Copper Colonialism

Vedanta KCM and the copper loot of Zambia
January 2014


Authors: Samarendra Das and Miriam Rose, Foil Vedanta. foilvedanta@rise !!!.foilvedanta.or" #ith than$s to all those !ho facilitated o r trip to Zambia, and !ho !e connected and shared !ith d rin" o r time. %his report and o r trip !ere reso rced b& o r o!n f nd'raisin" efforts, incl din" an (ndian ban) et evenin" and a sponsored son". #e are deepl& "ratef l to all those !ho contrib ted small and lar"er amo nts to ma$e this !or$ possible. Front cover pictures: Vedanta KCM*s +chan"a mine, Chin"ola. , copper tr c$ leaves Zambia over the Victoria Falls -rid"e. .oll ted !ater in Shim lala villa"e, Chin"ola. Vedanta Chairman ,nil ,"ar!al and Zambian .resident Michael Sata meet in /ondon.

Introduction: Copper from Cape to Cairo Chapter 1: ho are !edanta "C#$ p.3 p.% p.10

Chapter 2: Copper & the elephant in the room − %he copper elephant − Ma$in" sense of copper material flo!s − 0pa) e profit − %he problem !ith rent see$in" − %he real price of copper − Material flo!s 1 !here does the copper "o2 Chapter 3: !edanta's perception mana(ement in )am*ia Chapter 4: ,he truth a*out !edanta in )am*ia − #ater poll tion − ,ir poll tion − #or$ers* ri"hts Chapter -: ho o.ns )am*ia$ − Shareholder interests − +eo'colonialism and the 3K Department for (nternational Development Chapter %: /01s and civil society & parasites of the poor$ − (n !hose interest2 − #hose politics2 − .olitical infl ence − , !arnin" abo t ri"ht !in" criti) es of aid Conclusion and recommendations

p.1+ p.21





Copper from Cape to Cairo
The question as to who, and what, is responsible for African underdevelopment can be answered at two levels. Firstly, the answer is that the operation of the imperialist system bears major responsibility for African economic retardation by draining African wealth and by making it impossible to develop more rapidly the resources of the continent. Secondly, one has to deal with those who manipulated the system and those who are either agents or unwitting accomplices of the said system. The capitalists of estern !urope were the ones who actively e"tended their e"ploitation from inside !urope to cover the whole of Africa. #n recent times, they were joined, and to some e"tent replaced, by the capitalists from the $nited States% and for many years now even the workers of those metropolitan countries have benefited from the e"ploitation and underdevelopment of Africa. #alter Rodne&, 1564, *7o! 8 rope 3nderdeveloped ,frica*. Zambia has been e9portin" Copper for almost a cent r&. (n 1::5 the -ritish So th ,frican Compan& ;-S,C< !as "iven a Ro&al Charter, modelled on the 8ast (ndia Compan&, to e9ploit the mineral !ealth of So thern ,frica for -ritain. %he board of -S,C incl ded Sir Cecil Rhodes, fo nder of the De -eers Minin" Compan&, and pioneer colonialist after !hom So thern and +orthern Rhodesia ;Zimbab!e and Zambia< !ere at that time named. Rhodes* si"nat re pro=ect !as to lin$ the Cape to Cairo b& rail!a&, allo!in" minerals and nat ral reso rces to be easil& e9tracted and e9ported to 8 rope. -S,C administered +orthern Rhodesia !ith paramilitar& forces ntil 154>, !hen it !as replaced !ith direct -ritish r le, b t contin ed to o!n Zambia*s rail!a&s ntil 15>6, and their mineral ri"hts ntil 15?> !hen Zambia achieved independence. Massive copper deposits !ere discovered in +orthern Zambia in the 154@*s and 8 ropean Caption: Cecil RhodesB Cape'Cairo rail!a& prospectors and ind strialists flooded into the pro=ect. Fo nder of the De -eers Minin" co ntr&. /i$e toda&*s m ltinational companies, Compan&, one of the first diamond companies, the& bro "ht !ith them administrators, Rhodes !as also the o!ner of the -ritish technicians and s$illed labo rers, b t the life' So th ,frica Compan&, !hich carved o t threatenin" =ob of minin" !as reserved for Rhodesia for itself. 7e !anted to Cpaint the ,fricans, !ho s ffered appallin" conditions, b t map D-ritishE redC, and once famo sl& declaredB had to earn an income in order to pa& the *h t Call of these stars... these vast !orlds that ta9* imposed thro "ho t colonial r le. -S,C has remain o t of reach. (f ( co ld, ( !o ld anne9 been called a *parasite* on +orthern Rhodesia, other planetsC. 10 December 1892 edition of Punch. pa&in" ver& lo! ro&alt& rates ;!hich !ere even ta9 ded ctable< and allo!in" companies to pa& ta9es !here their head) arters !ere based ;mostl& /ondon< rather than in Zambia.1
1 A.D. Roberts, 1982, 'Notes towards a financial history of copper mining in Northern Rhodesia'. Canadian Journal of African Studies. ol 1!, no 2, 1982" #$%&#'9.


(n the 15A@*s and >@*s a risin" tide of ,frican nationalism led to stri$es and protests in the mines, and the formation of the +orthern Rhodesian ,frican Con"ress 1 the first ,frican political part& in Zambia ' in 15>:. ,s a response to these prisin"s, the 15FF . blic 0rder ,ct !as instated b& the -ritish colonial r le, to maintain their administrative and economic po!er, ens rin" that e9tractive colonialism !as not interr pted. %he ,ct ;similar to Section 1>> in (ndia< prevented meetin"s, protests, and political fla"s or niforms, criminalisin" all forms of resistance. %he . blic 0rder ,ct remains in Zambian la! toda&, and c rrent .resident Michael Sata has been !idel& criticised for brea$in" an historical *selective se* polic&, and sin" the colonial la! e9tensivel& to prevent an& dissentin" "atherin"s or protests. Zambia achieved independence in 15?>, and =oined the (MF in 15?F. First .resident Kenneth Ka nda nationalised the minin" companies and briefl& oversa! an economic boom as hi"h copper prices bro "ht prosperit& to the nation. %he (nter"overnmental Co ncil of Copper 89portin" Co ntries ;C(.8C< !as created in / sa$a in 15?6 !ith ma=or copper prod cin" nations Zaire, .er and Chile as a copper cartel to increase national reven es from minin". - t C(.8C did not s cceed, copper prices fell dramaticall& in the late 156@*s, and Zambia*s sanctions on !hite'r led Rhodesia ;Zimbab!e< endan"ered their trade ro tes for copper e9ports to So th ,frican ports. (n the 15:@*s Ka nda !as forced to as$ for international aid, and in 15:A the first official Str ct ral ,d= stment .ro"ramme !as imposed b& the #orld -an$ and (MF, leadin" to food riots, st dent demonstrations and civil nrest, as "overnment spendin" !as slashed, price controls !ere removed and povert& increased. Ka nda*s "overnment re=ected the #orld -an$G(MF*s pro"ramme briefl& in 15:6, and sa! economic "ro!th ret rn, b t !ere forced to remove all protective meas res a"ain onl& a &ear later nder press re from the .aris Cl b ;a "ro p of rich co ntr& leaders< !ho !ere !ithholdin" bi'lateral aid4. Since then Zambia has nder"one one of the most far reachin" liberalisation and privatisation pro"rammes in ,frica, and sim ltaneo sl& has become poorer and poorer. %oda&, in a co ntr& half the siHe of 8 rope, covered in fertile soils and forests, !ith a pop lation of onl& 1A million, life e9pectanc& is onl& A6, and 4@ percent of the pop lation claim ?:.?6 percent of the total incomeA. , core plan$ of the #orld -an$ and (MF*s conditions !as the brea$ p and privatisation of national minin" compan& ZCCM. %he& facilitated secret Development ,"reements bet!een the Zambian Iovernment and minin" con"lomerates, !hich red ced ro&alt& rates, environmental re" lations, electricit& prices, corporate ta9 and !or$ers* !a"e and !elfare pac$a"es. %he a"reements are " aranteed for bet!een 1F and 4@ &ears, and can onl& be chan"ed via a process a$in to chan"in" the national constit tion. Cecil Rhodes* brid"e over the Victoria Falls "or"e contin es to f lfil its intended p rpose, as tr c$s and trains carr&in" copper stream over the border to Zimbab!e, headin" for So th ,frican ports. From there it is alle"edl& mainl& e9ported to S!itHerland, b t onl& a fraction of it arrives at its declared destination, s ""estin" that the ma=orit& is sold on the hi"h seas to China 1 the !orld*s bi""est importer of the metal. ;More on this in later sections<
, copper tr c$ crosses the Victoria Falls brid"e into Zimbab!e. 2 (orld De)elopment *o)ement, 2++$, 'Condemned to Debt'. # ,entral -tatistical .ffice of /ambia, 2+12, Living Conditions Monitoring Survey report 2006 and 2010


%he le"ac& of e9tractive colonialism and recent far reachin" neo'liberal economic policies ;!hich can be clearl& seen as neo'colonialism<, is a Zambian state !hich has been corr pted, ban$r pted, disenfranchised and dis'informed>. /ac$ of reso rces and political conflicts of interest, alon"side a concerted effort b& minin" companies to hide data and mana"e perceptions, leave the Zambian state !ith virt all& no information on the o!nership, operations or prod ction of the minin" companies. %here is no independent data on the vol mes of copper or other minerals the& are prod cin" or e9portin", or !here it is "oin". 0n top of this, !ea$ la!s ;ne"otiated b& the #orld -an$ and (MF pro"rammes<, and ill'reso rced re" lator& bodies mean that ta9 evasion, fra d, ille"al minin", environmental dama"e and h man ri"hts ab ses are rarel& penalised even if the& are $no!n. Most stri$in"l&, t!o Chinese mana"ers !ho shot 1A Zambian !or$ers at Coll m mine in 0ctober 4@1@, had char"es a"ainst them dropped a fe! months laterF. Mean!hile a"encies s ch as the Zambia Development ,"enc& ;previo sl& the Zambia .rivatisation ,"enc&< contin e to advertise Zambia*s on"oin" achievements in economic liberalisation in an attempt to attract more Forei"n Direct (nvestment. %he 1>th Zambia Revie!, prepared for the 3+ #orld %o rism 0r"anisation 4@1A Ieneral ,ssembl& in Victoria Falls, to attract investment from attendin" dele"ates, notes that minin" companies can en=o& lo!er corporate ta9 rates than other companies ;at A@J< and that F6.A billion K!acha ;K1@ million< of the 4@1A b d"et has been allocated to the development of M lti'facilit& 8conomic Zones ;MF8Zs< ;in !hich ta9 and other le"al e9emptions appl&<. %he revie! openl& states thatB &#nvestors face no restriction on the amount of interest, profit, dividends, management fees, technical fees and royalties that they are allowed to repatriate. #ncome earned by foreign nationals may also be e"ternalised without difficulty.&' %hese $ind of policies are leavin" Zambia !ith ver& little reven e or benefit from the e9tensive and rapid minin" ta$in" place. %he hi"hest nemplo&ment rates are in the Copperbelt and in the capital / sa$a, at 4>.FJ and 44.AJ respectivel&6, mostl& affectin" &o th, and prostit tion is the onl& !a& of earnin" for man& !ives of =obless miners in the re"ion:. %his report ses the best available so rces from !ithin and o t'!ith the ind str& to inform and !iden the debate aro nd copper minin" in Zambia, foc sin" on the activities of Kon$ola Copper Mines ;KCM<, a s bsidiar& of Vedanta Reso rces. (t aims to e9pose the interests behind Vedanta, their environmental and h man ri"hts ab ses, and their loot of copper and other minerals from the Zambian people. More "enerall&, !e loo$ at !ho reall& controls the Zambian econom& and national policies 1 from international instit tions and shareholder patterns, to donor a"encies and +I0s. D e to hi"h levels of opacit& ;opa) eness< !e are missin" vital information s ch as KCM*s ann al reports, and acc rate fi" res on copper prod ction and e9ports, despite visitin" ever& "overnment and private instit tion !e co ld in an attempt to find them. /ac$in" this cr cial information, this report is based on international financial data and first hand intervie!s as !ell as other st dies and doc ments.

$ A,0*.123, D., -. 4.5N-.N, and 4. R.67N-.N, 82++19, ':he ,olonial .rigins of ,omparati)e ' ! % 8

De)elopment', American !conomic "evie#, 91, 1#!9&1$+1. 6arry 6eara;, $e# %or& 'imes, April $, 2+11, ' /ambia Drops ,ase of -hooting by ,hinese *ine 6osses'. (ambia "evie#) 1*t+ !dition, 2+1#. p.2$. *inistry of ,ommerce, :rade and 7nd<stry. Directory =<blishers of /ambia ltd. ,entral -tatistical .ffice of /ambia, 2+12, Living Conditions Monitoring Survey report 2006 and 2010 IRIN News, 26th Feb 2009. 'ZAMBIA: Copper-mining downturn ee upturn in e! tr"de' "t http:##www.irinnew .org#report#$%&6&#'"mbi"-(opper-mining-downturn- ee -upturn-in- e!-tr"de


ho are !edanta2"C#$

Vedanta*s assets in ZambiaB 1A.? Million %onnes of Copper. From (edanta presentation on )*+, ,-.,.

