Exploitative multinationals a threat to Zambia

FOR MANY developing nations of the world, an endowment of widely coveted natural resources is as much a blessing as it is a curse.

Although the extraction of these resources provides a means for public revenue, job creation and other socio-economic benefits, the gap between potential and reality is, more often than not, widened by mismanagement, corruption and other preventable factors. At least this much is true in my own Zambia, where for decades precious little has accrued to the people.

Of course, as fate would have it, this experience is not universal.

While generations of Zambians have earned a pittance from the extraction of their nation’s natural resources, outsiders have made off with vast fortunes. By some estimates, multinational mining corporations have defrauded the country of nearly $3 billion (R44.77bn) in copper revenues since the sector was privatised in 2001.

In 2011 these same firms only paid 2.4 percent of the $10bn of their copper export revenues in tax. To put things in perspective, this meant that Zambians employed in the mining industry have historically paid a higher tax than their multinational employers.

Although to us, and countless other citizens of the developing world, these inequitable circumstances are nothing new. Save for the rare exception, these capitalist merchants of the mines employ the same entitled, abusive and unlawful tactics of past imperialist powers. It’s fitting then, that some appear to think themselves emperors in their own right.

Since Vedanta Resources acquired a majority stake in Konkola Copper Mines (KCM) in the early 2000s, Anil Agarwal, Vedanta’s chairperson, has fancied himself Zambia’s most valuable partner. And, to some extent, this is true.

In the 15-odd years since his company’s acquisition, KCM has grown to become the single largest mining company in Zambia, and in turn the country’s largest private sector employer. Moreover, the company’s direct and indirect contributions to Zambia’s economic and infrastructural development have been, and continue to be, tremendous. To be sure, Zambia would not be the copper producer it is today without the likes of KCM.

But since the downturn in global copper prices in 2016, what was arguably once a valuable partnership has grown increasingly toxic. In these last few years KCM has suffered from dreadful mismanagement and under-performance, and found itself entangled in a series of labour and environmental scandals, all the while shirking its fiscal obligations to the government.

What’s more, Vedanta has repeatedly failed to co-operate with tax regulations, including the new mining tax regime. And the company repeatedly failed to uphold commitments and agreements on investment, production, and management of KCM, opting instead for coercion, and blackmail and fraud to bend Zambia, its generous host, to its will.

Although this is to be expected from a company owned by the likes of Agarwal who, lest we forget, is known to boast of his African exploits to his peers, behaviour truly befitting of a king. Despite this, the Vedanta chairperson had the audacity to publicly “warn” Zambia against the steps it is taking to divorce its abusive partner, Vedanta.

Earlier this month ZCCM-IH, the state’s copper investment holdings company and minority stakeholder in KCM, filed a provisional liquidation petition with the Lusaka High Court. In effect the move is designed to oust Agarwal’s incompetent and indifferent Vedanta Resources at the perennial urging of multiple mineworkers unions, residents of the Copperbelt region and yes, even prominent opposition politicians.

Nevertheless, Agarwal claims to know the wants and needs of the thousands of Zambians this measure is meant to address. His claim that Vedanta’s ousting will “only hurt the nation’s hard-earned democracy and investor-friendly status”, is demonstrably false, if not outright threatening. The truth is that the ongoing ouster is one small part of the government’s broader effort to stand up against the greatest existential threats to Zambian democracy and economic stability – exploitative multinational corporations.

This process is not, as Agarwal and other Vedanta executives would suggest, a precursor to nationalisation of the mining sector. Rather, it’s an attempt to revitalise KCM, one of the greatest assets at Zambia’s disposal.

To be clear, KCM’s assets will not be seized, partitioned and sold to the highest bidder. Instead, KCM will remain in operation under the government’s supervision as new investors are identified and engaged in a civil and co-operative manner.

Those who criticise the undertaking, like Agarwal, offer only contrived, self-interested evidence, which pales in comparison to the legitimate grievances held by government and its constituents. Zambians are right to believe they are due more than the scraps brushed to them by Vedanta and other relentless abusers.

Indeed copper is one of our most valuable non-renewable resources, and we mustn’t allow disingenuous foreign interests to delay or obstruct our taking advantage of its potential.

Securing a prosperous future for KCM and the rest of Zambia is contingent on our finding partners that share our ambition, as Vedanta once did. If we fail to do so, and stay the course of previous administrations, we will be protracting our own abuse. Should this happen, we will have only ourselves to blame.

Sunday Chilufya Chanda is media director of the Patriotic Front party of Zambia.