Govt wants Vedanta to offload shares

I post this story, which is long and technical, exactly as is, from The Post. The issue is well discussed on this site, so I won't offer any comment for the moment other than to say this looks like a 'political clarification', after the fact of whether the ZCC was leant on by the Government or decided for itself (having been leant on?).

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THE government is discussing with Vedanta Resources Plc to compel the mining company to offload part of the shares purchased from Zambia Copper Investments (ZCI) to the public, commerce permanent secretary Davidson Chilipamushi has said.

And Chilipamushi has said the Zambia Competition Commission (ZCC) voluntarily withdrew from handling the Vedanta Call-Option Deed as a result of the legal technicalities involved in the transaction.

Chilipamushi said as much as Vedanta has successfully purchased 28.4 per cent shares in Konkola Copper mines (KCM) previously held by Bermudan registered ZCI, the government could still negotiate for a certain percentage of shareholding to be held by Zambians.

“Government is closely monitoring what is happening although the 28.4 per cent additional shares bought by Vedanta did not belong to the state. The interest of government is to ensure the transfer of wealth to the Zambians through shareholding in these major companies,” Chilipamushi said. “We are in discussion with Vedanta Resources so that they can sale some of the shares to the Zambians.”

But University of Zambia (UNZA) Development Studies lecturer Dr Francis Chigunta expressed doubts on whether Vedanta would agree to offload some of its shares to Zambians.

“Considering Zambia’s attempt to promote economic empowerment, Vedanta should offload shares on LuSE so that Zambians can participate in KCM’s shareholding. I however have doubts whether Vedanta will do that because the company fought aggressively to increase its shareholding in KCM,” Dr Chigunta said.

“Vedanta is obviously happy. It has struck a good deal considering that the price of copper is very high and it is projected to remain like that for quite some time, and so the company will make good money. There will be reluctance for Vedanta to offload shares.

It’s a bit of a challenge for government to attempt to persuade Vedanta to offload shares to the public.”

And Chilipamushi said the Ministry of Commerce, Trade and Industry was working at a programme that would compel each mining company to offload part of its shares to the Zambian public before accessing any incentives from the government.

“We have had a bad experience as the country in terms of investments that have been coming in Zambia. For example, those that bought off enterprises like ZCBC just left after making money in Zambia.

Others came with one suitcase and went back with suitcases after making as much profits as they could from our resources,” Chilipamushi said. “What the problem has been is that there is no local participation in most of these investments. That is the reason why government’s immediate plan is to have local participation in the running of foreign companies so that when they decide to leave, Zambians can take over the operations.

We are trying to create an incentive scheme where if you meet certain requirements such as local participation in the company, corporate social responsibility programmes and giving top positions to some Zambians, then such a company will have an opportunity to do business with the government, being the largest player in the market.”

Chilipamushi said the ministry was therefore considering the amendment of the ZDA Act, Empowerment Act and Companies Act so that the proposed initiative could be included in the three pieces of legislation.

Vedanta Resources Plc has concluded the purchase of 28.4 per cent of ZCI shares in KCM through a “Call-Option Deed” entered into by the two companies a couple of years ago. Vedanta held a Call-Option Deed on the 28.4 per cent shares of KCM owned by ZCI whereby they agreed that the latter, upon exit, would offer its 28.4 per cent shares in KCM to the former.

The mining company has since concluded the deal and US $213.85 million (approximately K739.1 billion) has been paid to ZCI for the 28.4 per cent shares, as assessed by Rothschild in August 2005.

Rothschild evaluated 100 per cent shares of KCM at US$750 million – a move that most shareholders and concerned Zambian citizens opposed, saying Vedanta needed to pay more for the shares in question.

South Africa-based investment advisors, Southern Charter Wealth Management (Pty) Ltd said the US $213.85 million paid by Vedanta for the 28.4 per cent ZCI shares in KCM would rob shareholders and Zambian citizens of millions of dollars in value.

