The Centre for Trade Policy and Development (CTPD) has urged mining companies to respect the integrity of Zambian workers and desist from using them as a means to influence government policies.
And CTPD says mining companies must be transparent in telling the government what the actual costs of production are instead of referring to their staff workers.
In a statement, CTPD executive director Isaac Mwaipopo appealed to mining companies not to use local workers to bargain with government over the ongoing 2019 mining fiscal regime impasse.
Mining conglomerate First Quantum Minerals (FQM) has commenced the process of laying off staff this quarter following the implementation of the 2019 mining fiscal regime, which took effect from January 1.
Konkola Copper Mines (KCM) Plc has also followed suit by opting to downsize its Nchanga Smelter operations due to low availability of concentrates.
Part of what the 2019 mining fiscal regime has introduced are import duties of five per cent on copper and cobalt, while also hiking export duty on precious stones and gemstones to a rate of 15 per cent.
“The mining companies must stop using Zambian mine workers as tools for bargaining in negotiations on the proposed tax changes; this is manipulative and government should not condone such behaviour. CTPD has observed with great concern that every time there is a standoff between mining companies and government, the mining companies are quick in pushing back, and often times using the Zambian workers as ‘sacrificial lambs’ in the bargaining process. This is wrong and must end. While we understand that there could be some concerns from the mining companies with regards to the proposed tax changes, it is imperative that dialogue is prioritized over manipulative and arm twisting tactics,” Mwaipopo argued.
“One thing the mining companies must never forget is that the minerals they are extracting and exploiting belong to the Zambian people, and Zambians have every right to participate and benefit from its natural resource endowment, and employment is one of the ways through which this is achieved.”
And while Mwaipopo observed that mining companies raised plausible concerns over the new changes, such as the Mining Royalty Tax (MRT), he urged mining companies to be open about challenges in their cost of production instead of instigating Zambian workers as a liability.
“We note that among the most notable proposed changes, the new mining tax regime proposes to make Mineral Royalty Tax (MRT) non-deductible from income tax and increases MRT by 1.5 percentage points on the sliding scale depending on the international copper prices. Government has also proposed to abolish VAT and replace it with Sales Tax effective April 1, 2019,” he observed.
“These proposed measures and other tax changes have infuriated the mining sector in Zambia and resulted into threats to lay-off close to 21,000 workers. The mining sector believes that the imposed new tax changes will affect production and expansion projects across on the sector.”
He also doubted that the new fiscal regime should merit such huge layoffs.
“While we do appreciate a number of concerns raised by the mining companies, CTPD would like to urge the mining companies to be a lot more open and sincere on their production costs, we do not think that the proposed tax changes could warrant such high number of job losses and backlash, unless they tell us that the Zambian work force is a burden they have always wished to get rid of,” Mwaipopo added.
He further pointed out that most mining companies were performing well, according to financial reports.
“It is sad that mining companies have continued to project a picture that they are operating under tough conditions and that it’s difficult for them to trade profitably, while publicly-available information continues to show that this may not simply be true. For example, in 2017 alone, it was reported by Bloomberg that profits for Glencore, Mopani’s parent company, grew 400 per cent, from US $1.38 billion in 2016 to US $5.78 billion in 2017. Owing to this, Glencore paid US $2.9 billion in dividends to shareholders! We urge the mining companies to explore other ways of cutting down on costs, this is something that can be worked in consultation with government and other key stakeholders. It will also be helpful if they can publish a detailed cost of production so that many can get to know what exactly goes in extracting minerals,” stated Mwaipopo.