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Arabica Robusta

Pambazuka - Copper in Zambia: Charity for multinationals - 0 views

www.pambazuka.org/...73742

zimbabwe mugabe agribusiness agriculture security foodsecurity development africa international industry news governance pambazuka world bank zambia copper

shared by Arabica Robusta on 04 Jun 11 - No Cached
  • Despite the apparent ‘success’ of the privatisation of the Zambian copper industry, the true picture is one of systemic multinational exploitation, national assets sold ‘for a song’ and persistent tax dodging, writes Khadija Sharife.
  • It has been almost two decades since Zambia's ailing copper industry, beset by low commodity prices and skyrocketing debt, was privatised. The process was described by the New York Times in 1996 as, 'Westerniz[ing] the economy with a combination of help and arm-twisting from the World Bank and the International Monetary Fund, the lead lenders for the $6.3 billion in external debt the country is carrying.’
  • Provisions granted to multinationals included stability periods extending for up to 20 years, rendering multinationals exempt from legislation implemented by parliament and other national and legal alterations; the right to carry over losses throughout the 'stability periods'; 100 per cent foreign currency retention, remittance and provision for capital investment deductions; zero withholding tax; and various other fiscal and para-fiscal exemptions ranging from customs duty to environmental pollution and penalties; pension schemes, and contracting of casual workers – accounting for 45 per cent of the workforce, amongst others.
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  • Stated former finance minister Edith Nawakwi: ‘We were told by advisers, who included the International Monetary Fund and the World Bank 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].’
  • In 2004, UK-based corporation Vedanta Resources acquired 51 per cent of shares in KCM, known as the largest copper mine in the world, for $48 million cash. In the three-month period that followed, the company registered profits of $26 million from KCM.
  • The World Bank's IFC (International Finance Corporation) reported that, thanks to corporate incentives, effective tax rate for mining companies was 'effectively zero'.
  • Despite being the world's copper powerhouse, Zambia is now one of the world's 25 poorest nations. Though copper provides about 80 per cent of foreign exchange earnings, mining employs just 10 per cent of salaried workers, contributes just 2.2 per cent of revenue to the government's tax agency (ZRA – Zambia Revenue Authority) and 9.7 per cent to GDP (gross domestic product). The drastic increase in price was primarily due to China's increased copper needs, rising to US$10,000 per tonne. The bulk of copper in Zambia is exported to Switzerland – on paper, that is.
  • Glencore International AG, based in Baar, Switzerland (the world's leading secrecy jurisdiction), controls over 50 per cent of the world's global copper market.
  • Comparative analysis reveals that Mopani’s costs are much higher than those of comparable mining companies operating in Zambia.
  • Extensive revenue analysis revealed cobalt extraction rates twice inferior to other producers of the same area - a difference deemed unlikely by the auditors and which indicates that some of the ore extracted by Mopani could remain undeclared.
  • Transfer pricing manipulation and breach of the Arm’s Length principle: The company’s production is sold, both locally and internationally, via its main buyer Glencore International AG, who also happens to be Mopani’s parent company. After careful revenue analysis, it appears that the sales from Mopani to Glencore fail to comply with the OECD “Arm’s Length” principle: minerals are sold to Glencore under conditions that would not apply to a third-party buyer… According to the audit, Mopani seems to prefer selling its production to Glencore whenever prices are at their lowest, something a buyer, not a seller, would be likely to do.'
  • This is, of course, a common script for Africa: the bulk of the illicit flight (estimated by Global Financial Integrity at 60 per cent) is often siphoned not by rogue regimes but instead by corporations through 'underpricing, overpricing, misinvoicing and making completely fake transactions, often between subsidiaries of the same multinational company, bank transfers to offshore accounts from high street banks offering offshore accounts, and companies formed offshore to keep property out of the sight of the tax collectors. According to a survey assessing the economic practices of 476 multinational corporations, 80 per cent acknowledge that transfer pricing remains central to their tax strategy.
  • And though prices increased, Zambia’s revenue actually decreased, by 50 per cent from 1.4 per cent (2003) to 0.7 per cent (2004). The government introduced a 25 per cent windfall tax, raised mineral royalties to 3 per cent and corporate tax to 30 per cent. But soon after, mining houses engaged in intensive lobbying. Current Zambian President Rupiah Banda claims that the windfall tax will not be implemented again. In fact, soon after introduction, it was scrapped.
Arabica Robusta