Kon$ola Copper Mines ;KCM< !as the lar"est and most copper rich asset sold off as part of the brea$ p of national minin" compan& ZCCM. (t !as ori"inall& sold to ,n"lo ,merican plc for K5@ million in 4@@4, !ho have been in Zambia since the 15A@s, and had been mana"in" the mine for ZCCM prior to official privatisation. (n 4@@1 the& had sec red a K:1 million loan from the 3K Department for (nternational Development ;Df(D< to ref rbish the +$ana smelter ;be""in" ) estions abo t !h& the 3K*s aid b d"et !as bein" sed for private "ain<5. - t onl& a fe! months after privatisation ,n"lo ,merican claimed the mine !as nprofitable and p lled o t their shares a"ain. %his raises star$ ) estions abo t !h& and ho! ,n"lo ac) ired the mine. %he former head of ,n"lo in Zambia, ,nderson MaHo$a, later claimed it !as to *loc$ p reso rces in Zambia*1@, b t MaHo$a !as also sponsored b& ,n"lo to start a political part& to o st .resident Chil ba, !hich !as ns ccessf l and ma& have led to his poisonin" in 4@@1,11 another potential reason "iven for ,n"lo*s hast& !ithdra!al. (n realit& this is &et another opa) e m&ster& in Zambia*s copper histor&. , F1J share in KCM !as sold to Vedanta Reso rces for = st K4F million, paid in cash, and K4A million in deferred pa&ments, in 4@@>14. %he deal !as facilitated b& Clifford Chance and Standard Chartered -an$1A ;one of the main boo$r nners and lenders to Vedanta Reso rces<. #ithin three months Vedanta had alread& reco perated its initial investment, ma$in" K4? million. %he ban$s also helped Vedanta secretl& ne"otiate a call option allo!in" them the ri"ht
9 >reedom of 7nformation Re?<ests to Df7D filed by -imon ,hase 8A,:-A9, reported in '3ndermining De)elopment" ,opper *ining in /ambia', .ct 2++%, by Aby Diamond et al, -,7A>, ,hristian Aid and A,:-A. 1+ @hadiAa -harife, 2+11, ,amba-u&a $e#s, ',opper in /ambia" ,harity for m<ltinationals'. 2+11&+!&+2, 7ss<e '#2 http"BBpambaC<;a.orgBenBcategoryBfeat<resB%#%$2 11 .pposition leader /poisoned/ 2!th *ay 2++!, News 2$ archi)es, http"BBwww.news2$.comBAfricaBNewsB.pposition&leader& poisoned&2++!+'2! 12 Andrew -ardanis, 2++%, A 0enture in Africa1 '+e C+allenges of African 2usiness. 76 :a<ris, 2ondon. 1# /ambia ,opper 7n)estments, ,irc<lar to -hareholers, 11th .ctober 2++$. 'The recommended introduction of Vedanta Resources plc as a strategic equity partner in Konkola Copper Mines plc'.


to p rchase Zambia Copper (nvestments* 4:.>J share1>, !hich the& e9ercised in +ovember 4@@F ;a &ear after their initial p rchase<, "ivin" them the 65.>J monopol& the& c rrentl& hold on KCM, !hile the Zambian "overnment ' via ZCCM'(7 ;their minin" investment !in"<, o!n the remainin" 4@.?J. %he Competition Commission !as even rendered irrelevant b& the Zambian "overnment to allo! Vedanta s ch a lar"e ma=orit& share1F. ,ndre! Sardanis, a politicall& connected b sinessman in Zambia, details the irre" larities of the sale of KCM to Vedanta in his 4@@6 boo$ A (enture in Africa/ The *hallenges of African 0usiness. 0n top of the K4F million, Vedanta !as to compensate the e9istin" shareholders ;Zambia Copper (nvestments 1 a -erm da Dta9 havenE based, part Zambian "overnment o!ned entit&, and ZCCM'(7< for their share losses. - t !hile ZC( received K4A.4 million in deferred pa&ments ;for the dil tion of its shareholdin" from F:J to 4:.>J<, ZCCM'(7 !as not offered the correspondin" K1?.: million for its share dil tion from >4J to 4@.?J. (nstead, Vedanta made a deal !ith the Zambian Iovernment ;IRZ< that K1?.: million in debt o!ed b& ZCCM'(7 to the IRZ !o ld be cancelled. Vedanta !as s pposed to pa& this amo nt to the IRZ, b t there is no evidence that the pa&ment !as ever received, or as$ed for.1? %he price ne"otiated for the b &o t of ZC(*s remainin" shares is not reported, b t anal&sts at the time val ed it bet!een K4F@ million and KFF@ million, p ttin" Vedanta*s ori"inal F1J share at bet!een K>FF and K51@ million, nine to ei"hteen times !hat Vedanta paidL %his means the Zambian e9che) er lost bet!een K1FF and KA>@ million in from the sale of 41.>J of ZCCM' (7*s shares alone. (n response, ZC(*s AAJ French shareholders ;"ro ped into a compan& called Sicovam S,< called the deal *the most o tra"eo s and scandalo s ever seen in ,frica for decades*.16 (n addition to all this Vedanta !as allo!ed to carr& for!ard all losses inc rred * p to and incl din" A1 December 4@@A* 1 before it even o!ned shares in KCM. %hese amo nted to K?AF,:56,@@@, meanin" Vedanta !o ld not have e9pected to pa& ta9 ntil the &ear 4@4> at the mar$et conditions of the time1:. (n the follo!in" &ears Vedanta made record profits 1 for e9ample KA@1 million in financial &ear 4@@?G6 alone15, b t ver& little chan"e !as seen in the Zambian national reven e from this minin" boom. Vedanta abandoned the Df(D ref rbished +$ana smelter in 4@@: and b ilt their o!n hi"h tech smelter at +chan"a instead. Construction started on the project in February 2006, but the Environmental Impact Assessment (EIA) was only submitted in April 2006.20 %he pattern of b &in" massivel& nderval ed state'o!ned entities, and operatin" them !itho t ade) ate permission is Vedanta*s specialit&. (n Chhattis"arh, (ndia, the& bo "ht -,/C0*s ba 9ite refiner&, smelter and mines for K:5 million in 4@@1 !hen it !as !orth aro nd K:@@ million41. Vedanta Chairman ,nil ,"ar!al is c rrentl& nder investi"ation b& the Central - rea of (nvesti"ations in (ndia over the ori"inal disinvestment of F1J of 7ind stan Zinc /td ;7Z/< to Vedanta for onl& K64 million44, claimin" the deal !as considerabl& nderval ed, and ma& have
1$ ,lifford ,hance, edanta ,all .ption Deed, No) 'th 2++$. 2ea;ed and a)ailable at http"<;B 1' @hadiAa -harife, 2+11, ,amba-u&a $e#s, ',opper in /ambia" ,harity for m<ltinationals'. 2+11&+!&+2, 7ss<e '#2 http"BBpambaC<;a.orgBenBcategoryBfeat<resB%#%$2 1! Andrew -ardanis, 2++%, A 0enture in Africa1 '+e C+allenges of African 2usiness. 76 :a<ris, 2ondon. 1% Andrew -ardanis, 2++%, A 0enture in Africa1 '+e C+allenges of African 2usiness. 76 :a<ris, 2ondon. p.2$% 18 Andrew -ardanis, 2++%, A 0enture in Africa1 '+e C+allenges of African 2usiness. 76 :a<ris, 2ondon. 19 /ambia ,opper 7n)estments 82++%9 Annual "eport, 2++% p 1 2+ @,*, !3A for t+e ne# smelter comple4 in $c+anga, 2++!, cited in 'Undermining e!elopment" Copper Mining in #am$ia', %ct &''(, $y )$y iamond et al, *C+), , Christian )id and )CT*). 21 5rontline) ol<me 18 & 7ss<e +', *ar. +# & 1!, 2++1, '2essons from the 6alco fiasco'. http"BBwww.frontline.inBstaticBhtmlBfl18+'B18+'1+9+.htm 22 !conomic 'imes of 3ndia, .ct 8, 2+1#. ',67 to initiate preliminary en?<iry into disin)estment of 5/2'


lost the e9che) er h ndreds of millions of dollars in reven e4A. Vedanta s bsidiar& Sterlite*s copper smelter in % ticorin, %amil +ad , has been b ilt and e9panded !itho t vario s permissions. /ocal activist researcher +it&anand Ma&araman*s article (edanta1Sterlite 2 3angerous by 3esign,4 s mmarises these ille"alities and co ld be a sef l reso rce for Zambians to nderstand the operatin" patterns of the compan& !hich o!ns the ma=orit& of their copper.

Fi" re 1B +e! str ct re of Vedanta "ro p, from (edanta investor presentation, 5une ,-.6.

KCM is a s bsidiar& of -ritish F%S8 4F@ minin" compan& Vedanta Reso rces. 3nder a recent restr ct rin" of Vedanta, KCM is no! one of onl& t!o ma=or s bsidiaries. %he other s bsidiar& Sesa Sterlite has ei"ht s bsidiaries of its o!n. Sesa Sterlite has been called a *corporate r bbish bin* b& anal&sts !ho s ""est its p rpose is to soa$ p debt and ris$ from loss ma$in" and hi"h debt companies li$e Vedanta ,l mini m and Cairn (ndia ;oil<4F. 0ne of the reasons KCM !as $ept separate from the other s bsidiaries is beca se it is a hi"h earnin" vent re, ma$in" 14.15J of reven e for the Vedanta "ro p in 4@14 accordin" to Ilobal Data anal&st reports.4? %he re'str ct rin" saved Vedanta K4@@ million in ta9 costs.46 Vedanta Reso rces !as a F%S8 1@@ compan& ntil December this &ear, !hen their share price dropped to an all time lo! of 66Fp ;from a F4 !ee$ hi"h of 1,AAFp<. (n response Chairman ,nil

http"BBarticles.economictimes.indiatimes.comB2+1#&1+&+8BnewsB$28292%9D1DhCl&sterlite&opport<nities&preliminary&en?<iry 2# !conomic 'imes of 3ndia, Dec 2#, 2+1#. '5ind<stan /inc 2td disin)estment" ,67 registers =0 against edanta ,hairman Anil Agarwal'. 2$ Nityanand 4ayaraman, 6afila, *arch 28, 2+1#. ' edanta&-terlite E Dangero<s by Design.' http"BB;afila.orgB2+1#B+#B28B)edanta&sterlite&dangero<s&by&design&nityanand&AayaramanB 2' =a<l (hitfield, >eb 2%, 2+12, '+e Deal ' edanta resh<ffle creates corporate r<bbish bin'. http"BBwww.thedeal.comBcontentB restr<ct<ringB)edanta&resh<ffle&creates&corporate&r<bbish&bin.phpFiGCC2os<1*/ma 2! 1lobalData, edanta Reso<rces plc 8 0D9 & >inancial and -trategic Analysis Re)iew, 18th 4<ly 2+1#. 2% Denise (ee, 0edanta tac&les un#ieldy corporate structure. 19 -eptember 2+1#. >inance Asia. http"BBwww.financeasia.comB NewsB#'%''!,)edanta&tac;les&<nwieldy&corporate&str<ct<re.aspG


,"ar!al pla&ed his s al tric$ of b &in" as man& shares as possible 1 a total of F.4 million4:45, b t it !as too late. %his leaves ,nil ,"ar!al o!nin" ?6J of the compan&, via his holdin" compan& Volcan (nvestments /td, based in the -ahamas ' a 3K controlled ta9 haven. %his means he pa&s a minim m of ta9, in -ritain, or an&!here else he operates. Vedanta, !hich has operations across (ndia and ,frica, has been named *the !orld*s most hated minin" compan&* b& %he (ndependent ne!spaper in -ritainA@, !hile even the former Director of the Confederation of -ritish (nd stries, Richard /ambert, has recentl& s ""ested Vedanta is brin"in" shame on the F%S8 1@@ b& *challen"in" the canons of corporate "overnance*A1. ,s Vedanta*s share prices crashed this !inter, the - siness Standard of (ndia p blished an article namin" people*s resistance and environmental iss es at their operations, "overnment re" lations, and hi"h debt as Vedanta*s ma=or !oes affectin" their (ndian operationsA4. .eople*s movements have cropped p in response to ille"alities, h man ri"hts ab ses, poll tion and !or$ers ri"hts iss es at almost all of Vedanta*s plants. Most stri$in"l& Vedanta lost K1@ billion this s mmer !hen it failed to "ain permission to mine ba 9ite in the +i&am"iri mo ntains in 0disha, (ndia, d e to ten &ears of resistance b& the inhabitin" tribal "ro ps and farmers. Vedanta had b ilt its refiner&, and e9panded it si9 fold to ? million tonnes per &ear capacit&, before it received permission to mine, so certain !as ,"ar!al that he !o ld "et the ba 9ite despite the inhabitant*s disa"reementAA,A>. #hen Vedanta bo "ht KCM the& inherited man& of the concessions ne"otiated b& ,n"lo ,merican in 4@@@, some of !hich had even re) ired ne! le"islation or chan"es to e9istin" le"islationAF. %hese are le"alised in Vedanta*s secret Development ,"reements ne"otiated b& Clifford Chance !ith the Zambian Iovernment !hich are fi9ed ntil 4@1:. %hese a"reements !ere lea$ed to +I0 researchers and can be fo nd onlineA?. %he deal " arantees them a ro&alt& rate of onl& @.?J, and allo!s them to ded ct 1@@J of capital allo!ance from their investments. %he Development ,"reements also radicall& red ced levels of environmental re" lation and environmental liabilities !hich the minin" ind str& had claimed *co ld res lt in ver& lar"e claims*. Vedanta !ere e9empted from ta9 on dividends, interest, ro&alties and mana"ement fees. %he& are also e9empt from r ral electricit& ta9A6, !hich is sef l for KCM since the& se aro nd 1AJ of Zambia*s electricit&. Vedanta KCM are c rrentl& searchin" for ne! coal to po!er a captive plant so that the& can avoid a price hi$e !hen their a"reement endsA:.
28 4ane :indall, 3nve--. Dec 19th 2+1#. ' edanta share price" ,hairman b<ys 1.% million shares.' http"BBin)eCC.comBnewsBe?<itiesB%%+#&)edanta&share&price&chairman&b<ys&1&point&%&million&shares 29 Director Dealings, 2$B12B2+1#. ' edanta Reso<rces ,hairman 6<ys #' *illion -hares' http"<;BAllNews.aspH codeI#t2e$$1aJheadlineID7R0,:.RDD0A27N1-D edantaDReso<rcesD,hairmanD6<ysD#'D*illionD-hares #+ Alistair Dawber, '+e 3ndependent, 29th 4<ly 2+1+. ' edanta Reso<rces" the world's most hated companyH' ttp"<;BnewsBb<sinessBanalysis&and&feat<resB)edanta&reso<rces&the&worlds&most&hated&company& 2+#%9%%.html #1 edanta was described in the 6ritish =arliament by *= 2isa Nandy as Kone of the companies that ha)e been fo<nd g<ilty of gross )iolations of h<man rightsL . *s Nandy ?<oted Richard 2ambert the former Director 1eneral of the ,67" K 3t never occurred to t+ose of us #+o +elped to launc+ t+e 5'S! 100 inde4 27 years ago t+at one day it #ould be providing a cloa& of respectability and lots of passive investors for companies t+at c+allenge t+e canons of corporate governance suc+ as 0edanta89 http"BBwww.p<blications.parliament.<;BpaBcm2+121#BcmhansrdBcm12+'22BdebteGtB12+'22&+++2.htm #2 *ansi :aneAa J -hine 4acob , Dec 1! th 2+1#. 2usiness Standard. 'Anil Agarwal's many str<ggles in 7ndia'. http"BBwww.b<siness&standard.comBarticleBcompaniesBanil&agarwal&s&many&str<ggles&in&india&11#121!+12#$D1.html ## *adh<sree *<;erAee, :uffington ,ost, ,+8B2!B2+1# '=ristine :ribe -a)es -acred *o<ntain >rom *ining' http"BBwww.h<ffingtonpost.comBmadh<sree&m<;erAeeBpristine&tribe&sa)es&sacredDbD#8+9$9!.html #$ -a<rabh ,hat<r)edi,' 7ndia ReAects =lan to *ine 6a<Gite in Niyamgiri 5ills'. 4an 12th 2+1$. ;all Street Journal) http"BBonline.wsA.comBnewsBarticlesB-61+++1$2$+'2%+2#+#819%+$'%9#1!1219$!92!#$+ #' 4ohn 2<ng< and , *<lenga, 2++'. 'Corporate Social "esponsibility practices in t+e e4tractive industry in (ambia #! -ee http"<;B #% ,lifford ,hance. :he 1o)ernment of the Rep<blic of /ambia and @on;ola ,opper *ines plc. Amended and restated De)elopment Agreement. -eaked at http"..mine/atch0am$ia.$ #8 *atthew 5ill, 2loomberg $e#s, 4<l 1%, 2+1#. ' edantaLs /ambian 3nit =lans ,oal =ower =lant to Red<ce ,osts.'


Copper 2 the elephant in the room

&..The production and sales figures 7for copper8 announced are indeed impressive but what pu99led me was the :overnor&s carefully phrased &estimate copper e"port earnings&. #t made me think that these &earnings& were perhaps never received in the country and # am asking for clarification. ere the &estimated e"port earnings& actually received or are they likely to be received and when; #f not, how much was received and what happens to the rest; Are the new mining companies allowed to keep them abroad and if so how do they account for them; 3oes the :overnment monitor the foreign accounts of these companies and does it make sure that the country gets its fair share; The <ation needs answers to these questions.& Kenneth Ka nda ;Zambia*s first .resident<, %he .ost Zambia ne!spaper, 4@@F.

