By Staff Reporter
Former Commerce minister Bob Sichinga questioned why Hakainde Hichilema is not protecting the interests of Zambians by allowing mining companies to rip-off the country without paying their fair share on the country’s main resource.
Speaking with Daily Revelation, Sichinga said in the case of Kansanshi mine for instance the company like all the mining companies has not been paying its fair share of taxes, when they are selling copper which was hovering over $10,000 per metric tonne not too long ago and is still fetching at the high price of $8000 per tonne, saying if mining companies could not make profit at that level then they should get out of the country, but they will not because “they see a government that does not seem to know what it’s doing.”
“The ruling mineral royalty tax percentage is 6 percent. Why would you agree to 3.1 percent at prices of $8000 per metric tonne? Why would you do that? It does not make business sense and that’s why I said the problem then is not even the problem f pricing. It is a problem of management,” Sichinga said. “Now the truth of the matter is that it is not those companies that are making those decisions. It is the government of HH that is making those decisions. That’s what they want. And we are asking them why? Why are you not doing this to protect the interest of the country? … Why are you not protecting the public interest and demanding of those companies to do their part? Because it means that any time you make any investment now you should be expecting 3 percent to be the only mineral royalty tax.”
Sichinga described as nonsensical Finance minister Dr Situmbeko Musokotwane’s justification that the country would get more from 3.1 percent than waiting for dividends, arguing that in the first place the government would not have representation on the board as they would not even be shareholders and could therefore not decide the operations of the company.
He laughed off the justification that the country would get $700 million instead of $300 million, and therefore it justified the government’s position to let go, but wondered how future generations would benefit from the same as the government would have no control of the mining sector, yet that was the same sector that gives the country the foreign exchange.
“How are you going to control the exchange rate? Tell me? All I can tell you is that it’s ill-informed. He’s not being truthful with us. He’s being very economical with information, he is not telling us the truth. He should come out in the open and say the truth about what is causing these decisions. We think there are other factors outside what we are being told that are controlling what is actually coming out from the government,” Sichinga said. “It makes me very very sad as somebody who has worked in the mining sector for that length of time that a country can fail to utilize resources that it has at its disposal even when the prices of the metal are so high. It has never been $8000, it has never been $10,000. So what happens when it is $12000? You cannot participate because you are not a shareholder and there is also no windfall tax. We demand that he should come out in the open and explain to us, show us the figures not superficial briefings. And the mining companies have got management they must explain where they stand. They should explain why they are not running things properly.
“And then you accept 3.1 percent when it should have been at six percent. Even the six percent is not enough to justify that because you have no control over the figures that are being given to you by the mining companies. It seems to me, and I am talking on behalf of the general public, because many have never worked in the mines, and I am talking from the mining sector, it’s quite clear to me that either it’s a deliberate thing that he wants the private sector, whatever he thinks of the private sector, to be the ones that are involved and it seems to be it’s being done from a position of inadequate experience with the mining sector.”
Sichinga said the issue before Zambia was about how to address investment in the mining sector, and the country can worry about issues dealing with ownership afterwards.
He said there was no mining company which uses its own resources to invest saying he was speaking as someone who has served as group financial controller for the former ZCCM, insisting that he had more information about how mining works.
He said there was no policy from the government, saying the only thing they were saying was that there was no cash to put in now and arguing that because of that their policy would be influenced by that going forward.
Sichinga said that was a superficial statement as he felt there was a lot more going on behind the curtains than meets the eye.
“In the case of Mopani, the government owns 100 percent. How much does Mopani need to be revamped while the government maintains the 100 percent? At the moment it’s about $500 million. Are we saying that Mopani management are not capable of being able to borrow $500 million against the ore they have in the ground for the whole of Mufulira mines and Nkana? Then if that is the case then what we need to do is to change management. It means we don’t have a management that is capable of running the mines. Because they should be able to do that,” Sichinga said.
Asked what he meant when he said that he suspected that there was something that was happening than meets the eye in the mining sector, Sichinga said government claimed in their recent statement that the request came from ZCCM-IH over issues at Kansanshi mine, arguing that there was no truth in that statement because there was no way ZCCM-IH could ask government but it was the government of Hichilema which was instructing the state-owned firm.
He said it was not for ZCCM-IH to formulate policy but the government, saying President Hichilema knows exactly what he wants and should not hide but come out and spell it out.
Sichinga said just because the government did not have money does not mean that they cannot do the investment themselves as everybody borrows, including the investors he is depending on to come in, arguing that they will come in and go to the banks to borrow, make money and claim that they do not have the money to pay taxes claiming they are not making any money.
He wondered why companies lie Vedanta in Konkola Copper Mines would be wanting to stick to the mine if indeed they do not make any money, asking “why hold on to something that is not making money?”
“There is something going on behind the scenes which government is not disclosing which the government is not being truthful about,” Sichinga said. “If it was anything that is above board, people speak about it. Why would you want to conceal it?”
He said on Mopani, despite the government owning 100 percent in the mining firm, there was no position given on the 80 percent going to Glencore from the mined resource with government only getting 20 percent.
“Why hasn’t HH’s government addressed that? … How can government allow that to continue? This is the government of the methodical leadership. They should have questioned that in the first place and said we are not going to do it because you have no interest in this company anymore, so that the 100 percent of whatever we have invested must come to Mopani. Unless there is some ulterior agreement,” said Sichinga.
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