CorpWatch : Congo Copper Mine Deals Questioned - 0 views

www.corpwatch.org/article.php

africa development international news mncs intervention exploitation copper extractive industries

shared by Arabica Robusta on 05 Aug 12 - No Cached
  • Eurasian Natural Resources Corporation (ENRC), a global mining company that got its start in Kazakhstan, has won a new $101.5 million license to dig for copper at the Frontier mine in the Democratic Republic of Congo. The company has been criticized by Global Witness for its purchases of rights from offshore companies connected to Dan Gertler, a controversial Israeli diamond merchant.
  • Per-capita income in the Congo is under $300 a year and experts at the Carter Centre, which was founded by former US president Jimmy Carter, say there is a reason. "In a mining sector defined by irregularities and mismanagement, large industrial mining projects can earn huge profits for investors and government officials,” Sam Jones, associate director of the centre's human rights program, told the Guardian. “(L)ittle revenue finds its way back into desperately impoverished Congolese communities for schools, healthcare, or other social services.”
  • First Quantum, a Canadian company, acquired the rights to mine for copper at Frontier in 2001 but was forced to turn it over to Sodimco, a state owned company in 2010 by the Congolese government. The licences were then sold to Fortune Ahead, a Hong Kong shell company. Meanwhile First Quantum filed multiple legal claims demanding $4 billion in compensation for Frontier and other assets nationalized by the Congolese government.
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  • But exactly who paid whom how much for mining rights in the Congo is up for debate. “ENRC’s purchase of its stake in Kolwezi was structured through a deal between itself and at least seven companies registered in the British Virgin Islands, all connected to Dan Gertler,” states a Global Witness fact sheet. “When ENRC bought the remaining 50 per cent stake in SMKK, it purchased it from another British Virgin Islands company linked to Mr Gertler. Even ENRC’s acquisition of CAMEC involved sale purchase agreements with several offshore companies linked to Dan Gertler which held shares in CAMEC.”
  • Gertler, an Israeli diamond merchant, has been doing business in Congo for over a decade, working first with Laurent-Désiré Kabila, the former president of the Congo, and now with his son, Joseph Kabila, the current president.
  • Arabica Robusta on 05 Aug 12
     
    "Eurasian Natural Resources Corporation (ENRC), a global mining company that got its start in Kazakhstan, has won a new $101.5 million license to dig for copper at the Frontier mine in the Democratic Republic of Congo. The company has been criticized by Global Witness for its purchases of rights from offshore companies connected to Dan Gertler, a controversial Israeli diamond merchant. "
Arabica Robusta