,he copper elephant Zambia prod ces a si9teenth of the !orld*s copper, at almost 1 million tonnes in 4@14 ;accordin" to data reported b& minin" companies to the -an$ of Zambia<A5. (t has the !orld*s richest copper deposits ;alon"side Con"o<, and is the ei"hth lar"est copper prod cin" co ntr& in the !orld>@. Copper is Zambia*s most important e9port, ma$in" p 6FJ of its e9port reven e. 7o!ever, despite all this, copper minin" onl& contrib tes 4J to Zambia*s domestic reven eL >1 #h& is it that !hen copper prices are aro nd K6,A@@ per tonne, and demand from China is increasin" ann all&, Zambia is one of the !orld*s poorest nations !ith e9ternal debts of A4J of ID.2 ,s Kenneth Ka nda, Zambia*s first ,frican .resident, points o t in the ) ote above, the profits from minin" are " shin" o t of the co ntr&, and the Zambian Iovernment and re" lator& bodies remain painf ll& short of information on !here this reven e, or even the copper itself, is "oin". Fi" re 4B %he profit mar"in on copper is far hi"her than other
metals. So !h& aren*t Zambians seein" the benefit2 ;So rceB -loomber", #ood Mac$enHie, ,lliance-ertstein<

%his dearth of information ma$es copper the *elephant in the room* in Zambia. %here is no monitorin" of prod ction vol mes at the mines, or e9ports at ports of e9it. (nstead all fi" res come from the compan&*s o!n reportin", !hich historical cases sho! is often deliberatel& distorted>4. .oliticians, trade nions, academics and =o rnalists debate endlessl& over the percenta"e of ro&alt& or !indfall ta9 the nation sho ld be receivin". - t !itho t acc rate
#9 $+ $1 $2 http"<nit&plans&coal&power&plant&to&red<ce&costs.html 6an; of /ambia, Mineral ,roduction and !4port, 2+12. 7nternational ,opper -t<dy 1ro<p 87,-19, 2+12. Lusa&a 'imes, 4<ly 22, 2+11, '*ining -ector contrib<ting less than 2M of domestic re)en<e&/,:3'. e.g -herpa )ers<s *opani, April 2+12. Specific 3nstance regarding <lencore 3nternational A< and 5irst =uantum Minerals Ltd and t+eir alleged violations of t+e .!CD guidelines for multinational enterprises via t+e activities of Mopani Copper Mines ,lc in (ambia


information on the vol mes of e9traction or the profit made b& minin" companies, ho! can the Iovernment ma$e an informed decision on minin" polic&2 #e !ent from pillar to post loo$in" for a cop& of Zambia*s bi""est miner Vedanta'KCM*s ann al report, believin" the vital fi" res on prod ction and profit it contains sho ld be p blic information. - t despite visitin" the Central Statistical 0ffice, the -an$ of Zambia, the Dep t& Minister of Mines, the / sa$a Stoc$ 89chan"e, and ZCCM'(7 ;4@.?J shareholder of KCM<, none !as available. %his section loo$s at the opa) e nat re of copper minin" in Zambia, and ses "lobal financial statistics and parallel case st dies to e9amine copper material flo!s and financial flo!s from Zambia, eval atin" the potential for the Zambian people to tr l& profit from their e9tensive reso rce. #a3in( sense of copper material flo.s ,ccordin" to the Central Statistical 0ffice of Zambia ;CS0< copper and cobalt prod cts !orth KF.5 billion !ere e9ported from the co ntr& in 4@1@>A, !hile the -an$ of Zambia ;-oZ< p ts the val e of metal e9ports in 4@1@ at K?.@6 billion>>. (n the same &ear, accordin" to the Iovernment of Zambia*s reports to the 89tractive (nd stries %ransparenc& (nitiative ;8(%(< onl& KFF4 million !as received in ta9 reven e from minin", or K?:: million if .,N8 ;ta9 ded cted from !or$ers* pa&< is incl ded>F, a tenth of the estimated val e of the e9ports. - t this is not the !hole stor&. #h& are the CS0 and -oZ fi" res so different2 %he CS0 ta$es its fi" res from the minin" compan&*s declarations, !hile the -an$ of Zambia ses its o!n form las to estimate prod ction and e9port vol mes. (n 4@1@ CS0 report 6?6,@@: tonnes of copper prod ced, !hile -oZ report :F4,F?? 1 a difference of :F,@@@ tonnes. (n 4@14 CS0 report 641,>>? tonnes, and -oZ :4>,544 tonnes, a difference of 1@A,@@@ tonnes>?>6. So there is no clarit& !ithin Zambia on the act al levels of prod ction or e9port of metal. (t is li$el& that the real fi" res are considerabl& hi"her for several reasonsO ille"al minin" operations e9tractin" ore nder the radar, and deliberate nder'declarin" of prod ction and e9port vol mes b& companies. Research cond cted b& the (SS in Zambia in 4@1@ fo nd the minin" ind str& e9tensivel& affected b& theft, corr pt b siness practices, ta9 evasion and sm ""lin">:. , 4@11 detailed investi"ation into the operations of Mopani Copper Mines ;a s bsidiar& of Ilencore (nternational< b& a "ro p of international +I0s *revealed cobalt e"traction rates twice inferior to other producers of the same area 1 a difference deemed unlikely by the auditors and which indicates that some of the ore e"tracted by +opani could remain undeclared.'49 (t is li$el& that cobalt, a metal !ith a val e three times hi"her than copper, is considerabl& nder'declared. Stat tor& instr ment :5 in Zambian la! permits the e9port of nprocessed ore,
$# ,entral -tatistical .ffice, 'raditional !4ports 200> ? 2012. -<pplied on re?<est to researchers. 8:he fig<res are N!.9 bn in 2+11 and N!.' bn in 2+129 $$ ,aleb ><ndanga, 1o)ernor of 6an; of /ambia, 2+11, Macroeconomic trends in relation to t+e attainment of MD<s. 6an; of /ambia website. $' /ambia 2+1+ 07:7 report. $! ,entral -tatistical .ffice, <rap+ of 'otal Copper ,roduction 2000@2012. $% 6an; of /ambia, Statistics 5ortnig+tly1 fortnig+t ending $ov 1A 201>. ol<me 2+, no22. $8 A *af<le;a, 2+1+, .rganised ,rime in -o<thern Africa" the case of /ambia 8<np<blished report9. -<bse?<ently incorporated into a re)iew of organised crime compiled by A 5<ebschle, .rganised ,rime in -o<thern Africa" >irst Ann<al Re)iew 82+1+9 7nstit<te for -ec<rity -t<dies pp. '9&!1 $9 -herpa )ers<s *opani, April 2+12. Specific 3nstance regarding <lencore 3nternational A< and 5irst =uantum Minerals Ltd and t+eir alleged violations of t+e .!CD guidelines for multinational enterprises via t+e activities of Mopani Copper Mines ,lc in (ambia


and the e9port of !aste prod cts is also permitted. 0ne financial =o rnalist !e spo$e to in / sa$a alle"ed that cobalt, silver and other minerals are e9ported ndeclared in ores and !aste prod cts. KCM alle"edl& e9port !aste $no!n as *slimes*, !hich ma& contain other minerals for processin" o tside Zambia. (n (ndia Vedanta*s s bsidiar& Sesa Ioa are acc sed of e9portin" 1F@ million tonnes of iron ore from Ioa in 4@1@G11 !hile onl& declarin" 6.? million, their a"reed e9port allo!ance.F@ (t !o ld not be nreasonable to ass me s ch a compan& !o ld be prone to misdeclarin" its e9ports else!here. Revelations abo t Vedanta*s ille"al minin" in Ioa and Karnata$a !ere ori"inall& made after comm nit& s rve&s of n mbers of tr c$s leavin" their mines !ere carried o t. Simple s rve&s s ch as this co ld e) all& be sed in Zambia to determine the acc rac& of compan& reportin" on prod ction and e9port.F1F4 1pa4ue profit KCM and other minin" companies in Zambia don*t p blish their profits, even tho "h the Zambian ta9pa&er has a share in most of them via ZCCM'(7. 7o!ever Vedanta*s 4@1A ann al report claims KCM prod ced 41?,@@@ tonnes of copper in 4@1A. (n the same &ear costs of prod ction !ere val ed at 4FF.1 3S centsGlb, p ttin" the total cost of prod ction that &ear at K1.4 billion, !hich !o ld constit te a profit of KA?4 million ;at a c rrent copper price of K6,A@@<.FA 7o!ever, Vedanta has declared that the& are ma$in" ver& little profit at KCM, = stif&in" the retrenchment of 4@@@ !or$ers !hich the& anno nced in Ma& 4@1A, and !hich KCM vice'president for h man capital David Ka nda, told the Mine #or$ers 3nion of Zambia !as d e to Ca very unsustainable cost of productionC !ith hi"h pa& rates, and electricit& prices.F> Vedanta re" larl& cite prod ction rates of : tonnes per emplo&ee, b t at the 4@1A prod ction levels stated in their ann al report, !ith 1:,@@@ emplo&ees, the Figure 6/ =roduction and costs at (edanta subsidiaries. real fi" re !o ld be 14 tonnesGemplo&ee. Adapted from (edanta&s annual report ,-.6 (n fact 11,@@@ of KCM*s emplo&ees are cas al or contract labo r and ma& be !or$in" part time, as !ell as for considerabl& lo!er pa& than f ll time labo rersFF. %he 44F.1 centsGlb ;or K>,5?4 per tonne< cost of prod ction Vedanta cite in 4@1A is act all& not far from the "lobal avera"e of bet!een KA4@@ and KF@@@ ;accordin" to one anal&st<. #ith copper prices consistentl& above K6@@@ per ton this provides a h "e profit mar"in on copper compared to other metals.F?
'+ RaAee) @<mar, <ulail, 1'th No) 2+1#, ' edanta, a maAor player in 1oaLs illegal mining syndicate.' http"BBg<lail.comB)edanta&a&maAor&player&in&goas&illegal&mining&syndicateB '1 "ediff ne#s) 'Detailed report" -tory of 6RA/0N illegal mining in 1oa', December +8, 2+12 http"BBwww.rediff.comBnewsBreportBdetailed&report&story&of&braCen&illegal&mining&in&goaB2+1212+8.htm '2 -<ditpo *ondal, '+e :indu. 4<ne 1%, 2+1#. '@arnata;a lost Rs 1 la;h cr from 2++!&2+1+', http"BBwww.thehind<.comBnewsB nationalB;arnata;aB;arnata;a&lost&rs&1&la;h&cr&from&2++!2+1+Barticle$82+%'8.ece '# edanta Ann<al Report 2+1# '$ *ishec; (angwe and Dari<s @apembwa, 2' th *ay 2+1#, (ambia ,ost, '1o)t reAects @,*'s plan to sac; 2,+++ wor;ers'. http"BBwww.postCambia.comBpost&readDarticle.phpHarticle7dI##189 '' ,hristian Aid's report claims that s<b&contracted labo<rers are paid A<st O#% per month instead of O1'+ they re?<ire for a li)ing wage. Aby Diamond et al, .ctober 2++%, Bndermining Development1 Copper in (ambia A,:-A, -,7A> and ,hristian Aid. '! 4onathan R<ff, *arch 12, 2+1#. '>eared ,opper P>loodQ *ore 2i;ely a :ric;le', Alliance6ernstein http"BBblog.alliancebernstein.comBindeG.phpB2+1#B+#B12Bfeared&copper&floodB


Vedanta*s o!n fi" res sho ld be treated !ith s spicion. (f the& onl& prod ce : tonneGemplo&ee compared to a "lobal avera"e of 1F@ tonneGemplo&ee, as the& have often stated, ho! are the& still ma$in" a KA?4 million profit2 8ither the& are pa&in" the !or$ers ver& little, ma$in" lar"e mar"ins on other concessions, or misdeclarin" their prod ction. Dep t& Minister of Mines Richard M s $!a s ""ested to the researchers of this report that Vedanta have been doin" a lot of in'ho se tradin" b& brin"in" in (ndian companies as contractors. ,nal&sts reports from Ilobal Data reveal that KCM made 14.15J of reven e for the entire Vedanta "ro p in 4@14F6 so the& are certainl& not doin" too badl&. %he !idespread se of *transfer mis'pricin"* means that man& minin" companies nder'declare their profits !ithin Zambia to red ce ta9. %ransfer pricin" is heavil& lin$ed to the se of ta9 havens, !hich is ver& common amon" minin" con"lomerates. For e9ample, minin" companies can sell their copper to a holdin" compan& !hich is one of their o!n s bsidiaries, based in a ta9 haven li$e the -ritish Vir"in (slands or the -ahamas, at belo! mar$et price, recordin" lo! or Hero profits in Zambia. %he holdin" compan& then sells it on to the b &er at a hi"h val e, recordin" hi"h profits at their holdin" compan&, !hich are barel& ta9ed. , lea$ed report a thored b& Irant %hornton at the re) est of the Zambia Reven e ,"enc& ;ZR,< demonstrated ho! the Ilencore*s Mopani Copper Mines ;MCM< sed this t&pe of transfer mis'pricin", as !ell as overestimated operatin" costs and nderestimated prod ction vol mes, to declare no profits, and cheat Zambia*s e9che) er o t of millions of dollars, !hile ma$in" a fort ne.F: , 4@1@ 8conomic Commission for ,frica report on Tracking and *ertification of +ineral >utput in Southern Africa statesB There are also concerns about such practices as transfer pricing by large1scale mining conglomerates taking advantage of intra1group agreements involving the holding companies based in low ta" jurisdictions and the subsidiaries based in the region. Transfer pricing abuses take various forms, including over1 or under1invoicing of e"ports and imports, overloading of costs onto the subsidiary, service contracts and intra1group loans. Through such agreements, the holding companies are able to transfer income and allocate costs in a hidden manner that unfairly favours them. These malpractices reduce revenue which would have accrued to the producing States, thus e"acerbating poverty amidst a rich natural resources heritage 2 the so1called ?parado" of plenty@ABC

'% 1lobalData, edanta Reso<rces plc 8 0D9 & >inancial and -trategic Analysis Re)iew, 18th 4<ly 2+1#. '8 1rant :hornton, 2+1+, ,ilot audit report ? Mopani Copper Mines ,lc1 3nternational e4pert team report to t+e Commissioner Domestic 'a4es) (ambia "evenue Aut+orities '9 0conomic ,ommission for Africa, 2+1+, 'rac&ing and Certification of Mineral .utput in Sout+ern Africa p vii