Some ZCI shareholders insist that Vedanta bought the 28.4 per cent shares very cheaply as it did with the 51 per cent shares of KCM stock in November 2004 for a mere US $48 million (approximately K166.5 billion).

And Chilipamushi said ZCC had not been directed to discontinue the handling of the Vedanta case, but willingly gave up in view of the legal technicalities involved in the “Call-Option Deed.”

Vedanta and ZCI concluded the deal after government’s invocation of section 3(f) of the Competition and Fair Trading Act under the Zambia Competition Commission to allow the latter become a majority shareholder in one of Zambia’s huge mining operations.

Section 3 (f) of the Competition and Fair Trading Act CAP 417, states that "nothing in this Act shall apply to...activities expressly approved or required under a treaty or agreement to which the Republic of Zambia is a party."

The government’s approval of Vedanta’s bid to takeover ZCI’s 28.4 per cent shares in KCM comes at a time when Parliament is debating the percentage of foreign ownership of mining rights, proposing a shareholding of not more than 49 per cent for an individual entity.

Bizarre relations between MMD Government and Chinese investors tell us why we need Labour Law reform?

A story in the government-owned Times of Zambia today unwittingly reveals the state of relations between labour, investors and the state in Zambia today. In a story ostensibly about the refusal of the Government to withdraw the controversial Industrial and Labour Relations Amendment Bill, the Times reports, without comment, a frankly bizarre statement from President Mwanawasa: "Do not be surprised if we fire ringleaders. Ringleaders at the Chambishi were fired and I have directed that they should not be re-engaged."

WHAT?!
1) What power does the state believe it has to 'fire' the leaders of independent trade unions?
2) What is the President talking about in relation to Chambishi? The firm involved is a private foreign investor, with links to the Chinese state, investing in Zambia, which prides itself on being a 'liberalised' economy. Did the company or the state fire the striking workers? What is the role of the state in negotiations between labour and the company?

This sense, that labour unions can be heavily interfered with by the state through legal harrassment or the manipulation of the internal democracy of the unions is part of Zambia's history as a one party state, but is surely something that should be left behind in the past. The fact that it apparently has not been helps explain the anxiety of union leaders about the Government sponsored amendments to the Bill.

The Post and the Daily Mail also reports the President reaction to Zambia Congress of Trade Unions (ZCTU) president, Leonard Hikaumba's appeal for the Government to withdraw the proposed amendments from Parliament. The Mail reports, Mwanwasa saying “We are not going to withdraw the amendment Bill because we have consulted all stakeholders. Mr (Leonard) Hikaumba, you know the fact that we have consulted you,” President Mwanawasa to the president of the Zambia Congress of Trade Unions (ZCTU) who had earlier spoken against the Bill. “We have consulted you but you want to make it difficult for Government. And you workers don’t ever say we will go on strike if the Bill is not withdrawn. Otherwise, you will be fired,” he added.

The Lusaka Times covers the same story. They note that President Mwanawasa "warned mining companies that they will fail to acquire the needed profits if they deny the workers better working conditions. He said even after the newly introduced mineral taxes that mining companies would still a lot from their investment. He reiterated that Zambians taxes in the mining sectors were not high on average as compared to other mining countries."

In a second story the Lusaka Times report that Government has finalized the proposed national social security policy for the labour force in the country as a measure to provide adequate social protection.

Mines and Minerals development deputy minister Maxwell Mwale said the policy is aimed at creating a comprehensive social security system for workers. He also said that while Government had attracted new investment, that was creating jobs, in addressing the challenges arising from the jobs created government has launched the Zambia decent work country programme as an urgent and necessary step to ensure that the jobs are decent. He said government will also improve its capacity to enforce the labour laws that protect workers rights and occupational health and safety.

Zambia Congress of Trade Union trustee M’tumbi Goma said the economic growth that government is managing now should be acknowledged by respecting worker’s rights and creation of decent work. Mr Goma said the increased demand for labour market flexibility by employers has weakened collective bargaining structures and it has lead to poor working conditions and vulnerability of workers. He challenged workers to fight and strive to ensure that better legislation and other labour market laws that will bring dignity and respect for workers are adhered to by employers.