Pambazuka News - 0 views

www.pambazuka.org/...49569

africa china copper development extractive industry international katanga

shared by Arabica Robusta on 01 Aug 08 - Cached
  • Corruption DRC: Mining multi-nationals get deal of the century 2008-07-18 http://www.pambazuka.org/en/category/corruption/49569 Printer friendly version There is potentially enormous mineral wealth in the DRC province of Katanga. In exchange, investors from all over the world, and especially China, are prepared to offer money and infrastructure to revive the DRC after 15 terrible years of war and invasion. The potential for ecological disaster, social exploitation and corruption is almost limitless. Le Monde diplomatique ----------------------------------------------------- July 2008 MINING MULTINATIONALS GET DEALS OF THE CENTURY Copper colony in Congo There is potentially enormous mineral wealth in the DRC province of Katanga. In exchange, investors from all over the world, and especially China, are prepared to offer money and infrastructure to revive the DRC after 15 terrible years of war and invasion. The potential for ecological disaster, social exploitation and corruption is almost limitless. by Colette Braeckman Lubumbashi is the capital of Katanga, the southernmost state of the Democratic Republic of Congo (DRC). Day and night, huge trucks roar through its streets, making for the nearby Zambian border with cargoes of copper and cobalt on their way, via the Tanzanian port of Dar es Salaam, to Asia. Every month new stores open: fast food joints with American names, and shops where the locals stare in wonder at Chinese consumer goods, finally within their reach.
  • Lubumbashi is the capital of Katanga, the southernmost state of the Democratic Republic of Congo (DRC). Day and night, huge trucks roar through its streets, making for the nearby Zambian border with cargoes of copper and cobalt on their way, via the Tanzanian port of Dar es Salaam, to Asia. Every month new stores open: fast food joints with American names, and shops where the locals stare in wonder at Chinese consumer goods, finally within their reach.
  • And there is a third, social threat. The small-scale exploitation of mineral deposits is coming to an end as the big multinationals move in, driving out independent miners. Until a few months ago the Étoile mine at Ruashi, a few kilometres outside Lubumbashi, was just an open pit where men worked unprotected. Children scurried through unsupported tunnels, pulling out rocks striated with green copper or yellow cobalt and cramming them into jute sacks. Cave-ins and fatalities were so frequent that the miners had their own mutual insurance scheme to cover hospital or funeral expenses.
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  • The terms granted to private companies associated with Gécamines took the commissioners aback. The investment of external partners was systematically overvalued and that of the Congolese (the value of mineral deposits and existing Gécamines infrastructure) underestimated. Fiscal and para-fiscal concessions (such as 30-year tax exemptions) deprived the state of essential revenues. Mining rights were acquired for purely speculative ends (the partners sold the shares on the stock exchange before even starting work on the ground), while social and environmental clauses were ignored, local skills undervalued, local workers underpaid and concession boundaries extended without authorisation.
  • Unlike western governments, incapable of releasing the credits necessary for the reconstruction of a country four times the size of France, China has been quick to get down to work: several projects have already begun in Katanga, Kivu and Kinshasa, where 250km of roads and 1,000 units of social housing are to be built. The people's hopes are undermined by fears that the arrival of Chinese workers and engineers heralds a new wave of colonisation. The unconcealed displeasure of the West, Belgium especially, could endanger the stability of the government. But the Congolese government is determined to pursue its relationship with China.
Arabica Robusta

The Growing Relationship Between China and Sub-Saharan Africa: Macroeconomic, Trade, In... - 0 views

wbro.oxfordjournals.org/...103

africa china development governance

shared by Arabica Robusta on 24 Apr 08 - Cached
  • Arabica Robusta on 24 Apr 08
     
    China's economic ascendance over the past two decades has generated ripple effects in the world economy. Its search for natural resources to satisfy the demands of industrialization has led it to Sub-Saharan Africa. Trade between China and Africa in 2006 totaled more than $50 billion, with Chinese companies importing oil from Angola and Sudan, timber from Central Africa, and copper from Zambia. Demand from China has contributed to an upward swing in prices, particularly for oil and metals from Africa, and has given a boost to real GDP in Sub-Saharan Africa. Chinese aid and investment in infrastructure are bringing desperately needed capital to the continent. At the same time, however, strong Chinese demand for oil is contributing to an increase in the import bill for many oil-importing Sub-Saharan African countries, and its exports of low-cost textiles, while benefiting African consumers, is threatening to displace local production. China poses a challenge to good governance and macroeconomic management in Africa because of the potential Dutch disease implications of commodity booms. China presents both an opportunity for Africa to reduce its marginalization from the global economy and a challenge for it to effectively harness the influx of resources to promote poverty-reducing economic development at home.
Arabica Robusta

Sub-Saharan Africa in Global Capitalism by John J. Saul | Monthly Review - 0 views

monthlyreview.org/...an-africa-in-global-capitalism

international development economic development neoliberalism marxism capitalism africa