,he pro*lem .ith rent2see3in( 3nder press re from the #orld -an$, (MF and other donors, Zambian a thorities have red ced ta9ation on minin" companies to a minim m to *attract investment*. %he corporate ta9 rate for minin" companies is set at A@J ;compared to AAJ for other companies<?@, tho "h man& minin" companies, s ch as KCM, have a"reed rates of 4FJ. KCM*s a"reement allo!s them to ded ct 1@@J of capital allo!ance from an& investments made 1 s ch as prospectin", b ildin"s and e) ipment, and losses from bad &ears ma& be carried over into "ood &ears.?1 %his is ver& similar to the a"reement for Mopani Copper Mines, and other ma=or miners in Zambia and can leave the e9che) er !ith virt all& no ta9 reven e at all from companies ma$in" enormo s profits. For e9ample KCM declared profits of KA@1 million in 4@@?G6 ?4, tho "h the& e9tracted K1 billion !orth of ore, and onl& paid ro&alties of K?.1 million?A. KCM*s Development ,"reement onl& re) ires it to pa& @.?J in ro&alties, fi9ed ntil 4@1:, and the& have even ar" ed that this is too hi"h?>. Ro&alties are calc lated as a percenta"e of the mar$et val e of minerals *less the cost of smeltin", refinin" and ins rance, handlin" and transport from the minin" area to the point of e9port or deliver& !ithin Zambia*?F, leavin" m ch room for manip lation of fi" res b& companies. KCM bra""ed in a presentation to investors that .,N8 ;.a& ,s No 8arn< ded ctions from !or$er*s !a"es ma$e p nearl& F@J of their ta9 contrib tions to the Zambian Iovernment. (n the same presentation, in 4@@6, the& note that the& are not pa&in" income ta9 since the& are !aitin" ntil *carr&'for!ard losses are e9ha sted.P?? ,nd Vedanta*s 4@1A ,nn al Report notes thatB The :roup has $SD.,,'6.4 million of unutilised ta" losses at )*+ E,-.,/ $SD.,6-..F millionG which e"pire in the period ,-.4 to ,-,,. These unutilised ta" losses have been recognised as a deferred ta" asset, as they will unwind as the accelerated capital allowances unwind, thereby generating economic benefits for the *ompany.'F ,s !e noted earlier, these losses !ere inherited from ,n"lo ,merican, the previo s mine o!ner. (n an intervie! !ith the researchers of this report, Dr Matthe s Mpande, former Dep t& Minister of Mines, and .rofessor at the 3niversit& of Zambia, named three problems !ith Zambia*s minin" policiesO rent see$in" behavio r, labo r aristocrac&, and pop list vie!s. #e !ill refer to the latter t!o later in this report, and !ill loo$ at the former no!. Mpande ar" ed, and !e a"ree, that ro&alties and ta9ation sho ld not be seen as the primar& method of reven e "eneration from copper minin". (nstead, he s ""ested that increasin" val e addition and *bac$!ard lin$a"es* in Zambia sho ld be the main foc s?:. %his means raisin" the val e of copper before it is e9ported b& processin" it into coils, pipes, !ires etc, after !hich the prod ct can be sold at a far hi"her price.
!+ Lusa&a 'imes, 4<ly 22, 2+11, '*ining -ector contrib<ting less than 2M of domestic re)en<e&/,:3'. !1 -herpa )ers<s *opani, April 2+12. Specific 3nstance regarding <lencore 3nternational A< and 5irst =uantum Minerals Ltd and t+eir alleged violations of t+e .!CD guidelines for multinational enterprises via t+e activities of Mopani Copper Mines ,lc in (ambia !2 #am$ia Copper +n!estments 1&''(2 Annual Report, &''( p !# 6an;trac;, April 2+11, Dodgy deal1 6on&ola Copper Mines !$ /ambian 0ye, No)ember 1+, 2+1#, <ovt reps sitting on 6CM board in dar& about laying off over 1A00 #or&ers ? Minister http"BBCambianeye.comBarchi)esB1!2%+ !' Lusa&a 'imes, 4<ly 22, 2+11, '*ining -ector contrib<ting less than 2M of domestic re)en<e&/,:3'. !! @,*, a presentation for in)estors on edanta and @,*, 2++%R E the presentation states that =AS0 totalled <p to 3-N#' million o<t of a total of 3-N%'&8+ million. & ?<oted in Aby Diamond et al, .ctober 2++%, Bndermining Development1 Copper in (ambia A,:-A, -,7A> and ,hristian Aid. !% edanta Reso<rces, Ann<al Report 2+1# !8 7nter)iew with *atthe<s *pande, 3N/A, 'th December 2+1#.


Fi" re >B #orld*s top copper miners ;top< vers s top copper refiners ;bottom< ;(CIS<.

-e&ond that, !e s ""est Zambian a thorities sho ld re' e9amine the concept of ro&alties all to"ether, and loo$ at char"in" private companies a realistic price for the ore the& e9tract. Ro&alt& itself is a colonial concept, !hich ori"inall& meant *a percenta"e of profit "ained from a service rendered to the state*. %he relevance of ro&alt& !as challen"ed b& (ndian co rts in 155A'> d rin" a disp te over lo! ro&alt& and other rental rates for "ranite minin".?5 Ma=or international campai"ns s ch as %a9 M stice +et!or$ and the 89tractive (nd stries %ransparenc& (nitiative have pla&ed into this *rent see$in"* ideolo"&, lobb&in" for minor increases in ta9 reven es, and i"norin" more profo nd iss es aro nd the o!nership and val ation of mineral reso rces at the o tset.
Zambia is the !orld*s ei"hth lar"est copper prod cer, b t the in 15??, follo!in" independence, fo rteenth lar"est prod cer of refined copper. %he top refiners of and introd ce an e9port ta9 to copper are rich co ntries !ho benefit from the val e addition.

Zambia did abandon ro&alt& rates

red ce the lea$a"e of copper profits overseas. %his helped enable the co ntr&*s copper boom in the ne9t decade.6@ %oda& copper prices are a"ain hi"h, !ith a profit mar"in of at least K4@@@ per tonne ;difference bet!een prod ction cost and price of copper 1 see fi" re 4< b t Zambians are seein" ver& little benefit. ,he real price of copper Since private minin" companies are not carr&in" o t a *service* for the state, b t rather e9tractin" reso rces for their o!n profit, ro&alt& rates ma& not be an appropriate form of reso rce ta9. (nstead it !o ld be sef l for the Zambian "overnment to eval ate the real val e of its copper and other mineral reso rces, and consider char"in" for e9traction accordin"l&. %his means demandin", or independentl& see$in", information on the real cost of prod ction, and the real profit attained b& companies. ,ccordin" to KCM*s o!n reports, their assets in Zambia comprise 1A.? million tonnes of
!9 'a4es of mines and minerals ? 6arnata&a State at $3C, 18 A<g 1999. ### &ar nic inCfinanceCtrcCc+0D pdfT %+ A.D. Roberts, 1982, 'Notes towards a financial history of copper mining in Northern Rhodesia'. Canadian Journal of African Studies. ol 1!, no 2, 1982" #$%&#'9.


copper61. ,t c rrent rates of K6,A@@Gtonne this !o ld be !orth K55 billion. %his val e belon"s to the Zambian people. Shortl& after ta$in" office this &ear .resident Mahama of Ihana stated his disma& abo t the mea"re ret rns the co ntr& sees from its nat ral reso rces. 7e declared that e9ports of nprocessed ore and other reso rces sho ld be stopped, and val e sho ld be added to these prod cts in Ihana. %he . blic ,cco nts Committee also made statements e9pressin" shoc$ at the vol me of earnin"s from Ihana*s "old mines !hich !ere $ept in forei"n offshore acco nts64. 7ead of .olic& Monitorin" and 8val ation in the .resident*s office, Dr %on& ,idoo, made a ver& profo nd statement to the pressB 3r Aidoo told the Accra1based Hadio :old that he would rather the minerals remained untapped in the ground so that local mining techniques, even if primitive, could be employed to e"ploit them. #f that meant only BI of the minerals were e"ploited, he said, it would be far better for the country than the current situation where :hanaians themselves did not benefit from :od1given resourcesF6. %he cost of minin" to the Zambian and Ihanaian economies "oes far be&ond loss of profit from ta9ation or e9port val e. %he real price of copper incl des the poll tion of !ater and air ca sed b& minin" and transportation, the cost of decommissionin" mines and smelters, health effects on local pop lations, and the Fi" re FB !"ternalities of copper production, from 3e it, ,--B. depletion of the finite reso rce, !hich !ill not be available to f t re "enerations. %hese are $no!n as *e9ternalities* 1 real costs !hich !ill be borne b& people and "overnments at present and in the f t re, b t !hich are not incl ded in the mar$et price of a reso rce. 8colo"ical economist Maarten De #it val es the real cost of copper ;incl din" e9ternalities< at KAA,@@@ per tonne, fo r to five times the c rrent mar$et price.6> %he price is hi"h beca se copper is one of the most material intense metals to prod ce 1 creatin" F@@ tons of !aste, and sin" 4?@ tons of !ater for each ton of primar& copper.6F 3nderstandin" the real ecolo"ical price of copper is important for reso rce rich states, since !hen their reso rce is depleted, the& !ill contin e to pa& for the e9ternalities for &ears to come. %his sort of calc lation sho ld be incl ded in the cost benefit anal&ses !hen ne! mines are proposed or deals str c$ !ith companies.
%1 @on;ola ,opper *ines, presentation to in)estors, No)ember 2+12. ### slides+are netC0edanta<roupCkcmpresentation@ november2012 %2 Dr :ony Aidoo, head of policy monitoring and e)al<ation in =resident *ahama's office. >emi A;omolafe, $e# African, December 2+1#, '1hana" ><ry o)er offshore acco<nts' %# Dr :ony Aidoo, head of policy monitoring and e)al<ation in =resident *ahama's office. >emi A;omolafe, $e# African, December 2+1#, '1hana" ><ry o)er offshore acco<nts' %$ *aarten 4. de (it, 2++', !cological !conomics, ' al<ing copper mined from ore deposits', ol<me '', 7ss<e #, 1' No)ember 2++', =ages $#%E$$# %' *ichael Ritthoff, 5olger Rohn, ,hrista 2iedt;e. 2++2. Calculating M3,S 1 "esource ,roductivity of ,roducts and Services 8(<ppertal -peCial no. 2%e9 :he (<ppertal 7nstit<te for ,limate, 0n)ironment and 0nergy


#aterial flo.s & .here does the copper (o$ .erhaps the most star$ case of opacit& in Zambia*s copper stor& relates to the final destination of its copper e9ports. 0n paper the ma=orit& ends p in S!itHerland ;a ma=or ta9 haven !here Ilencore (nternational is based<6?. Fi" re ? sho!s Zambia*s main e9port mar$ets in 4@@:G5 !hen the dominance of S!itHerland !as more stri$in" than toda&, !ith the most recent "raph inset. %he increase in imports to China can be attrib ted to the infl 9 of Chinese state o!ned minin" companies no! e9portin" copper from Zambia.
Fi" re ?B Direction of Zambia*s e9ports in 4@@:'5 and 4@14'1A ;inset<

%ho "h Zambia is the !orld*s ei"hth bi""est copper miner, it doesn*t even re"ister on the list of copper cons mers. China c rrentl& cons mes >@J of "lobal copper, and this is predicted to rise to :>J b& 4@1>66. So ho! can the ma=orit& of Zambia*s copper end p in S!itHerland2 %he obvio s tr th is that it doesn*t. , 4@1@ Christian ,id report fo nd that in 4@@: half of Zambia*s copper e9ports !ere destined for S!itHerland as the& left Zambian c stoms, b t the S!iss import a thorit& claims most of it didn*t arrive. %he report also fo nd vast differences bet!een the price paid b& S!iss a"encies for Zambian So rceB (CIS copper, and the price attained for e9portin" this a"ain from S!itHerland. %he& claim the Zambian Iovernment co ld have increased its
%! ,entral -tatistical .ffice, cited from 6an; of /ambia, (ambia direction of trade report) =1 201>. http"BBwww.boC.CmB M28-M28<c#;sc''shnAfl$''srhrl)$M29M29B1eneral,ontent.aspGHsiteI!9 %% -tandard 6an;, An Analysis of C+ina9s Copper Demand, >ebr<ary 21, 2+12.

Fi" re 6B #orld copper cons mption in 4@@5


reven e from minin" si9 times if these prices had been realised in Zambia6:. ;see fi" re :< Copper leaves Zambia on tr c$s and trains Zambia and S!itHerland. bo nd for ports in Dar es Salaam ;%anHania< or So th ,frica, b t ver& little is $no!n b& the Zambian a thorit& abo t !hat happens ne9t. %he -an$ of Zambia notes its lac$ of information !hen it statesB Jarge metal traders Ee.g. :lencore #nternational A:G, headquartered in Swit9erland, purchase copper and cobalt from Kambian mining companies off gate and sell the commodity to other foreign markets. +ost Kambian companies are not fully aware of the final destination of the copper purchased by these companies. FC Sellin" *off "ate* means that the cost of, and responsibilit& for, frei"ht is pic$ed p b& the b &er. So !here do KCM*s e9ports "o and !hat is their real val e2 (n an affidavit to the Zambian 7i"h Co rt ;as part of a co rt battle over ta9 o!ed< in +ovember this &ear, KCM claimed it sells its copper cathode e9ports to traders incl din" %ra9&s S,, Mar beni Corp and ,mbrian Metals /td., and is not priv& to !ho the final b &ers are or !here the& are located.:@ %he fact is that most metal is traded on the hi"h seas 1 a colonial tradition !hich is almost totall& de're" lated, and nacco ntable:1. For e9ample the contrib tion of shippin" to poll tion and climate chan"e has onl& recentl& been established !hen it !as revealed that si9teen me"a ships alone prod ce the same amo nt of s lph r as all the !orld*s cars. Ilobal shippin" is overseen b& the (nternational Maritime 0r"anisation ;(M0<, a $e& 3nited +ations bod& based in /ondon, !hich has ref sed to ta$e part in carbon red ction and other re" lator& pro"rammes.:4
Fi" re : Difference bet!een copper e9port prices in

%8 ,hristian Aid, *ay 2+1+, 2lo#ing t+e ;+istle1 '+e time/s up for financial secrecy. %9 3ank of #am$ia, irection of Trade report, 45 &'56. 8+ *atthew 5ill, 2loomberg, No) ! 2+1#, ' edantaLs /ambia 3nit -<es :aG A<thority .)er N'8! *illion 6ill' http"!B)edanta&s&Cambia&<nit&s<es&taG&a<thority&o)er&'8!&million&bill.html 81 -letmo, 1.@, 2++1, ':he 0nd of National -hipping =olicyH A 5istorical =erspecti)e on -hipping =olicy in a 1lobal 0conomy', 3nternational Journal of Maritime !conomics, ol<me #, N<mber $, 1 December 2++1 , pp. ###&#'+8189. 82 >red =earce, 21 No)ember 2++9. '+e Daily Mail ne#spaper. '5ow 1! ships create as m<ch poll<tion as all the cars in the world'.