Workers’ Rights under discussion

Worker’s Day seems a good time to think about the hopes for a solution to the long-running problems of workers’ rights in Zambia. As previously discussed, legislation passing through Parliament has been heavily criticized by trade unions for failing to tackle the biggest problems with the current system.

The Daily Mail reports that both main opposition parties in Zambia, the UPND and the Patriotic Front have said they will vote against the Government’s proposals until the state brings the unions on board. UPND vice-president Richard Kapita expressed concerns about casualisation, said Government should take a more proactive role in labour issues to ensure that workers are not abused and called on the Ministry of Labour and Social Security (MLSS) to widely consult stakeholders before amending the Industrial and Labour Relations Act. “As we celebrate this year’s Labour Day, it is sad that unemployment levels have continued to surge more and more among our people, especially the youths who are now roaming the streets without employment while those in employment no longer have satisfaction of their labour,” Mr Kapita said.

The Patriotic Front (PF) has also said it would not support new amendments to the Industrial and Labour Relations Act until a consensus was reached. PF general secretary Edward Mumbi said his party would only support legislation and political changes aimed at improving the welfare of the Zambian workers. “The Party joins Zambian workers and their representatives in wishing for prosperity and a fairer share of the great wealth currently being extracted from the country’s natural resources.”

The editorial in the Government-run Times of Zambia on the other hand, reports comments from Labour and Social Security Minister, Ronald Mukuma. "Zambia needs job creation, and the Government is determined to ensure that these jobs are essentially decent; providing rights at work, social protection and social dialogue," said Mr Mukuma in his foreword in the "Decent Work Country Programme" DWCP document for Zambia developed by the Government in conjunction with the United Nations International Labour Organisation, ILO, Lusaka Office.

The editorial notes that the designation of the MLSS as an economic ministry as opposed to a social ministry, has effectively brought labour and employment issues to centre stage, and the ministry has garnered an increased share of the Budget to enable it address the various challenges in the employment and labour sector. During 2006 to 2007, the paaper claims there has been considerable evidence of an enhanced capacity within the MLSS including doubling of its team of labour inspectors and procurement of a new fleet of vehicles to undertake inspections. “We have since carried out a total of 3,500 inspections countrywide during the past one year following the acquisition of vehicles and recruitment of 20 labour and factory inspectors. This has brought to 91 the total number of inspectors we have deployed countrywide,” said ministry of Labour ad Social Security Permanent Secretary, Ngosa Chisupa. Mr Chisupa said the Government has ratified 39 of International Labour Conventions which are currently in force. He said that the Government will progressively domesticate the Conventions in the revised labour laws when they are passed by Parliament. "We have finished the proposed amendments to the labour laws and these will be tabled in Parliament when it resumes sitting in January, 2008. We are confident that when passed, the laws will provide a conducive climate for labour to play its maximum and rightful role in the economic development of Zambia," said Mr Chisupa.

Is the mining sector healthy?

A number of stories over the past few days raise the question, is the mining sector healthy? One question of interest, particularly for those of us who advocated for greater taxation and regulation of the sector is whether the new tax regime had an impact on a sector previously described as 'booming'? Even if we worried about the distribution of benefits from that boom, the continued general health of the sector is clearly a precondition for significant benefits to flow to workers, communities and the Zambian state. Obviously, mining companies don’t like paying taxes that would otherwise increase their profits. Their standard propaganda line is that the costs incurred do not come out of profits and dividends to shareholders, but out of investments, and thus damage job creation and the wider economy. So, should we accept that argument?

