REAPING FROM MINING
ONE of the cries of Zambians throughout the years has been that they had not been getting a fair deal from the mining companies.
And for years, Government, particularly under the former Patriotic Front administration and the mining companies played a “cat and mouse” game.
The bone of contention was whether the nation was reaping from its mineral wealth as the mining companies claimed their operations were not profitable.
There were accusations that the mining companies were giving false figures to the government in an effort to avoid paying the appropriate taxes.
Not that there is a change of government, from the pro-business friendly UPND, there is hope that this fractious relationship would be a thing of the past.
However, we are glad that even though the UPND has promised a new beginning, the new dawn government is aware of the nitty-gritty issues that could have been responsible for the mistrust.
Zambians must be elated that the new Minister of Mines and Minerals Development, Mr Paul Kabuswe has said that Government would carry out an audit on mining firms that are in the habit of under declaring production figures.
Mr Kabuswe said in an interview that some mines were misbehaving by giving fake figures to avoid paying the correct taxes to the government.
It is good that the minister is made aware of this historical issue and not dismiss it as one of those failed policies of the PF government.
It is a known fact that while the mining companies complained over the unfair tax regime, the government also had no nice words for the mines and accused them of cheating.
In fact, the Zambian government was vindicated by the Supreme Court of Zambia when it delivered a fundamental and remarkable Judgement in 2020.
It fined Mopani Copper Mines $13 million. This is a case in which the Zambia Revenue Authority (ZRA) had been battling with MCM and its Swiss parent company Glencoe since 2009.
Glencore PLC is a British multinational commodity trading and mining company with its headquarters based in Baar, Switzerland.
The background is that the ZRA conducted an Audit of Mopani Copper Mines for the period 2006 – 2009, which revealed that the transactions between the company and its Swiss parent multinational, Glencore International AG (GIAG) violated the Arm’s Length Standards.
An arm’s length transaction refers to a business deal or transaction in which a buyer and seller act independently without one party influencing the other.
It is ironic that Zambia has been losing out on financial benefits due to various factors, including the volatile mining tax regime policies but also the increasing tax-avoidance schemes perpetrated by mine houses that might appear legal but are aggressively aimed at reducing the amount of tax payable.
Mr Kabuswe said the government had scrapped off mineral royalties to ensure that mines could be able to function properly and be more transparent as announced by the Minister of Finance and National Planning, Dr Situmbeko Musokotwane in his budget presented in Parliament on Friday.
What is reassuring though is Mr Kabuswe’s admission that some mining firms have not been honest brokers.
It is important that the new minister reviews the efforts that the previous administration made to ensure that Zambians derived from the mines what rightfully belongs to them.
We recall that the previous administration spoke about placing inspectors at the mining firms to check against giving false production figures, among other measures.
We feel assured, that Mr Kabuswe appears to appreciate the saying that “old habits die hard.”
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