!edanta's perception mana(ement in )am*ia:
/i$e other places !here the& operate in (ndia, Vedanta have p t considerable emphasis on . blic Relations ;.R< since ac) irin" KCM in Zambia. .R is sed to emphasise and e9a""erate their Corporate Social Responsibilit& ;CSR< pro"rammes, and create positive perceptions of the compan& for politicians, investors and comm nit& members. 7o!ever, behind the shin& ima"es of happ& ,frican children, Vedanta*s rhetoric of alleviatin" povert& thro "h minin" is s all& ver& hollo!. %he realit& for comm nities aro nd Vedanta*s operations aro nd the !orld, and in Zambia, is far from positive, as poll tion, !or$ers ri"hts violations and ta9 evasion leave little local benefit. Shortl& after ac) irin" KCM Vedanta emplo&ed *ima"e b ilder* , " stine Se& ba 1 a former =o rnalist, to create confidence in the compan& locall&. %he& sponsored the Zambian s per' lea" e and too$ on several local clinics and schools previo sl& r n b& ZCCM and ,n"lo ,merican, and promoted these developments in ne!spaper adverts and billboards. 7o!ever the& did not promote the fact that the& also "ave bac$ one of the hospitals previo sl& r n b& ,n"lo to the "overnment, and that, accordin" to a local activist ' 'the standards of health care and service delivery have drastically dropped with chronic shortages of even basic medication where even clients are compelled to buy some of the medicines from drug stores in town&:A. ,nother report notes thatB 'in a speech to officially launch the football league sponsorship, and in the presence of the Hepublican =resident, the )*+ *hief !"ecutive >fficer E*!>G could not hide the intentions of the company when he asked the government to e"tend the ta" holidayLe"emptions the company has been enjoying ever since )*+ was set up E,---G.&M4 , " stine Se& ba is no! .ermanent Secretar& in Zambia*s +orth #estern province, an pcomin" minin" area, sho!in" the dan"ero s and common revolvin" door from =o rnalism to .R to politics. KCM*s c rrent .R head ' Mo& Sata, is another former =o rnalist, and their head of Comm nications 1 Shapi Shacinda, is a former Re ters correspondent. (n (ndia Vedanta has come nder attac$ for its misleadin" .R campai"ns. , ma=or national campai"n in (ndia called *minin" happiness* had to be scrapped after celebrit& participants p lled o t d e to concerns abo t Vedanta*s ethics. ,ctivists formed a parallel campai"n called *fa$in" happiness* !hich pointed o t the tr th abo t Vedanta*s minin" practices s ch as land "rabbin", to9ic !aste d mpin" and harassment of villa"ers !ho opposed their pro=ects:F. Vedanta are c rrentl& r nnin" another ma=or .R campai"n in (ndia called *0 r Iirls, 0 r .ride* !hich paints them as !omen*s ri"hts advocates. %his has also been opposed b& !omen*s "ro ps !ho have called it a sham, notin" the man& !omen and "irls made homeless, fatherless and destit te ,nil ,"ar!al tries to paint himself as b& Vedanta, as !ell as those !ho have led social movements a"ainst their operations:?. one of (ndia*s top philanthropists.
8# 8$ 8' 8! 0mail from incent 2engwe, Director of ,opperbelt :rade and De)elopment >or<m, 2<anshya. !th 4an<ary 2+1#. 4ohn 2<ng< and , *<lenga, 2++'. 'Corporate Social "esponsibility practices in t+e e4tractive industry in (ambia >a;ing happiness campaign. http"BBfa;<;B http"BBwww.;racti)ist.orgBopen&letter&to&priyan;a&chopra&on&ndt)&)edanta&o<r&girls&o<r&pride&campaign&)awB and http"BBwww.foil)edanta.orgBarticlesB12%'B


Vedanta*s perception mana"ement in Zambia has also involved spreadin" some serio s misconceptions ri"ht p to the hi"hest levels of Zambian politics. %he most common m&th is that Vedanta is an (ndian compan&, !hen in fact the& are re"istered on the /ondon Stoc$ 89chan"e and head) artered in /ondon. %ho "h the ma=orit& of their operations are in (ndia, and ma=orit& o!ner ,nil ,"ar!al is (ndian b& birth, (ndian shareholders hold less than 1J of the compan&, and Vedanta are ans!erable to -ritish compan& la!. #e !ere shoc$ed to discover the prevalence of this misconception in Zambia. Dep t& Ieneral Secretar& of the Mine #or$ers 3nion of Zambia ' /eonard .hiri, told s CThe belief we have had is that )*+ is an #ndian company and it has not been making profit.Q 7e !ent on to respond to the ne!s that Vedanta !as in fact -ritish, and !as ma$in" lar"e profits in Zambia sa&in"O CThey can&t take care of safety measures, they can&t talk about their future plans for )*+, or where they e"pect to go to after this.. they can&t follow mining regulations, they have huge indebtedness due to outsourcing companies that were not being paid money. All these things have been made clear to the people in the country,..and it has really been looked at in a negative light by the Kambian community and the Kambian state, where the government now has to look for a team to monitor its operations so they can see if they can salvage the company from its current doldrums, which is a very very sad state of affairs. And, if it is owned by the 0ritish, as you are saying, # would not e"pect this, because the 0ritish have a history of running entities in a professional manner, respecting the indigenous laws of the country they are operating from, and motivating the workers of the country. This is not the case with )*+.C:6 Creatin" a perception that the& are not ma$in" profit is important to Vedanta in Zambia as the& can se this to bar"ain for red ced ta9es and other costs. Vedanta recentl& claimed the& co ld not pa& an alle"ed KF:? million in npaid ta9 as it !o ld compromise their abilit& to pa& !or$ers::. , =o rnalist told s that since Vedanta*s rep tation !as serio sl& compromised b& their attempt to fire 4@@@ !or$ers this &ear, the& have been ta$in" o t front pa"e ne!spaper ads sa&in" the& are prospectin" for oil and "as in Zambia, tho "h there is no evidence that the& have made an& s ch developments. %his sort of perception mana"ement is also sed b& Vedanta to create investor confidence. For e9ample, !hile claimin" the& are cash strapped in Zambia, Vedanta !ill tell investors that KCM is hi"hl& profitable. %his enables them to sec re loans or increase share pta$e. Most famo sl&, Vedanta created the perception that the& had permission to mine the +i&am"iri 7ills in 0rissa, (ndia, for ba 9ite, !hich !as reported in the 3K*s Financial %imes in 4@@>, assistin" them !ith investment and loans for the pro=ect.:5 (n fact permission !as never "ranted, ltimatel& costin" them K1@ billion from an nrealised investment5@.

8% 7nter)iew with 2eonarh =hiri, *ine (or;ers 3nion of /ambia, 9B12B1#. 88 *atthew 5ill, 2loomberg $e#s, No) !, 2+1#, ' edantaLs /ambia 3nit -<es :aG A<thority .)er N'8! *illion 6ill'. http"!B)edanta&s&Cambia&<nit&s<es&taG&a<thority&o)er&'8!&million&bill.html 89 @<nal 6ose, 5inancial 'imes, No)ember #, 2++$, '7ndia" 7n)estor interest grows as nation shows its mettle.U 9+ -a<rabh ,hat<r)edi,' 7ndia ReAects =lan to *ine 6a<Gite in Niyamgiri 5ills'. 4an 12th 2+1$. ;all Street Journal) http"BBonline.wsA.comBnewsBarticlesB-61+++1$2$+'2%+2#+#819%+$'%9#1!1219$!92!#$+


,he truth a*out !edanta in )am*ia:
ater pollution #e visited comm nities livin" aro nd Vedanta'KCM*s mines and refineries in the Copperbelt. 7elen and Shim lala comm nities are located near KCM*s +chan"a mine in Chin"ola. %he& are home to >@@ people. .oll tion from KCM*s tailin"s dam n mber 4 ;$no!n as %D4< has contaminated their !ater s ppl& as !ell as the M shishima stream !hich r ns nearb&. /ocal residents told s that KCM drilled them a borehole after the stream became contaminated b t !hen the& too$ samples it !as also poll ted !ith copper s lphate. %he& alle"e that a !ater tan$ s bse) entl& delivered b& the compan& also contained contaminated !ater. #ith no clean !ater so rce in their villa"e residents no! !al$ to a shallo! !ell the& have d " in marsh to fetch dirt& !ater. %he& fear this ma& also be poll ted.

KCM*s contaminated borehole in 7elen villa"e, and a !oman dra!in" !ater from a shallo! and dirt& !ell !hich is their onl& !ater so rce.

KCM*s press releases praise their contrib tion to local comm nities b& releasin" F@,@@@ fin"erlin"s into M shishima stream this s mmer.51 - t residents sa& altho "h the& eat fish from the stream, the& are !orried that the& ma& also be contaminated. (n 4@@? KCM released ra! effl ent from their poll tion control dam into the M shishima stream, !hich r ns directl& into the river Kaf e, the !ater so rce for >@J of Zambia*s pop lation. %he res lt !as some of the !orst contamination Zambia has ever seen, !ith chemical concentrations of 1@ 9 acceptable levels of copper, 66@ 9 man"anese and 1@@ 9 cobalt in the river Kaf e, t rnin" it a stran"e bl e "reen colo r.54 0ne local resident told a =o rnalistB R e are scared. #n fact even this water they are bringing in tanks is not enough. <ow we are dead because of )*+. e may have problems in the future. e do not know what is in our bodies. e drank because we were thirsty. 0ut the taste was bitter. #t was like chloroquine. +ost people are sick. +ost people canAt even stand up. #f we try to put chlorine, the water becomes black. #f we boil it, it becomes brown.Q5A #ater companies in Kit!e and Chin"ola s ed KCM for their ne"li"ence, !hich had dama"ed their !ater processin" plants, and Vedanta compensated them o t of co rt. - t the& ref sed to
91 Daily Mail, 4<ne ! 2+1#, '@,* restoc;s *<shishima stream with '+,+++ fingerlings'. http"BBdaily&!B+!B;cm&restoc;s&m<shishima&stream&with&'++++&fingerlingsB 92 'imes of (ambia) No)ember 8 2++!. '@,* poll<tes @af<e Ri)er'. 9# Sunday ,ost, 2<sa;a, No)ember 19 2++!, '@,* =oll<tion ictims -pea; .<t'. ,ited in >raser, A and 2<ng<, 4. >or (hom the (indfalls" (inners and losers in the pri)atisation of /ambia's copper mines, 2++!.


settle an& compensation !ith the tho sands of people affected b& drin$in" the !ater. Follo!in" the fail re of the 8nvironmental Co ncil of Zambia ;8CZ, no! Z8M,< to prosec te the compan&, / sa$a based la!&er Kelvin -!al&a too$ a p blic interest liti"ation a"ainst KCM on behalf of 4@@@ affected people. (n a landmar$ r lin" S preme Co rt = d"e .hillip M sonda ordered KCM to pa& a total of K4 million to the families, sa&in" he !anted to ma$e an e9ample of KCM for their *"ross rec$lessness*. 7e also stated thatO RThe courts have a duty to protect poor communities from the powerful and politically connected. # agree with the plaintiffAs pleadings that )*+ was shielded from criminal prosecution by political connections and financial influence, which put them beyond the pale of criminal justice.Q5> 7o!ever, Vedanta s bse) entl& challen"ed this decision, claimin" the& !ere not responsible for the contamination. 3ntil no! the case has not been heard and the residents are &et to be compensated. Mr -!al&a told s abo t the lon" term effects of the incident !here local people are still e9periencin" miscarria"es, and premat re and deformed births.5F %he li$el& lon" term impacts of the spill ma& incl de l n" and heart problems, respirator& diseases and liver and $idne& dama"e. 89pos re to man"anese can ca se *man"anismP a disease of the central nervo s s&stem affectin" ps&chic and ne rolo"ical f nctions. -rain dama"e effects in the local pop lation ma& onl& sho! p in f t re "enerations.5?

.oll ted !ater r ns from a borehole in Shim lala.

%he M shishima stream, contaminated b& KCM.

(n 4@1@ KCM contaminated the river a"ain, in another ma=or incident !hich left tho sands poisoned once a"ain. %he& !ere fo nd " ilt& b& Zambian co rts on fo r co nts, incl din" *!ilf ll& failin" to report an act or incident of poll tion of the environment*.56 0ne of the victims, !ho !as admitted to hospital !ith the rest of his famil& follo!in" the spill told the press that KCM !as a serial offender, and had repeatedl& poll ted the Kaf e river !ith s lph ric acid as !ell as committin" several ma=or incidents. 7e claimed KCM !as *polluting the environment with impunity because the mining company was highly favoured by the government*.5:

9$ Newton -ibanda, December 12, 2+11. (ambia1 :ig+ Court orders 6on&ola Copper Mines to pay 2 million BSD for polluting "iver Mus+is+ima 9' 7nter)iew with @el)in 6walya, 18th December 2+1#. 9! Dobson, A( et al, 2++$. '*anganese ne<rotoGicity'. *arR 1+12"11'&28. 9% Steel <uru, 28 No)ember 2+1+, '@on;ola ,opper fined @,* 3-D $+++ for poll<ting water in @af<e Ri)er.' 98 @abanda ,h<l<, +# Dec. 2+1+, '+e ,ost ne#spaper. '@,* poll<tion )ictim spea;s o<t'.http"BBwww.postCambia.comBpost& readDarticle.phpHarticle7dI1!$11


Air pollution #e met residents livin" near KCM*s +$ana refiner& and smelter in Kit!e !ho claimed ambient air poll tion is a constant problem, and that miners and other local residents s ffer from diseases s ch as %- ca sed b& airborne contaminants ;as !ell as the hi"h rate of ind strial accidents in the mines and plant<. , recent academic st d& evidenced the dama"e done b& s lph r dio9ide poll tion aro nd the +$ana plant, !hich ca sed die'bac$ in trees and $illed ve"etable "ardens in the comm nit&, as !ell as affectin" residents* health.55 (n December KCM*s +$ana smelter released so m ch s lph r dio9ide that their .R head Mo& Sata !arned residents to sta& in their homes. %ho "h the incident !as ca sed b& a po!er fail re at a "overnment facilit&, KCM*s bac$ p po!er so rce failed to $ic$ in, ca sin" the ni) e incident at their plant.1@@

Street vendors cover their faces from S04 in % ticorin, and the protests !hich follo!ed.