The Daily Mail reports claims from the Chamber of Mines, the industry body representing multinational mine corporations in Zambia, that some of their members have put on hold projects involving considerable capital outlay pending assessment of their operations to take into account the new mine taxes. A trustworthy correspondent also assures me the mines investors have told him they have hired attorneys and were waiting until after the taxes had been imposed to strike a legal blow, judging that only once it had happened the contracts had in fact been breached. I remain sceptical any of them will calculate that a hostil relationship with the state is a price worth paying for an uncertain legal process. Still, most of these projects seem to be ‘pending review’, which may simply mean the firms are still trying to milk maximum pressure on the government hoping for a late concession. At the same time, the Mail quotes Mufulira Chamber of Mines president, Shadreck Musozya, saying that that although capital projects were under consideration, nothing much had changed. It is unsurprising that firms continually calculate likely outlays and profitability ahead of making significant investments. Of course the questions they ask themselves are not answered simply in relation to tax.

So how else could we assess the health of the sector? The Lusaka Times notes that Zambia earned $886 million in copper exports in the first quarter of 2008. This represents an increase of 3.2 per cent compared to $858 million earned in the fourth quarter of 2007. Cobalt export earnings increased to $108 million from $79 million in the same period. This represents an increase of 36.9 percent. In each case, these increases were achieved with lower total output from the mines as a result of increasing copper prices. However, Cho visits these statistics in his blog, questioning the price models used by the Bank of Zambia. However, these statistics are for the period before the new taxes kicked in so they don’t tell us much either.

We can see, from the Daily Mail that Equinox Minerals Limited, one of the companies that has suggested the government’s unilateral imposition of taxes did untold harm to their faith in the policy environment, and would weaken future investment, has projected to spend over US$232.2 million on the Lumwana uranium project following a postive outcome of its uranium feasibility study. The study told them they would make a high return on investment. The ‘policy environment’ suddenly looked less scary, I guess. The company will this month submit an Environmental Impact Assessment (EIA) report to the Environmental Council of Zambia (ECZ) on the uranium project. There's clearly plenty of good news around with stories of new Chinese and Indian investements flowing frequently.

On the other hand, The Post reports that dividends declared by mining companies to ZCCM-IH in the second half of last year reduced to K18.180 billion compared to K26. 53 billion in the corresponding period the previous year. Again this is before the taxes kicked in.

ZCCM-IH company secretary William Musama attributed the rise in turnover mainly due to the increase in metal price participation income of K70. 757 billion, of which K12. 089 billion was for the period of six months to December 31, 2006. “However, this higher income was dampened by the reduction in dividends to the group for the period of December 31 2007 compared to K26. 53 billion in the corresponding period of December 2006,” Musama announced. “The reduction arose from one of the associate companies declaring a lower interim dividend in the period to December 31, 2007 compared to the period to December 31, 2006.”

Musama also announced that ZCCM-IH reduced its operating expenditure to K54. 73 billion for the half year ended December 3, 2007 compared to K70. 562 billion for the corresponding previous year. He attributed the reduction to what he termed ZCCM-IH’s operational efficiency. “As a result of the above, an operating profit of K54. 173 billion for half year ended December 31, 2007 compared to K70. 562 billion for the corresponding period to December 31, 2006,” stated Musama.

ZCI shareholders suggest KCM Vedanta deal 'illegal'

A lengthy report in The Post includes criticism from shareholders in ZCI about the sale of the company’s 28.4 per cent stake in KCM to Vedanta Resources under a 'call option' negotiated by KCM when it made its initial investment.

The paper quotes South Africa-based investment advisors Southern Charter Wealth Management (Pty) Ltd, who have advised a large client base to invest in ZCI in the past, and whose customers are disappointed at what they perceive as the low price of the sale. The firm said the US $213 million paid by Vedanta for the stake amounted to, “robbing Zambia of control of its most prized copper deposits for at least thirty years to come.”

The deal was concluded after the government removed the competition commission – from handling the sale. The government claimed it had the power to end the Competition Commission's enquiry, invoking section 3(f) of the Competition and Fair Trading Act under the Zambia Competition Commission to allow the latter become a majority shareholder in one of Zambia’s huge mining operations. Section 3 (f) of the Competition and Fair Trading Act CAP 417, states that "nothing in this Act shall apply to...activities expressly approved or required under a treaty or agreement to which the Republic of Zambia is a party."

