
“Copper prices are around $7,300/tonne now, the profiles, strategic guidelines, management and governance of these companies are very diverging,” the Friends of ZCCM-IH stated further.
They then outlined the various governance actions that both Zambia and DRC took against the mineral wealth plunder in the respective countries.

“GECAMINES: Former Chief Executive Officer GECAMINES Ahmed Kalej Nkand was fired in July 2014 on allegations of corruption and ‘serious and multiple violations of governance’. Congolese senior government officials said First Quantum had violated the law broadly and specifically,” the analysis continued.
They quoted one government official: “When the new mining code came in 2002, we asked everyone to conform to the law. That is why we launched the review of mining licences in 2007. First Quantum is the only one that did not negotiate”.
According to the Friends of ZCCM-IH, FQM was then legitimately kicked out from the DRC.

“A few day ago, Glencore reached a deal with Gecamines to end a legal dispute over Kamoto Copper Co., which is set to become Congo’s largest copper and cobalt mine. Gecamines had sought to shut down KCC after claiming Glencore failed to address a capital shortfall at the subsidiary,” the analysis read in part.

Friends of ZCCM-IH then provided Gecamines’ explanation on the Glencore standoff issue.
“We think that by the end of this year the company will be able for the first time to pay profit tax and distribute dividends to its shareholders,” Gecamines president Albert Yuma said at a conference in Lubumbashi in southeastern Congo on Thursday. “In the decade to come, the profit taxes expected by the Congolese state should climb to $3.5 billion. And the expected dividends for Gecamines will exceed $2 billion.”
The Gecamines boss, Friends of ZCCM-IH noted, has repeatedly claimed joint ventures with foreign investors are too generous to companies such as Glencore, China Molybdenum Co. and MMG Ltd., saying existing arrangements provided a bad deal for the Treasury and the state miner.
“We wished to engage the re-evaluation of all our partnerships to create conditions of exploitation that are actually profitable for all : the foreign investors, Gecamines and the Congolese state,” Yuma said. “We have started with the most important among them (referring to KCC).”
Gecamines, according to Yuma and as quoted by the Friends of ZCCM-IH, will now initiate discussions with other partners, adding that companies “are seriously mistaken” if they think they can continue to operate unchanged joint ventures.

Then Friends of ZCCM-IH moved to what the Zambian government has done in the plunder of the country’s mineral wealth.

“ZCCM-IH does not take legal action against Glencore for the looting of Mopani. In 2010, an audit of Mopani Copper Mine (MCM) by Grant Thornton Zambia and Econ Poyry revealed glaring irregularities in production and revenue, there is fraud at every level. ZCCM-IH has lost hundreds millions of $. Despite of this overwhelming evidence, nothing has been done for 7 years… and the looting continues,” they stated. “Mr Emmanuel Mutati, the elder brother of former finances minister Felix Mutati, was the former CEO of MCM. The Ministry of Finance appoints the representatives of the govt on the board of ZCCM-IH. Does it make pression on ZCCM-IH to cover up the matter? During a conference in Paris in December of 2016, ZCCM-IH CEO Dr Kasolo said under pressure by Minority Shareholders that something’s going to be done but he cannot say anything. One and a half years later, the looters are still not prosecuted.”

They disclosed that ZCCM-IH holds a 20% stake in Kansanshi Mining, the most profitable mining Company in Zambia, according to the Friends of ZCCM-IH.
“Non-controlling interests are the Minority shareholders’s benefits after investment. ZCCM-IH is the only Minority shareholder in FQM’s books.The ZCCM-IH stake in Kansanshi currently represents now $750/800 million in undistributed profits attributable to the Zambian holding,” they wrote. “However the majority owner First Quantum Minerals (FQM) insists on conserving this money as a legal reserve and only distributes derisory dividends to ZCCM-IH in spite of having made more than $3 billion in net profits in recent years and having totally recovered its investment in the mine.”
They stated that worse still, First Quantum uses the money as cheap financing for other Zambian and worldwide operations in which ZCCM-IH has no stake.

“The ZCCM-IH management decided nonetheless to launch action in October 2016 to sue First Quantum for recovering interests of loans as well as 20 per cent of the principal amount i.e.non controlling interests. Why did they do nothing for all those years?” Friends of ZCCM-IH querried. “But what is even more shocking is that President Lungu wanted ZCCM-IH to drop case against FQM and has called for an out of court settlement with that company. He wanted to engage it for a speedy and amicable conclusion of this matter, behind doors closed. Given the outcry from the Churches and the civil society organisations, he had no other choice than to let the process continue. But the recent revelations concerning judges’ wrongdoings and a defective Zambian Justice (system) lead us to fear the worst.”