,t Vedanta*s other copper smeltin" s bsidiar& 1 Sterlite, in %amil +ad , (ndia, a ma=or s lph r dio9ide release !hich hospitalised h ndreds of residents bro "ht more than F@@@ people into the streets this March, in a *bandh* !hich closed the to!n of % ticorin.1@1 %he smelter !as temporaril& closed as a res lt, b t !as reopened a fe! months later. %he Sterlite plant has one of the hi"hest rates of !or$ers deaths, !ith si9teen d&in" bet!een 4@@6 and 4@11.1@4 Man& of these !ere recorded b& the police as s icides. (n 1556 a to9ic "as lea$ at the plant hospitalised 1@@ people spar$in" an indefinite h n"er stri$e b& a local politician and a *sie"e on Sterlite* that led to 1?>A arrests. or3ers ri(hts ,nother of Vedanta*s patterns to be pla&ed o t at KCM is the minimisation of f ll time emplo&ees in favo r of cheaper and less nionised contract labo r. 0f KCM*s 1:,@@@ emplo&ees an estimated 11,@@@ are contract labo r. , Christian ,id report claims that s b' contracted labo rers at KCM are paid = st SA6 per month instead of S1F@ the& re) ire for a
99 Nc<be, 0., ,. 6anda, and 4. *<ndi;e 82+129, PAir poll<tion on the ,opperbelt pro)ince of /ambia" 7ts s<lph<r dioGide effects on )egetation and possibly h<mansQ, 4o<rnal of Nat<ral and 0n)ironmental -ciences, ol. #, No. 1, pp. #$&$1 1++ Nicholas 6ariyo, Dec 1$, 2+1#, ;all Street Journal, '.<tage damages /ambiaLs largest copper smelter' http"BBwww.mar;etwatch.comBstoryBo<tage&damages&Cambias&largest&copper&smelter&2+1#&12&1$ 1+1'6andh affects normal life in :<ticorin,' :indu ne#spaper, April 8th 2+1#. http"BBwww.thehind<b<sinessline.comBcompaniesBbandh&affects&normal&life&in&t<ticorinBarticle$'9$+8'.eceH refIwlDopinion 1+2 Nityanand 4ayaraman, 6afila, *arch 28, 2+1#. ' edanta&-terlite E Dangero<s by Design.' http"BB;afila.orgB2+1#B+#B28B)edanta&sterlite&dangero<s&by&design&nityanand&AayaramanB


livin" !a"e.1@A S$illed, and even semi's$illed labo r is often s pplied b& imported (ndian emplo&ees, !ith an estimated F@@ c rrentl& !or$in" at KCM.1@> KCM*s rep tation in Zambia too$ a nosedive this Ma& !hen the& anno nced the& !o ld retrench ;fire< 4@@@ !or$ers as part a bid to streamline operations and increase profits. .resident Sata threatened to revo$e their minin" license if the& !ent ahead, and the plans !ere p t on hold. - t KCM*s C80 Kishore K mar defied him, la&in" off 6? !or$ers in +ovember, !hich so an"ered Sata*s "overnment that the& iss ed a deportation notice for K mar and cancelled his !or$ permit, callin" him *arro"ant*. -& +ovember the official n mber of emplo&ees to be fired had decreased to 1F45, tho "h local activists claim F@@ had alread& ta$en vol ntar& red ndanc& in the meantime.1@F Vedanta Chairman ,nil ,"ar!al fle! o t to Zambia to ne"otiate over the la&'offs, leadin" Chin"ola*s district commissioner to acc se KCM of actin" li$e a *small "od* b& tr&in" to arm t!ist and blac$mail the "overnment.1@? 8ach mine !or$er in Zambia has an estimated 1@'14 dependants so Vedanta*s proposed =ob losses !ill affect p to 4@,@@@ people in total. Samfronce -!a&la from +chan"a province *atholic *hurch 5ustice and =eace, !ho !or$ !ith minin" comm nities sa&sB N+any people in this nation will suffer from retrenchment. !ach miner who is retrenched has nieces and daughters who depend on them, in colleges and $niversities and elsewhere. They will all suffer. !ven people who have left the copperbelt still depend on copper belt money.N.-F KCM have also been ded ctin" e9cess ta9 from !or$ers since the retrenchment !as anno nced in Ma&, b& claimin" the !or$ers had previo sl& nderpaid ta9, and ded ctin" the bac$dated amo nt from the pa&che) es, leavin" them !ith p to half their s al salar&. %his !ent on for a fe! months ntil nion action p t a stop to it and the e9cess ta9 !as event all& ref nded.1@: , recent article also claimed that the 6? fired !or$ers !ere nfairl& compensated, and "iven *pean ts* as red ndanc& benefits.1@5 Vedanta*s claim that la&'offs are necessar& d e to poor profitabilit& has led to their investi"ation b& a KCM !or$er*s red ndanc& pa&che) e. So rceB %he (ndependent 0bserver, Dec 4, 4@1A. Iovernment tas$ force, to establish the s stainabilit& of their operations11@. Mean!hile at Vedanta*s ,nn al Ieneral Meetin" in /ondon in , " st 4@1A ,"ar!al braHenl& claimed that the compan& has not retrenched a sin"le !or$er in an& of their operations.111

1+#Aby Diamond et al, .ctober 2++%, Bndermining Development1 Copper in (ambia A,:-A, -,7A> and ,hristian Aid. 1+$ 0stimated by *inewor;ers 3nion of /ambia Dep<ty 1eneral -ecretary, 2eonard =hiri, 9B12B1# 1+''+e 3ndependent .bserver , !th No) 2+1#, '@,* fire %! wor;ers', http"BBwww.tioCambia.comB1BpostB2+1#B11B;cm&fire&%!& wor;ers.html 1+!,hiwoy< -inyangwe, '+e ,ost $e#spaper, +# Dec. 2+1#. '@,* sho<ld not be treated li;e a small god E -ich<la' http"BBwww.postCambia.comBpost&readDarticle.phpHarticle7dI$1$%+ 1+%7nter)iew with members of ,,4= in @itwe, 9th De 2+1#. 1+8*ishec; (angwe, '+e ,ost ne#spaper. 29th No) 2+1#, '@,* ref<nds wrongly ded<cted =AS0'. http"BBwww.postCambia.comBpost&readDarticle.phpHarticle7dI$1292 1+9'+e 3ndependent .bserver , 2nd Dec 2+1#, '%! @,* fired wor;ers gi)en pean<ts as benefits'. http"BBwww.tioCambia.comB1B postB2+1#B12B%!&;cm&fired&wor;ers&gi)en&pean<ts&as&benefits.html 11+ /ambian 0ye, No)ember 1+, 2+1#, <ovt reps sitting on 6CM board in dar& about laying off over 1A00 #or&ers ? Minister http"BBCambianeye.comBarchi)esB1!2%+ 111 Richard -olly, '0edanta says1 3ndia needs us) and it #asn9t us #+at did it/ 2ondon *ining Networ;. A<g !, 2+1#. http"BBlondonminingnetwor;.orgB2+1#B+8B)edanta&says&india&needs&<s&and&it&wasnt&<s&what&did&itB


(n M ne 4@14 KCM !ere ordered to pa& dama"es to -alaam M!ila, an en"ineer !ho !as dismissed after he attended a p blic for m shortl& after KCM*s 4@@? contamination of the river Kaf e. Mr M!ila said that residents sho ld *ta$e KCM on* beca se the& made K4.? million ever& da& and co ld easil& afford to compensate residents. KCM s bse) entl& fired him for *unprofessional conduct that might directly or indirectly tarnish the company&s image*. M d"e Ma$an" a"reed that Mr M!ila !as e9ercisin" his freedom of e9pression and added that C%he defendant has not shown that the plaintiff told a lie that the company was earning profits of that magnitude daily.C114 ,s previo sl& mentioned Vedanta are also in a le"al battle !ith the Zambian "overnment over a KF:? million ta9 bill, char"ed b& the Reven e , thorit& after an a dit revealed KCM did not have receipts from the final destination of man& of its e9ports. Mean!hile Vedanta has bra""ed in investor presentations that F@J of their ta9 contrib tions in Zambia are via !or$ers* .a& ,s No 8arn ;.,N8<.11A

Copper concentrate bo nd for one of Zambia*s ports of e9it on a tr c$

112 *wila ,hansa&Ntambi, '+e ,ost $e#spaper. 1%th 4<ne 2+12, ',o<rt penalises @,* for <nlawf<l dismissal'. http"BBwww.postCambia.comBpost&readDarticle.phpHarticle7dI2%99$ 11# @,*, a presentation for in)estors on edanta and @,*, 2++%R E the presentation states that =AS0 totalled <p to 3-N#' million o<t of a total of 3-N%'&8+ million. & ?<oted in Aby Diamond et al, .ctober 2++%, Bndermining Development1 Copper in (ambia A,:-A, -,7A> and ,hristian Aid.


ho o.ns )am*ia$
0ther st dies have dealt !ith Zambia*s lac$ of soverei"nt& over its o!n *development* d e to the restrictive conditions placed on it b& #orld -an$ and (MF loans and *aid*. %hese conditions have forced c ts to "overnment spendin" and the privatisation of almost all of Zambia*s parastatal entities over the last three decades, ma$in" Zambia a celebrated model of economic liberalisation, b t sim ltaneo sl& e9acerbatin" levels of povert& and deprivation.11> #e !ill not deal !ith the !ell p blicised impacts of the #orld -an$ and (MF here, b t instead attempt to shed li"ht on several of the lesser $no!n interests behind these a"encies and the m ltinational companies the& have shered in. 5hareholder interests , "lance at the top shareholders of the lar"est minin" companies in Zambia is ver& revealin" ;see fi" re 5<. Common shareholders in Vedanta Reso rces, First T ant m Minerals and Ilencore (nternational are -lac$roc$, Standard /ife, Capital Iro p and the Iovernment of Sin"apore.
Fi" re 5BSome of the top shareholders of Zambia*s main minin" companies as of A@th Dec 4@1A.11F

!edanta 6esources
Volcan investments -lac$roc$ (nc Standard /ife plc -lac$roc$ (nvestment Mana"ement ;3K< /td -lac$roc$ "lobal f nds 1 !orld minin" f nd Chase nominees ;on behalf of I(C private ltd< I(C private ltd

F.?4 F.11 >.>1 A 4.55 4.55

0lencore International 7
F@ :.1F ?.>A 4.A 1.@> @.>? Tatar (nvestment , thorit& -lac$roc$ (nc Iovernment of +or!a& Capital "ro p companies (nc Standard /ife plc

First 8uantum
3nlisted shareholders -lac$roc$ (nc

1@ 5.F>

??.5A Ilencore Ustrata plc

Capital Iro p companies 6.16 (nc ,ffiliated mana"ers "ro p >.:4 (nc .r dential plc Carmi"nac Iestion M. Mor"an chase V co A.A5 A.1 4.A:

Iovernment of Sin"apore @.>A

-lac$roc$ is the !orld*s bi""est asset mana"ement compan&, in char"e of K>.1 trillion of assets ;incl din" m ch of Zambia*s copper via its shares<. (t is bi""er than an& ban$, ins rance compan& or "overnment f nd, and is the ma=orit& shareholder in half of the !orldPs A@ lar"est companies. (t !as set p b& /arr& Fin$ ' a #ashin"ton insider !ho !as named as a potential treas r& secretar& in the 3S.11? -lac$roc$, M. Mor"an and Ioldman Sachs are c rrentl& !or$in" to"ether in an attempt to b & p :@J of available copper on behalf of investors, and hold it in !areho ses. %his !ill create a copper f t res mar$et enablin" spec lation, f t res tradin", and bac$in" of ne! loans and f nds. (n 4@1@ M. Mor"an bo "ht more than half of the available !areho sed copper in a fe! !ee$s, leadin" to a spi$e in copper prices. Man fact rers and copper !holesalers !arned the
11$ 2ishala ,. -it<mbe;o and 4ac; 4ones /<l<, April 2++$, (ambia1 Condemned to debt (orld De)elopment *o)ement. 11' 1lobal Data, .rbis company reports, #+th Dec 2+1#. 11! '+e !conomist, Dec %th 2+1#. '6lac;Roc;" :he monolith and the mar;ets' http"BBwww.economist.comBnewsBbriefingB21'911!$&getting&1'&trillion&assets&single&ris;&management&system&h<ge& achie)ement


Sec rities and 89chan"e Commission ;S8C< that s ch a monopol& on copper !o ld s) eeHe the mar$et and send prices s$&roc$etin" b t nder press re from -lac$roc$ and the ban$s the S8C approved their proposal.116 %he al mini m f t res mar$et set p b& Ioldman Sachs, on !hich the copper ta$eover is modelled, is estimated to have cost cons mers billions of dollars in price hi$es, as mar$et manip lations sent prices soarin".11: -lac$roc$ also o!ns 6.51J of Freeport McMoran Copper and Iold (nc, the !orld*s lar"est p blicl& traded copper prod cer, ma$in" it a ma=or po!er in the copper ind str&. ,nother $e& shareholder in Zambia*s copper ' Capital Iro p, based in /os ,n"eles, is one of the !orld*s lar"est investment mana"ers, controllin" aro nd K1 trillion in assets. (t is !orth notin" that the Iovernment of +or!a& have a lar"e share in Ilencore (nternational, the controllers of Mopani Copper Mines ;one of the lar"est and most contentio s and ta9 avoidin" miners in Zambia<. #hile +0R,D, the +or!e"ian "overnment*s development pro"ramme, f nds pro"rammes in anti'corr ption and a ditin" of minin" companies !hich are billed as helpin" to red ce the loot b& minin" companies, the +or!e"ian "overnment sim ltaneo sl& profits from the same loot, in dividends and pa&o ts. For e9ample +0R,D is c rrentl& f ndin" the Zambian Reven e , thorit& to set p a special Minin" nit to monitor compan& profits and increase reven e, an act !hich, if s ccessf l !o ld si"nificantl& red ce their o!n profits from Ilencore shares.115 %he +or!e"ian Iovernment*s si"nificant infl ence on Zambia via shareholdin" and aid sho ld be closel& monitored. /eo2colonialism and the 9" :epartment for International :evelopment ,s a former -ritish colon& it is not s rprisin" that the 3K "overnment contin es to have si"nificant interests in, and infl ence on, Zambia. %he 3K*s Common!ealth Development Corporation ;previo sl& the Colonial Development Corporation and no! $no!n as CDC "ro p< o!ned 6.FJ of KCM !hen it !as controlled b& ,n"lo ,merican, and had previo sl& set p the Kaf e Consorti m to tr& to b & $e& mines d rin" the privatisation of ZCCM14@. CDC is !holl& o!ned b& the 3K "overnment and overseen b& the Department for (nternational Development ;Df(D<. Df(D also helped ma9imise ,n"lo ,merican*s profit from KCM !hile the& themselves o!ned shares in it, b& sin" K:1 million of 3K ta9pa&ers mone& to f nd the p"radin" of KCM*s +$ana smelter.141 /ater, Df(D helped resc e ,n"lo from its fail re to mana"e KCM via its contentio s initiative 0usiness =artners for 3evelopment ;-.D<. -.D !as set p !ith the #orld -an$ in 155: and abandoned in 4@@4 follo!in" considerable criticism. %he initiative aimed to provide &long1term benefits to the business sector and at the same time meet the social objectives of civil society and the state by helping to create stable social and financial environments&. (t carried o t pro=ects brin"in" b siness, civil societ& and "overnments to"ether, describin" partnerships !ith +I0s and "overnment a"encies as *f ndamental* in order to primaril& *reduce disputes as obstacles to social investment, and doing so in such a way that they do not re1emerge.&.,, -.D has been heavil& criticised for !or$in" in the interests of b siness not comm nities, leadin" it to re'brand itself *- ildin" .artners for Development* ;removin" the
11% '+e $e# %or& 'imes, 4<ly 21st 2+1#, 'NeGt <p ,opper.' 118 Da)id @ocieniews;i, $e# %or& 'imes, 4<ly 2+, 2+1#. ':he 5o<se 0dge" A -h<ffle of Al<min<m, b<t to 6an;s, =<re 1old' http"BBwww.nytimes.comB2+1#B+%B21Bb<sinessBa&sh<ffle&of&al<min<m&b<t&to&ban;s&p<re&gold.htmlHDrI+ 119 .0,D, Synt+esis report1 2et#een +ig+ e4pectations and reality1 An evaluation of budget support in (ambia E200A@2010F 8see p 1#19 www.oecd.orgBco<ntriesBzambiaB$921+''#.pdfT 12+ 4oe @a<nda, t+e ,ost $e#spaper, 1+ 4<ne 1998. /Africa" @af<e ,onsorti<m finally abandons /,,*'s mines bid'. 121 Response to >o7's to Df7D by A,:-A in 2++%. 122 6<siness =artners for De)elopment, Nat<ral Reso<rces ,l<ster =roAect =roposal. Disclos<re 1c. >o7 response from Df7D, April 2%, 2+1+