Southern Charter Wealth Management director Bruce Barclay claimed the Government did not follow appropriate procedure and that the deal was illegal as the parties involved did not gain the approval of the Zambia Competition Commission prior to entering negotiations. “It is with great distress and disappointment that we learn that the government of Zambia deemed it necessary to invoke "section 3(f) of the Zambian Competition and Fair Trading Act" and remove the jurisdiction of the Zambian Competition Commission over the transaction between Vedanta Plc and ZCI Ltd,” Barclay said. “Control of KCM has fallen into the hands of foreign investors and thereby ensures the current loss of millions if not billions of US dollars in value to Zambia, her citizens and ZCI Ltd shareholders. Despite our opinion, clearly it was in the government’s opinion that the greater good of Zambia would be served by ensuring the deal went through and therefore invoked section 3 (f) of the Zambian Competition and Fair Trading Act.”

“We are therefore mandated to act on behalf of an accumulated shareholding in that company of approximately 800,000 shares,” Barclay said. “We, as investment advisors to a number of ZCI Ltd shareholders, including ZCI's single biggest individual shareholder, will be convening a meeting to hear from them what next course of action, if any, they wish us to take in respect of this transaction. The deal may be concluded but the board’s responsibility to its shareholders and for this transaction in our opinion is not legal and it will be our advice based on our opinion that the board of ZCI ltd has failed its shareholders.”

Barclay questioned the invocation of section 3 (f) of the act, long after commencement of the transaction. “How come this section 3(f) of this act only comes to light at the dying hours of the transaction that has taken in the region of two years to conclude and only when the ZCC withdraws its approval of the transaction placing the transaction in jeopardy?” Barclay asked. “How is it that Vedanta, KCM, ZCI and GRZ were not aware of this act from the outset? If they were, then why even approach the ZCC for approval? In fact what was the ZCC getting involved for in the first instance causing further delays to citizens and shareholders and frustrating an already extremely frustrated transaction? Is it not worth questioning why KCM (essentially Vedanta) is the only mine to come out in support of the new controversial mining tax just prior to the invocation of this Act?”

And the shareholders, in their letters to the ZCI board and made available to the Business Post, have continued to oppose the purchase of ZCI’s 28.4 per cent shares in KCM by Vedanta Resources Plc even after the conclusion of the deal. They said the transaction regarding the sale of ZCI shares in KCM was absolutely against the law, considering that the ZCC was not consulted in the initial stages of the “call-option deed” between Vedanta and ZCI in 2004... In our opinion, the lawyers slipped up in November 2004 when this scheme was contemplated, by not getting the approval of the ZCC prior to signing the option contract because theoretically it is unable to be completed without ZCC’s approval,” stated the shareholders. “It is in our opinion that the board of ZCI were well informed of the status of the transaction at all times, including knowing that the transaction was illegal in terms of the Zambian Competition Commission rules and regulations who did have jurisdiction over this deal yet the board chose to remain silent and inactive in this regard and thereby, in our opinion, are responsible for perverting the ends of justice. It is time for us as shareholders either individually or collectively to call upon the directors to answer for their lack of action under the circumstances.”

But ZCI chairman Tom Kamwendo said the company had already given its shareholders enough data on the sale of its shares in KCM to Vedanta Resources Plc. Kamwendo further said ZCI shareholders would gain from the just concluded transaction on the sale of its KCM shares to Vedanta resources, at a purchase price of US $213 million. “We have written to some individual shareholders and some information has been posted on the website,” Kamwendo said. “I am very hopeful that the ZCI shareholders will gain something out of the transaction.”