shared by Arabica Robusta on 29 Sep 16 - No Cached
  • There are two ways of picturing Africa in the context of global capitalism. One is from the point of view of the people living and hoping to improve their lot in sub-Saharan Africa’s forty-eight nation-states with a considerable variety of kinds of “insertion” into the global capitalist economy, and a corresponding range of experiences of development (or the lack of it).6 The other is from the point of view of capital, for which Africa is not so much a system of states, still less a continent of people in need of a better life, as simply a geographic—or geological—terrain, offering this or that opportunity to make money.
  • Growing pressure of population means a constantly expanding landless labor force, partly working for subsistence wages on other people’s land, partly unemployed or underemployed in the cities, sometimes migrating to neighboring countries (e.g., from Burkina Faso to Cote d’Ivoire), living on marginal incomes and with minimal state services, including education and health.
  • The “investment climate” has been made easier, thanks, as we will see, to a decade and a half of aid “conditionality,” and the returns can be spectacular; the rates of return on U.S. direct investments in Africa are, for example, the highest of any region in the world (25.3 percent in 1997).9
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  • Fatefully for Africa, this debt came due, in the 1980s, just as the premises of the dominant players in the development game were changing. The western Keynesian consensus that had sanctioned the agricultural levies, the industrialization dream, the social services sensibility, and the activist state of the immediate post-independence decades—and lent money to support all this—was replaced by “neoliberalism.”
  • States in Africa felt compelled to comply: they were debtors, after all, and, with the decline of the Eastern bloc, were also fast losing whatever limited leverage this alternative source of support had given them.
  • “What has emerged in Accra,” Eboe Hutchful once wrote of the Ghanaian SAP experience, “is a parallel government controlled (if not created) by the international lender agencies…[while] the other side of the external appropriation of policy-making powers is the deliberate de-politicalization that has occurred under the ERP [Economic Reconstruction Programme], and the displacement of popular participation and mobilization by a narrowly-based bureaucratic management.”15
  • For political support, the new leaders had to rely not on urban working classes or middle classes, which mostly barely existed, but on rural notables, whose allegiance they secured through chains of patronage stretching from the ministers’ offices to the villages.
  • There was, of course, another trajectory to African politics—some states which professed to bend the logic of global capitalism in favor of more progressive outcomes: Ghana, Tanzania, and Mozambique, among others.
  • Mozambique and Angola: far too many instances of overweening industrial plans and of forced villagization in the countryside, far too little democratic sensibility towards the complex values and demands of their presumed popular constituencies. Future attempts to develop counter-hegemonic projects in Africa will have to learn lessons from such experiences and also determine how to disentangle, for purposes of popular mobilization, the discredited notion of socialism from this troubled past.
  • Thus Jonathan Barker speaks of the existence, in Africa and beyond, of “thousands of activist groups addressing the issues of conserving jobs and livelihoods, community health, power of women, provision of housing, functioning of local markets, availability of local social services, provision and standard of education, and abusive and damaging working conditions.”35
  • “African peoples have adopted many diverse strategies to challenge, deflect, or avoid bearing the costs of austerity involved and to seek a political alternative to the politicians they hold responsible.”They also document an impressive range of (primarily urban) actors—“lawyers, students, copper miners, organizations of rural women, urban workers and the unemployed, journalists, clergymen and others”—whose direct action in recent years has shaken numerous African governments.36
  • Such resistances—what Célestin Monga refers to as the “collective insubordination” of Africa37—have been one factor driving the renewed saliency of democratic demands on the continent.
  • in Zimbabwe in recent years arguing (alongside other popular organizations) for the formation of a new party to challenge the rancid Mugabe regime from the left: as Patrick Bond writes of this initiative, “What is crucial is that the opposition’s political orientation is potentially both post-nationalist and post-neoliberal, perhaps for the first time in African history.”39
Arabica Robusta

Gecamines Didn't Tell Government of KCC Gertler Deal - Bloomberg - 0 views

www.bloomberg.com/...nment-of-kcc-gertler-deal.html

africa development international news governance industry extractive drcongo

shared by Arabica Robusta on 21 Oct 13 - No Cached
  • Gecamines, the Democratic Republic of Congo’s state-owned mining company, didn’t tell the Mines Ministry of a possible sale of its stake in Kamoto Copper Co. to billionaire Dan Gertler, according to a letter from the mines minister.
  • Gecamines has faced criticism from the International Monetary Fund and advocacy groups including London-based Global Witness for selling its assets in a non-transparent process.
  • Gertler, an Israeli who is close friends with Congo’s President Joseph Kabila and has invested in the country for more than 15 years, is worth $3 billion, according to the Bloomberg Billionaire’s Index.
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