!ord *b siness*<. 8vidence has no! sho!n that man& of their pro=ects never came to fr ition, !ere short lived, or !ere even abandoned after the ind strial pro=ect be"an, effectivel& bein" sed to red ce dissent and pave the !a& for m ltinational corporations in the third !orld.14A -.D bro "ht to"ether C,R8 (nternational, 3nited Stated ,"enc& for (nternational Development ;3S,(D< and the #orld -an$ !ith vario s "overnmental bodies, civil societ& or"anisations and b sinesses to create a local plan to miti"ate for ,n"lo ,merican*s disastro s p ll o t from KCM in 4@@@ b& *red cin" dependenc&* on the minin" compan&. %his incl ded *retrenchment trainin"* for tho sands of miners. (t is notable that the list of participants does not incl de an& comm nit& "ro p, onl& +I0s !ho ma& not be acco ntable to the needs of the people ;see ne9t chapter<.14>

(n M ne 4@14 Zambian .resident Michael Sata !as $e&note spea$er at the Common!ealth 8conomic For m = bilee dinner in /ondon. %he conference !as part sponsored b& Kon$ola Copper Mines ;as !ell as Zambeef< and contained a session on *(nvestin" in Zambia* !ith a speech from then C80 of KCM, Me&a$ mar Mana$ara= alon"side Zambian parliamentarians.14F ,nother spea$er at the conference !as %om ,lbanese, the then Rio %into C80, !ho is also poised to be the ne9t C80 of Vedanta, !hom he =oined as Chairman of its s bsidiar& (edanta Hesources Ooldings Jtd in September 4@1A.14? %he dinner !as co'facilitated b& the Cit& of /ondon Corporation, the shad& heart of the 3K finance ind str&, and mana"er of the 3K*s m ltiple ta9 havens. %he importance of these lobb&in" net!or$s sho ld not be nderestimated. 7i"h profile events li$e this "ive m ltinationals direct access to polic& ma$ers and can sec re deals !ith 3K "overnment s pport. %he da& before the event Sata held a closed door meetin" !ith ,nil ,"ar!al ;Vedanta ma=orit& o!ner and Chair< in /ondon. %he other $e&note address !as to be "iven b& Mahinda Ra=apa$sa, a thoritarian .resident of Sri /an$a ' another head of state in !hich Vedanta has si"nificant interests via its oil and "as s bsidiar& Cairn (ndia, and
12# Richard (hittel, ,orporate watch. 4an<ary 28, 2+1+. D odgy Development1 5alse ,romises http"BBwww.corporatewatch.orgBHlidI#!!1 12$ 2,D !ngagement #it+ t+e 6CM ,roGect) (ambia !4ploratory Sta&e+older ;or&s+op, .ctober 2+++. 12' 6roch<re for Diamond Jubilee Common#ealt+ !conomic 5orum1 S+aping capitalism for global prosperity and sustainable gro#t+. 4<ne !&%, 2+12. *ansion 5o<se, 2ondon. 12! !conomic 'imes of 3ndia, Dec #1, 2+1#. ' edanta loo;ing for new ,0.R eGtends * - *ehta's term till *arch'. http"BBarticles.economictimes.indiatimes.comB2+1#&12&#1BnewsB$'%#9!%2D1Dlast&wee;&)edanta&tom&albanese&)edanta& reso<rces


!hom ,"ar!al is also li$el& to have met !ith. Ra=apa$sa !as ltimatel& nable to spea$ at the event d e to protests hi"hli"htin" his role in %amil *"enocide*.146 ,t the same time Df(D remains a $e& provider of *aid* to the Zambian "overnment, incl din" s pportin" its electoral process, and f ndin" the Central Statistical 0ffice and anti'corr ption strate"ies. /i$e the earlier e9ample of +or!a&, the 3K "overnment*s stated aims of its *development aid* to Zambia are often in direct conflict !ith the interests of 3K financial polic& and 3K re"istered companies, be""in" ) estions on ho! the 3K "overnment is reall& sin" its infl ence in Zambia. (n fact -ritain has been a central force in opposin" policies !hich !o ld have bro "ht "reater prosperit& to Zambians thro "h minin". (n 15?4 the 3+ Ieneral ,ssembl& passed Resol tion 1:@A on The ?3eclaration on the =ermanent Sovereignty of <atural Hesources ;$no!n as .S+R< !hich established the ri"ht of nations to se nat ral reso rces for their o!n development b& nationalisation or raisin" ta9es. %he polic&, !hich !as ori"inall& initiated b& 3+ Ieneral Secretar& Da" 7ammars$=Wld, !as sta nchl& opposed b& -ritain, alon" !ith other #estern po!ers and So th ,frica, !ho sa! it as a threat to *neo'colonialism*.14:,145 (t is poi"nant that Da" 7ammars$=Wld died in the Zambian Copperbelt, in !hat is no! believed to be an M(?G C(, assassination1A@, ta$in" !ith him his vision of a +e! (nternational 8conomic 0rder ;3+ Ieneral ,ssembl& Resol tion A4@1, 156><1A1 !hich aimed to brin" economic = stice to %hird #orld nations. 0f co rse there are man& other ma=or forces controllin" Zambia*s land, reso rces and policies. M ltinational a"rib sinesses s ch as Car"ill and ,- S "ar ;previo sl& -ritish S "ar< are b &in" p rich s!athes of land, nderminin" food sec rit& for Zambians in their vast and fertile co ntr&1A4. China*s infl ence on Zambia is often bemoaned b& its ne!spapers and politicians and there is m ch p blished criticism. %ho "h Chinese h man ri"hts standards in man& of their mines and other ind stries have indeed been despicable, Zambians sho ld be caref l of *China bashin"*, and $eep their e&e on all of the m ltinationals. (n fact Chinese investments often come !ith less strin"s attached than 8 ropean or ,merican *development* pro=ects.1AA %he %aHara rail!a& b ilt b& Chinese labo r in the 156@*s to red ce Zambia*s dependenc& on !hite r led Zimbab!e is a notable e9ample.1A> Finall&, the ne9t chapter !ill deal !ith the enormo s infl ence of international +I0s and donor a"encies on Zambian politics and societ&, and their role in the neo'liberal pro=ect in Zambia.

12% -hi) *ali; and AleGandra :opping, '-ri 2an;an president cancels speech in 2ondon o)er protest fears', ! th 4<ne 2+12. :he 1<ardian newspaper. http"BBwww.theg<ardian.comBworldB2+12BA<nB+!Bsri&lan;an&president&london&protest 128 6<tler, 2arry 82++89 Mining) nationalism and decoloni-ation in (ambia1 3nterpreting 2usiness "esponses to ,olitical C+ange) 1H*A@1H6* Archi) f<er -oCialgeschichte, $8. pp. #1%&##2. 129 3N Res<l<tion 18+#, 19!2. oter pattern" Ses" 8%, No" 2, Abstentions" 12, Non& oting" 9, :otal )oting membership" 110http"BBwww.<n.orgBenBgaBsearchB)iewDdoc.aspHsymbolIABR0-B18+#8V 779J2angI0JAreaIR0-.23:7.N 1#+ 4<lian 6orger and 1eorgina -mith, 'Dag 5ammars;AWld" e)idence s<ggests 3N chief's plane was shot down'. 1% A<g<st 2+11. :he 1<ardian Newspaper. http"BBwww.theg<ardian.comBworldB2+11Ba<gB1%Bdag&hammars;Aold&<n&secretary&general& crash 1#1 3N resol<tion #2+1 8-& 79. Declaration on the 0stablishment of a New 7nternational 0conomic .rder. Adopted 1 st *ay 19%$. http"BBwww.<n&doc<ments.netBs!r#2+1.htm 1#2 Nebert *<lenga, 2nd No) 2+12, 7nter =ress -er)ice, 5oreign farmers undermine food security in (ambia 1## *ohan, 1iles 82+1#9. '6eyond the encla)e" towards a critical political economy of ,hina and Africa.' Development and C+ange, $$8!9 pp. 12''E12%2. 1#$ :he :aCara railway which lin;ed the /ambian copperbelt to :anCanian ports was the third largest aid proAect to Africa at that time, after the Aswan Dam in 0gypt and the olta 8A;osombo9 Dam in 1hana.:he latter two, which were (estern financed, had considerable negati)e en)ironmental, economic and social impacts and ha)e remained )ery contentio<s, while the :aCara railway has been a relati)e s<ccess. 5oward >rench, ':he NeGt 0mpire', 1#th April 2+1+. Atlantic Maga-ine http"BBwww.theatlantic.comBmagaCineBarchi)eB2+1+B+'Bthe&neGt&empireB#+8+18B


/01s and civil society 2 parasites of the poor$
,ccordin" to the Central Statistical 0ffice of Zambia, +I0s and ch rches emplo&ed A6,F15 people in 4@14,1AF !hile minin" emplo&ed 6>,@@@ ;accordin" to the Zambia Development ,"enc&<.1A? #al$in" aro nd / sa$a, offices of (nternational +I0s, s all& behind "ated compo nds, are a re" lar si"ht. Conversel&, !e !ere s rprised to find that, despite the in= stices s ffered b& local comm nities in the Copperbelt, there !ere virt all& no "rassroots people*s movements on the "ro nd. (n (ndia and /atin ,merica, it has been lar"el& these mass movements ;s ch as at +i&am"iri< that have sec red ma=or victories for people*s ri"hts to land, !or$ers* ri"hts and even fair ta9ation, chan"in" the politics and policies of nations. 0ne recent article notes ho! in (ndia &activists and concerned citi9ens have managed to foster contentious agency and a judicial and political system that allows grassroots1level democratic steering of ecology in greater depth than in other countries&. %his has created &a legacy of mass movement based emancipation from colonialism, and sustained culture of questioning and political activism&..6F Zambia*s +I0s are the recipients of lar"e amo nts of forei"n donor aid and f ndin", b t are the& ma$in" a si"nificant difference for people in minin" areas, and are the& acco ntable to Zambia*s affected comm nities2 (t is o r e9perience in (ndia and else!here, that +I0s often have the effect of s ppressin", or co'optin" "rassroots actions, and hence do not create the si"nificant lon"'lastin" chan"e that ori"inates from mass movements. (nterestin"l&, !here stron" "rassroots movements e9ist in (ndia and /atin ,merica +I0s are often scarce, s ""estin" an inverse relationship bet!een the t!o "ro ps. %his chapter loo$s at three !a&s in !hich Zambia*s +I0 c lt re ma& be more harmf l than beneficial to the co ntr&. In .hose interest$ Man& people !e met in minin" affected comm nities in Zambia complained to s that international +I0s had come to their comm nities, done s rve&s, carried o t !or$shops, or "athered evidence for reports, never to be seen a"ain. %he& mostl& felt that the& !ere bein" sed b& these or"anisations to help them "et more f ndin" or tic$ bo9es. Small +I0s in the Copperbelt !ho had partnered !ith lar"er ones ; s all& in / sa$a< also complained that the / sa$a +I0s !ere o t of to ch !ith people*s iss es, b t received the ma=orit& of f ndin" d e to their connections to international donors. 0ne man !or$in" for a small Chin"ola based or"anisation told s ho! this +I0 c lt re had affected their relationship !ith the local comm nitiesB Ca lot of <:>s came here in *hingola and used us. They come here and collect information and they go just like that. <ow the community is hating usP.1A: +I0s are primaril& acco ntable to their f nders, !ho are s all& forei"n "overnment aid a"encies, or international +I0s ;!ho are in t rn f nded b& "overnment bodies andGor donor a"encies<, rather than the people the& claim to !or$ for or !ith. %here are several problems !ith this. Firstl&, pro=ects approved b& f nders are often *delivered* to comm nities b& centralised +I0 offices, rather than ori"inatin" from their priorities or needs. 0ne comm nit& !or$er described her e9perience in an online article !hen the villa"e she
1#' ,entral -tatistical .ffice, -eptember 2+1#. (ambia labour force survey report 2012 1#! /ambia De)elopment Agency, /ambia *ining -ector =rofile, 4<ne 2+1#. 1#% *ar;<s @roger, 4<ne 19th 2+1#. -hab;a. Mining boom) resistance and t+e future1 3ndias global position. http"BBwww.shab;a.orgB2+1#B+!B19Bmining&boom&resistance&and&the&f<t<re&indias&global&positionB 1#8 7nter)iew with anonymo<s wor;er in ,hingola, !th Dec 2+1#.


!or$ed in !as s ddenl& &filled with 3f#3 Jand *ruisers and people from the district whom she had not met before. Apparently this was the ?deliveryA of 3f#3As gender1based violence programme. The 3f#3 team swooped in, gave everyone free *oca1*ola and a te"t to keep about :0(, and then swooped out again.& ..6C Secondl&, it can lead to a *bo9 tic$in"* approach, !here +I0s appear to be doin" the minim m necessar& to en"a"e the participation of comm nities for f ndin" reports. 0ne activist !e spo$e to alle"ed that ,ction ,id emplo&ees had bo "ht comm nit& members beer in e9chan"e for "ivin" statements a"ainst a minin" compan&.1>@ %hirdl&, in man& cases, as !e e9amined earlier, lar"e donor a"encies ;!hether "overnmental or private< have their o!n commercial or national interests !hich infl ence the a"enda of +I0s and limit their capacit& to represent comm nities. %he head of a lar"e / sa$a based international +I0 told s ho! Df(D had !arned her not to p t too m ch press re on -ritish companies operatin" in Zambia. She had replied that Df(D f nded the 3K branch, and not the Zambian nit.1>1 #e have covered the case of - siness .artners for Development ;-.D< pro=ects involvin" C,R8 international and other local +I0s previo sl&. -ehind the rhetoric of local capacit& b ildin", -.D*s KCM pro=ect !as lar"el& in the interests of ,n"lo ,merican and its shareholders. #hether the participatin" +I0s !ere a!are of this or not, the& are complicit in !hat !as essentiall& a CSR pro=ect aimed at preventin" dissent at mass la&'offs and resc in" the ima"e of an a m ltinational minin" compan&. #ritin" abo t +I0s in Zimbab!e, Diane Meater claims that *very often, there is a belief that the aid agendas serve e"ternal commercial interests more than local human needs*, leadin" her to the concl sion that +I0s are *parasites on the poor&..4, hose politics$ 8arlier in this report !e to ched on the minimal impact of ta9 = stice and ro&alt& based campai"ns in Zambia. %he aims and val es of these campai"ns are often more related to donor interests and !orld'vie!s than an informed ) estionin" of minin" economies or people*s "rassroots perspectives. %he most obvio s e9ample of this is the 89tractive (nd stries %ransparenc& (nitiative ;8(%(<, promoted b& almost all the Zambian +I0s !itho t ) estion. 8(%( !as initiated b& -ritish .rime Minister, %on& -lair, and Development Minister, Clare Short ;no! its head< in 4@@4 as a =oint pro=ect !ith the #orld -an$. (t aims to increase transparenc& b& as$in" si"nator& companies to p blish their ta9 and ro&alt& contrib tions, and si"nator& states to disclose !hat the& receive, revealin" an& discrepancies. (n a comprehensive criti) e of the 8(%( b& Khadi=a Sharife for ,l MaHeera, she as$s ho! the 3K can be so concerned abo t fair ta9ation !hen the& host more than half of the !orld*s ta9 havens, !here man& m ltinationals have shell s bsidiaries !hich allo! them to le"all& avoid pa&in" ta9 in Zambia. %he 8(%(, she points o t, *does not focus on what multinationals ought to have paid, only what they have paid, and it never investigates the means through which corporations were able to circumvent ta"ation&, leavin" it *off the mark by billions*.1>A 7ence, the
1#9 Diana 4eater, 'th A<g<st 2+11. =ambaC<;a News, 7ss<e ''$. (imbab#e1 3nternational $<.s and aid agencies ? ,arasites of t+e ,oorI http"BBwww.pambaC<;a.orgBenBcategoryBcommentB%''88Bprint 1$+ 7nter)iew with anonymo<s acti)ist !B12B1#. 1$1 7nter)iew with anonymo<s N1. head 1%B12B1#. 1$2 Diana 4eater, 'th A<g<st 2+11. =ambaC<;a News, 7ss<e ''$. (imbab#e1 3nternational $<.s and aid agencies ? ,arasites of t+e ,oorI http"BBwww.pambaC<;a.orgBenBcategoryBcommentB%''88Bprint 1$# @hadiAa -harife, 18 4<ne 2+11. Al 4aCeera. ': ransparency/ +ides (ambia/s lost billions http"BBwww.alAaCeera.comBindepthBopinionB2+11B+!B2+11!1882$$'89%1'.html