And Lusaka Lawyer Eric Silwamba, who represented Vedanta Resources Plc in the deal, said the mining company had finally concluded the takeover, making it the largest shareholder of KCM with a total of 79.4 per cent shares while ZCCM-IH and government control the remaining stake

Workers' leaders dismissed, repatriated after strike

I somehow managed to miss Wednesday’s editorial in the Times of Zambia. The comment piece in the state-sponsored paper draws almost exactly the opposite lessons from the strike at Onshore Construction Company in Chingola than those I wrote about in a long blog yesterday.

The editorial does confirm that not all those workers returning to India are doing so voluntarily. In a classic union-busting tactic, so easy for employers under Zambia's labour legislation, 24 Onshore workers have been forcibly sent back to their country of origin, after being charged with gross misconduct and inciting fellow employees to strike.

The Times seems principally concerned not for the rights of Indian workers or the affect of hiring unprotected foreign labourers on the relative terms and conditions of Zambians, but that by protesting the workers caused ‘disruption’!

“While we sympathise with the workers and indeed management at Onshore, we feel dialogue should have been given a chance by both sides. The workers should have sought audience with their employers to discuss their grievances before abandoning their work stations.” The paper’s own reports over previous days makes it perfectly clear this had already happened. Furthermore, the failure of dialogue reflects the problems not of the attitudes of workers, but of Zambian labour rights legislation. Without the ability to form unions and be officially represented, and with the likelihood that any worker principled and brave enough to step forward as a representative will be sacked and repatriated for making trouble, industrial relations will inevitably prove fractious and disorderly.

The editorial does contain one semi-decent proposal. “In future, companies engaging foreign workers must be forced to display their signed contracts between the employer and the employee. This is to protect the hired labourers so that they are not duped and the employer against arm-twisting tactics to press for what was not in the original contract.”

Unions withdraw support for labour law amendments

Since the original publication of the 'For Whom the Windfalls?' report, several areas of the policy recommendations to the Zambian Government have seen significant improvements.

- We have seen real developments in the tax regime, as reported in great detail here.
- The Development Agreements have effectively been cancelled, ending a culture of secrecy and impunity for mining firms.
- The Environmental Council of Zambia has had moments of activism, though I wouldn't like to say everything is sorted.
- Similarly, even the Mines Safety Department has been allocated increased funding and shown some energy.
- The Government has made some noises about pressing the industry harder to make ties to further processing in-country, and to improve local procurement systems - one major concern here is the ongoing wrangles over company commitments to support the new North-Western rail link, rather than letting the state take all the risks.
- Even the Labour Mininstry and senior Ministers have occassionally made noises about the dangers of casualisation on the Copperbelt and have vocally pushed employers for more formal employment and more employment of locals - of course much of this is meaningless without new legislation. We do, however, hear gossip about proposals to regulate the pay of sub-contracted workers to ensure they are paid 80% of what permanent employees in the same work at the same plant receive. This falls some way short of the concept of equal pay for equal work and leaves a cost-cutting incentive in place for continued casualisation, but it would mark an improvement on the current situation.

However, it has been a long-running theme of this blog that the ongoing social, political and labour crisis on the Copperbelt results largely from the inadequacies of Zambian labour legislation. If enabled to organise effectively free trade unions would be well-positioned to bargain on behalf of workers, to draw attention to safety problems in the mines. In other words, rather than relying on weak state institutions, the interests of Zambians would be defended by the workers themselves.

Well, excitement greeted the initial annoucement that the Labour Law would undergo comprehensive reform in theis Parliament. However, as The Post report today, much of this enthusiasm is turning to concern as detail of the draft legisalation comes out. The Zambian Congress of Trade Unions were recently reported in the Daily Mail saying that the Government had snuck a revised version of its proposals to Parliament without the approval of the tripartite committee of business, governemt and unions originally brought together to discuss the changes. ZCTU first vice president, Sam Phiri said, “Our point is very clear. Government should withdraw the Bill from Parliament. Otherwise, this will result in confrontations. We are going to adopt a non cooperative attitude.”

