Mine crisis


Government has a duty and responsibility to respond to the plaintive appeal from the mining industry regarding the newly introduced tax regime.

The explanation by the Zambia chamber of Mines is clear and equivocal, making a very strong case for review and it is for this reason that we  appeal to the Government to provide an equally convincing response to justify the new tax regime.

We know for certain that Government would not intentionally impose conditions that would result in the closure of mines and subsequent loss of jobs. This should be the very last option.

However we do not accept the manner in which Barrick Gold has issued ultimatum on the matter. Little wonder there has been strident response from the Government and the mining unions who feel that the response was neither measured nor sensitive.

There is nothing new, peculiar nor indeed out of place for the mining companies to demand a  fair return on their investment  just as there is nothing wrong for the Government on behalf of the people iof Zambia to demand an equitable share of the proceeds from their wasting natural inheritance.

What is required is balance.

 As we write, the issue of British mining companies exploiting   Sierra Leone is very current. Thgere is a feeling that if mining companies demonstrated more corporate social responsibility, they could significantly improve the lives of six million people in that Ebola ravaged country.

It has been estimated by Christian Aid that Sierra Leone will lose US$131million from 2014-16 alone due to corporate income tax incentives granted to five mining companies. These incentives involve two British companies, African Minerals and London Mining.

According to Christian Aid these companies have negotiated agreements in which they do not pay the statutory corporate tax rate. London Mining is also completely exempt from both taxes on imported capital goods, vehicles and equipment, and the Goods and Services tax. This means that the country is losing out.

The National Revenue Authority estimated that Customs and Goods and Services tax exemptions cost the government $224million in revenue in 2012, which amounted to 8 percent of GDP.

For a country that is suffering serious ravages of the Ebola virus the loss of revenue to mining companies from the UK is a clear loss, that is denying the local people resources to undertake development and palliative  care for the hundreds of people infected and seriously affected by the virus.

The mining companies have of course explained themselves.

London Mining claims that it had been operating for less than two years and did not expect to make a profit in the foreseeable future.

Clearly, according to Action Aid, getting foreign companies to act responsibly and pay their fair share in taxes in developing countries could make a major contribution to poverty eradication.

This is the reason why African governments, like their counterparts in other developing countries are forever battling with foreign investors especially the mines to secure the best possible tax arrangement that benefited the indigenous people.

Barrick Gold must understand this reality and appreciate that the new tax regime was the result of serious background work by the Government, but as stated by the minister, is not cast in stone.

Instead of issuing threats Barrick Gold together with the Chamber of Mines must dialogue with the Government to arrive at a mutually acceptable  solution.

Categorized | Editorial

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