millions of dollars of f ndin" spent on 8(%( not onl& fail to address the real so rce of ta9 lea$a"e, b t sim ltaneo sl& co'opt the debate and hide the 3K*s central role in catacl&smic levels of ta9 avoidance. ,s Sharife sa&sO !ach year, Africa loses a minimum of D.4Mbn 1 almost four times the sum of foreign aid it receives, to capital flight 1 of which '- per cent is due to corporate mispricing. *learly, the solution toward enabling African countries to recover their lost revenue and become economically independent, is to block revenue leakages, rather than provide further loans and grants characterised by conditionalities that undermine development..44 ;olitical influence 0ne +I0 co ntr& head for Zambia told s ho! !or$in" for *civil societ&* can be a career path to a =ob in politics, via connections made tho "h lobb&in" activities and international donor a"enciesB C*ivil society figures also end up in politics, then they change. Some civil society people are actually working for the government and chamber of commerce, so they are really already government, yet they represent the civil societyC.1>F 0ne pop lar (ndependent M., .atric$ M chele$a, !as previo sl& 89ec tive Director of *ivil Society for =overty Heduction, a lar"e +I0 f nded b& the 8 ropean 3nion, ,ction ,id, Df(D, I(Z ;Ierman aid<, +or!e"ian Ch rch ,id, 3+(C8F, the Finnish 8mbass&, Dia$onia and the #orld -an$.1>? #hat interests and ideolo"ies !ill he brin" to his =ob in politics2 #e noted ho! eas& it !as for +I0s !e met to "et access to politicians and even cabinet ministers. %he perspectives of civil societ& are clearl& hi"hl& val ed b& Zambian polic& ma$ers, !ho the& e9tensivel& cons lt !ith, b t it sho ld not be a tomaticall& ass med that the& spea$ on behalf of the people. +I0s* si"nificant infl ence on polic& ma$in" co ld be seen as ndemocratic, lar"el& representin" donor interests and effectivel& s ppressin" the a thentic voice of comm nities.

A .arnin( a*out ri(ht .in( criti4ues of aid %he / sa$a born !riter and ban$er Dambisa Mo&o, a thor of *3ead aid/ hy Aid #s <ot orking and Oow There is Another ay for Africa&,.4F and other neo'liberal economists s ch as #illiam 8asterl& have made !idel& circ lated criti) es of aid from a ri"ht !in" perspective. %he& note that co ntries flooded !ith aid mone& have in man& cases become poorer and not more developed, and s ""est it sho ld be replaced b& Forei"n Direct (nvestment ;FD(< b& m ltinational companies. %his is in fact alread& happenin", !ith FD( flo!s overta$in" aid in S b Saharan ,frica since the 4@@: recession, boosted considerabl& b& Chinese ind strial interests. Some reports claims China has invested K4 billion in Zambia alread&. 8asterl& claimed in 4@@A thatB
1$$ ibid 1$' 7nter)iew with anonymo<s N1. head, Ndola, ' th Dec 2+1#. 1$! ,-=R Ann<al Report 2+12. A)ailable at http"BBwww.csprCambia.orgBindeG.phpBreso<rcesBann<al&reportsHstartI$ 1$% Dambisa *oyo, 82++99. Dead Aid1 ;+y Aid 3s $ot ;or&ing and :o# '+ere is Anot+er ;ay for Africa . New Sor;" >arrar, -tra<s and 1iro<G


#f Kambia had converted all the aid it received since .C'- to investment and all of that investment to growth, it would have had a per capita :3= of about D,-,--- by the early .CC-s. #nstead, KambiaAs per capita :3= in the early .CC-s was lower than it had been in .C'-, hovering under DB--.1>: %his simplistic ar" ment fails to ta$e acco nt of the man& !a&s, noted in this paper, in !hich Zambia has lost o t from its attempts to attract FD(, not least the *capital fli"ht* of ta9 reven es o!ed b& these companies, on top of !ea$ened re" lations, environmental dama"e and social iss es. Dambisa Mo&o, a Ioldman Sachs ban$er, no! sits on the boards of -arric$ Iold and -arcla&s -an$ 1 both infamo s for their ta9 evasion and loot of the %hird #orld, and has made her theories pop lar !ith the (MF, #orld -an$ and Co ncil on Forei"n Relations amon" other neo'liberal instit tions.1>5 %ho "h a red ction in aid ma& not be a bad thin", its replacement !ith investment b& forei"n m ltinationals !ith e) all& conflictin" interests to the Zambian people is not a sol tion. ,s the ,frica .ro"ress .anel*s 4@1A report on 8) it& in 89tractives statesB (iewed from a different perspective, foreign investment brings many challenges. Few African governments negotiating the terms of concessions and licences have the type of information they need to assess the e"tent of mineral reserves and the potential costs of e"traction and marketing. 0y contrast, oil and mining companies have unrivalled access to commercial market information, geological analysis, technologies for e"ploration and e"traction, financial resources, and e"port channels. hile corporate revenues are not strictly comparable to :3=, the commercial activities of multinational natural resource companies dwarf the economies of the African countries that they operate in. Asymmetry in information is not the only problem. Foreign investors in AfricaAs e"tractive industries operate across jurisdictions and through enormously comple" company structures. =etroleum and mining companies channel their financial and trade activity in Africa through local subsidiaries, affiliates and a web of offshore companies. The combination of comple"ity, different disclosure requirements and limited regulatory capacity is at the heart of many of the problems discussed in this report. #t facilitates aggressive ta" planning, ta" evasion and corruption. #t also leads in many cases to the undervaluation of AfricaAs natural resources 2 a practice that drains some of AfricaAs poorest nations of desperately needed revenues..B%he report also notes that *returns on investment in Africa are high by the standards of other developing regions/ ,- per cent compared with ., per cent to .B per cent in Asia and Jatin America*, a clear indication that e9ploitation is ta$in" place, and that other policies are possible. #hat is tr l& needed in Zambia is political a tonom& from all o tside interests, strate"ic lin$s !ith fello! reso rce rich nations and bet!een their social movements, and sharin" of information to enable a deep re'anal&sis of ho! to avoid the *reso rce c rse* and create a s stainable f t re.

1$8 (illiam 0asterly, 2++#, ',an >oreign Aid 6<y 1rowthH' Journal of !conomic ,erspectivesX ol<me 1%, N<mber #. p.1% 1$9 Dambisa *oyo biography at http"BBwww.dambisamoyo.comBbiographyB 1'+ !Juity in !4tractives1 Ste#arding Africa9s natural resources for all, Africa =rogress Report 2+1#. http"BBwww.africaprogresspanel.orgBp<blicationsBpolicy&papersBafrica&progress&report&2+1#B


Conclusion and recommendations
Zambian politicians and ne!spapers often tal$ abo t forei"n companies as *investors* in their co ntr&, and companies themselves present their presence in Zambia as a benevolent effort to create =obs, even at their o!n loss. %his misconception co ldn*t be f rther from the tr th. 89tractive ind stries come to Zambia to ta$e advanta"e of lo! ta9es and liberal policies !hich allo! them to r thlessl& loot and e9ploit the nat ral reso rces, leavin" behind corr ption and environmental and social dama"e !hich their minimal ta9 contrib tions don*t come close to compensatin". Recent st dies have revealed in ne) ivocal terms that S b Saharan ,frica is a *"lobal net creditor* of billions of dollars each &ear ;mostl& in *illicit fli"ht* of o!ed ta9es, ndeclared e9traction and corr pted deals<, and not a b rden on the rest of the !orld as !e are made to believe.1F1 %his is e9tractivism, not investment, or aid. %he bottom line is that Zambia*s copper based econom& has a finite lifetime, !ith economists s ""estin" that Zambian copper !ill be e9ha sted bet!een 4@4@ and 41@@.1F4 %he pper end ma& be nli$el&, and !e have sho!n ho! companies and even financial anal&sts can manip late these fi" res to create investor confidence and enable spec lation. ,t an& rate there is limited time to reverse the trend of losin", rather than "ainin" from this precio s reso rce, ma$in" it last, or plannin" for an econom& !itho t it. Vedanta claim their Zambian assets at KCM comprise 1A.? million tonnes of copper, !hich, at c rrent copper prices !o ld be !orth K55 billion. (s this reso rce benefittin" the people of Zambia nder Vedanta*s mana"ement2 (f not, ho! can the Zambian people and its a thorities radicall& re'e9amine the !orth and potential of this enormo s national asset2 %his report does not intend to "ive simple ans!ers, b t instead to raise some cr cial ) estions and provide missin" information to enable informed debate. %he follo!in" recommendations are intended to help Zambians ta$e steps to!ards re'assessin" and redefinin" copper'based *development* in their co ntr&. 6ecommendations .rimaril&, !e s ""est Zambia m st brea$ its c rrent isolation and ma$e lin$s !ith other reso rce rich nations, sharin" different approaches to polic& and econom& !hich "en inel& benefit people in the lon" term. (n partic lar, connections sho ld be made bet!een people*s movements !hich have enacted deep and meanin"f l chan"es from the bottom p. -& connectin" o r str ""les and sharin" research and tactics !e can be more informed and better s pported to dissent from ne) al and e9ploitative e9tractive policies. /ac$ of information is a $e& iss e in Zambia. /earnin" from other "lobal e9amples there are a variet& of !a&s in !hich cr cial research co ld be carried o t, affectin" informed polic& chan"e. , people*s s rve& of tr c$s andGor trains leavin" mines and smelters is an e9cellent !a& to estimate the tr e vol me of prod ction and e9ports. %his !as ho! Ioa*s ille"al minin" !as initiall& discovered ;see chapter 4<, leadin" to a = dicial in) ir& into minin" in Ioa, and s bse) entl& other (ndian states, !hich revealed the massive scale of loot and ta9 evasion and facilitated an overha l of minin" polic&.1FA,1F> , similar process co ld be carried o t in Zambia.
1'1 *ar; :ran, '7llicit financial flows ha)e made Africa 'a net creditor to the world'.' :he 1<ardian 29 *ay 2+1# http"BBwww.theg<ardian.comBglobal&de)elopmentB2+1#BmayB29Billicit&financial&flows&africa&creditor 1'2 enta;esh -eshamani, =rofessor of 0conomics, 3ni)ersity of /ambia, in" /ambia, *ining, and Neoliberalism" 6oom and 6<st on the 1lobaliCed ,opperbelt, 0dited by Alastair >raser and *iles 2armer. =algra)e *acmillan, December 2+1+. 1'# "ediff ne#s) 'Detailed report" -tory of 6RA/0N illegal mining in 1oa', December +8, 2+12 http"BBwww.rediff.comBnewsBreportBdetailed&report&story&of&braCen&illegal&mining&in&goaB2+1212+8.htm 1'$ S+a+ Commission submits final report on illegal mining 0conomic :imes of 7ndia. .ct 1', 2+1#.


,cc rate information co ld contrib te to developin" a *critical conscio sness* in Zambia, !hich e9amines and ) estions ne! models of development, as$in" ho! the& !ill serve people*s needs. Critical conscio sness is necessar& to prevent Zambians from bein" !ooed b& the rhetoric of ne! brands of neo'liberalism, !hich represent little or no chan"e from the old e9tractivist re"ime and are bac$ed b& the same interests. 0lack !conomic !mpowerment ;-88< in So th ,frica ;led b& the ,+C*s C&ril Ramaphosa 1 !ho no! sits on the board of /onmin<,1FF 3alit *apitalism in (ndia ;!hich has helped (ndians from the lo!est caste D$no!n as * nto chables*E become mana"ers and o!ners in the ver& same ind stries that e9ploit dalits as cheap labo r<1F?,1F6, the 3nited +ations 8nvironment .ro"ramme ;3+8.<*s :lobal :reen <ew 3eal ;formed follo!in" the 4@@: financial crisis as a fair !a& to contin e reso rce e9traction from ,frica in a *clean and "reen* !a&<, and AfricapitalismQ coined b& +i"erian b sinessman %on& 8lemel 1F: are a fe! e9amples. Finall&, Zambia*s +I0 c lt re sho ld be criticall& re'e9amined. %he notion of *civil societ&* sho ld be e9panded to incl de comm nit& "ro ps, mar"inal trade nions and people*s movements. %he "ro!th of these bodies, !hich are at the heart of tr e democrac&, sho ld be enco ra"ed and val ed. ,t a comm nit& level people sho ld learn from hopef l "lobal e9amples of social movements in (ndia, /atin ,merica and else!here, and be"in a bottom p process of redefinin" *pro"ress* and *development* !hich tr l& serves Zambia*s people.

R...They should make public the tonnage they produce and the selling price they achieve, to enable us to determine that the Kambian companies and not their foreign affiliates are deriving the highest possible benefits from the market boom. They should report their profits and the amount of ta" they paid% their cash reserves and where they are located% their dividends and their borrowings and their costs% their employment levels broken down between local and e"patriate% their investment plans and their projections. So that the <ation may be fully informed about what is happening to its most important resource. And so that these new +ining companies Eand all foreign investors for that matterG can understand that they are a part of this <ation and not a caste apart.P
"enneth "aunda <)am*ia's first ;resident=> ,he ;ost )am*ia ne.spaper> 200http"BBarticles.economictimes.indiatimes.comB2+1#&1+&1'BnewsB$#+!8#88D1Dfinal&report&illegal&mining&commission 1'' 1reg *arino)ich and 1reg Nicolson, '*ari;ana massacre" -A=-, 2onmin, Ramaphosa J time for blood. *iners' blood'. 2$ .ct 2+1#. Daily Maveric&. http"BBwww.dailyma)eric;.co.CaBarticleB2+1#&1+&2$&mari;ana&massacre&saps&lonmin& ramaphosa&time&for&blood&miners&bloodBF.3s'.s$ /2@G 1'! *anning *arable 82++#9. :o# Capitalism Bnderdeveloped 2lac& America) 1'% Ashwini Deshpande, Can Dalit capitalism be a ve+icle for social mobility in 3ndiaI. 2i)emint. -ept 2# 2+1#. http"$7#fdd36w6 i<G*N/7B,an&Dalit&capitalism&be&a&)ehicle&for&social&mobility& in&7nd.html 1'8 0arl N<rse and 4ill Do<gherty, ,NN, 'ony !lumelu1 '+e /Africapitalist/ #+o #ants to po#er Africa. No)ember 12, 2+1#


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