The Post now report that the Federation of Free Trade Unions of Zambia (FFTUZ) president Joyce Nonde has warned of unprecedented industrial unrest if the government does not withdraw the Industrial and Labour Relations Amendment bill, currently before parliament.

Nonde described the bill as primitive, suppressive and vindictive and was only targeted at individuals in the labour movement. She said the bill violated the Republican Constitution, the International Labour Organisation conventions and infringed on human rights.

“The bill that we agreed on at the tripartite labour council is not the one that has been presented to Parliament,” Nonde claimed. “Collective bargaining has been destroyed in this amendment bill because workers will no longer be represented by union officials of their choice but by those imposed by government and employers... This is taking away our freedom of association, which we fought for in the 1997 amendments. Workers must be represented by leaders of their choice without interference from employers and government.”

She noted that the Labour Commissioner had been given powers to register or not to register a trade union based on threats to national security and yet national security had not been defined. “This proposed law will lead to non-registration of trade unions and therefore leave many workers at the mercy of employers. This is testimony that today the Labour Commissioner has continued denying workers the right to form their trade unions... The few trade unions that have been registered recently have been through court orders.... Under the bill, the minister has taken away the powers from the workers and employers through the tripartite consultative labour council to himself alone to decide which category of workers are essential and not eligible to take strike action... So if for example today at Bank of Zambia the workers are not happy with the conditions of service and they want to revolt, the minister can sign a statutory instrument in the night and declare them essential workers before they take any action. It would be long before all workers in Zambia are declared essential workers.”

She further said the amended labour law, if passed, would render trade union secretariats non-existent as they would now be run by part-time staff. “All general secretaries of existing trade unions have been disqualified under the amendment bill from recontesting their elective posts. The law proposes that full-time positions in trade unions should be on part-time and that once a trade union official is seconded, he/she should cease to stand for re-election.”

She said that her union would consult with the Zambia Congress of Trade Unions whether or not to attend next week’s tripartite labour council to which they have been invited. “What will be the purpose of the tripartite labour council if the law has already been sent to parliament? We won’t be used as rubber stamps to show that we are in agreement on the amended law.”

Some of the contentious issues that FFTUZ disputes included the amendments of: section 69 of the Industrial and Labour Relations Act where the most representative trade unions in the sector, trade or industry would lead negotiations with employers after forming an alliance with minority labour bodies; section 21 where the labour commissioner had been given powers to appoint an independent auditor to look at the books of account of a trade union which is suspected of abusing funds or using them contrary to its objectives and that depending on the auditor’s recommendation, officers of the union could be suspended for a period not beyond 90 days pending conclusion of the audit report.

The Daily Mail covers the same story from a different angle, saying that the government has assured the labour movement that it is ready to dialogue over the Industrial and Labour Relations Amendment Bill because the proposed changes are still subject to further scrutiny by various stakeholders.

Acting Minister of Labour and Social Security, Dr Kalombo Mwansa, said in a statement in Lusaka yesterday that Government would respect guidelines from the Tripartite Consultative Labour Council and the International Labour Organisation on amendments to labour laws.“Government wishes to assure the Tripartite Social Partners that the Bill is not cast in stone and will be subject to further scrutiny by the parliamentary committee on economic affairs and labour,” Dr Mwansa said. Dr Mwansa, who is Minister of Mines and Minerals Development, said the Bill was a product of broad consultations between the Ministry of Labour and Social Security, trade unions and employers who met at a Tripartite Consultative Labour Council in November 2006 and in March and April, 2007. After the meetings, a report from the Tripartite Technical Committee was presented to legal experts to draft the Bill that was considered by Government and later published for introduction in Parliament. “I therefore wish to urge trade unions not to conduct social dialogue in the press but use the various avenues available by meeting the Ministry of Labour and Social Security,” he said.

