Avoiding over 4,000 job losses at MCM

Fri, 25 Aug 2017 11:40:17 +0000

Dear Editor,

IN THE front page article entitled, “Mine crisis deepens”, (Daily Nation, August 23, 2017), Zambia Republican Party president Wright Musoma did shed some light on the various complex contractual, political, social, and economic challenges being faced by the PF government after the Copperbelt Energy Corporation (CEC) reportedly increased electricity tariffs to the mining companies unilaterally.

The article offered a deep and an insightful analysis of the Power Supply Agreement (PSA) signed between the CEC and Mopani Copper Mines (MCM) at the behest of the World Bank. With this in mind, let’s begin with the historical context that produced it.

First, Copperbelt Power Company (CPC), the forerunner to CEC was established by then private companies namely Anglo American Corporation and Roan Selection Trust, the precursors to Zambia Consolidated Copper Mines (ZCCM) to service their power needs.

Somehow, during the privatisation of ZCCM, the CPC was privatised as a single unit via a management buyout by its senior management team which included the current opposition ADD president Charles Milupi.

But the Zambian former CPC senior employees were assisted with financial support by UK-based financiers who also became shareholders to complete the buyout of CPC and subsequent formation of CEC.

This is what could have formed the essence of CEC to appear as serving foreign interests in the current electricity deadlock with MCM rather than the local people’s interests.

However, on the other hand, I think that the Zambia Republican Party president overlooked one aspect that in 2011 five non-government organisations filed a complaint to the OECD against a subsidiary of Glencore over allegations that a mine it owns in Zambia may not be paying enough tax on its profits.

The cause for the complaint lay in the financial and accounting manipulations performed by the two companies’ subsidiary, MCM, to evade taxation in Zambia.

And the current looming risk of over 4,000 job losses at MCM smacks of déjà vu, a major problem that Zambians are urgently invited to manage.

Besides, a draft Grant Thornton report alleged that tax avoidance by Glencore in Zambia cost the Zambian Government hundreds of millions of dollars in lost revenue.

The avoidance was alleged to have been facilitated through mechanisms such as transfer pricing and inflated costs at Glencore’s MCM.

The Mopani mines are controlled through the British Virgin Islands, a recognised tax haven.

As expected, Glencore and its own auditor, Deloitte, rejected these allegations.

Several months after the revision of electricity tariffs by the Energy Regulation Board (ERB), a large portion of Zambians expressed increasing worries about the intense standoff and polarisation between MCM and CEC that threatens national development, peace and unity.

The lack of a consensual spirit and the absence of real channels for fruitful and open dialogue between political opponents or between CEC and MCM honchos deepen tensions and discords, and push the country to an endless threats of job losses in the mining sector, which would inevitably have disastrous results.

Politicians, whether from the ruling or the opposition parties, are supposed to show more responsibility, and maturity in this delicate and decisive moment in the history of Zambia when a metric tonne of copper is fetching US$7,000 on the world market.

They are invited to rationalise their political discourses or foreign interests, to adopt the basic principles of democracy, socio-economic and political pluralism, and to abandon populist, demagogic and exclusionary discourses.

Zambians are fed up with sterile political rhetoric and unfulfilled promises for more jobs in the mines.
They want concrete and effective actions to avoid over 4,000 job losses at MCM.

It is time for politicians – the ADD president included – to go beyond their political affiliations and partisan loyalties, and to exhibit a greater sense of patriotism.

It is time also to address burning political, economic, and social issues, and to set out clear strategies for an equitable and sustainable development.

And more importantly, it is time to ensure a healthy democratic atmosphere for avoiding over 4,000 job losses at MCM

MUBANGA LUCHEMBE,
Lusaka.