This way, all concerned parties would reach consensus on matters that would contribute to the efficiency of the labour market and productivity. The Zambia Congress of Trade Unions (ZCTU) and the Federation of Free Trade Unions of Zambia (FFTUZ) differed with the Zambia Federation of Employers (ZFE) over the proposed amendments to the Industrial and Labour Relations Act. ZCTU acting secretary general, Ian Mkandawire, said the labour movement had resolved at its general council to ask Government to withdraw the Bill from Parliament because there was no consensus among stakeholders. FFTUZ president, Joyce Nonde, said during the week that Zambia would experience a historic countrywide unrest if the Bill was not withdrawn from Parliament. But ZFE said it was happy with the “progressive” amendments to some sections of the Industrial and Labour Relations Act to create a level playing field.

Indian Labour Dispute at KCM

The Times of Zambia (yesterday and today ) reported a fascinating story of an industrial dispute between ‘Onshore Construction Ltd’ a firm contracted to Konkola Copper Mines (KCM) to construct the multi-billion Kwacha Nchanga smelter in Chingola and manual labourers shipped in from India to work on the plant.

On Saturday, 360 Onshore Construction employees, all from India, downed tools and staged a protest demanding better conditions of service.

The Times reported that Mr Subhas Chandra Mallick the group spokesperson said the employees were working 12 hours per day and were paid only K1million per month. He said the employees complained because 60 of the workers were housed in a three-bedroomed guesthouse and were made to share one toilet and bathroom.

"The employees are demanding leave days bonus, the actual bonus, their salaries to be paid in Indian currency, and are claiming that they are not given good food. They are not entitled to tea break or lunch break but worked for 12 hours… We are not given medical claims, we have no identity cards to access the plant and we can't go out of Chingola because we do not have immigration cards which management has withheld from us. We signed some agreement forms but they have not been given to us,” Mr Mallick said. He said the employees were working for 26 days in a month but only 20 days were paid to them, the situation he described as theft of their money.

The strike started on Saturday when the workers demanded for dialogue with management but were denied an audience. They chose to gather at Chingola Mine Club to coerce management to meet them on the way forward. Chingola police faced resistance when they broke up the meeting claiming it was an illegal gathering without police permission.

The company originally said they would not succumb to employees' demands of better conditions of service because it was spending more than it was recovering on each employee. Onshore administrative manager Iyer Ramachandran said management was giving payments according to the agreement which the company made with the employees prior to their coming to Zambia. Mr Iyer said the firm was spending over K10 million on each employee to enable him travel to Zambia, acquire a work permit and other documentation. He said the money spent on each employee was not recovered. He said he had earlier told the employees that whoever was aggrieved was free to go back to India.

Now 250 workers have apparently chosen to do just that. One of the employees is quoted in The Times today as saying 70 per cent of the employees had chosen to go back to India instead of being enslaved by Onshore (I can’t help wondering about this bit of the story. Saying they chose to go home could be a convenient way for the company to sack ‘troublesome’ workers rather than deal with their legitimate complaints). Ramachandran told The Times that the company would now employ local people to replace them.

Interestingly, the worker’s representative Mr Mallick called for intervention from the Zambian Government so that the Indian government could be aware of situation.

What hopes might Indian workers hold out of such an outcome? Well, they seem so far to be enjoying greater protection from local authorities than from the national government. At a local level, The Post report that the company may face legal action following public health concerns involving its expatriate workers. Chingola council town clerk Charles Sambondu said yesterday “I summoned the management of Onshore and told them that on health grounds, this situation was unacceptable,” Sambondu said. “I warned them of prosecution under the public health Act if they did not adhere to our directives.” He said his officers inspected about five houses in Chingola, where they established that each of them was housing about 60 people. “People in the neighbourhood have been complaining bitterly. These people are using those hospital pans to answer the call of nature and they dispose them in the drainages,” Sambondu said.

On the national level on the other hand, The Post reports that two Copperbelt Patriotic Front MPs have raised concerns in Parliament about the motive behind the government’s decision to grant temporary work permits to Indian nationals to work on the smelter. Immigration Department spokesperson Mulako Mbangweta said the over 300 Indians were issued with temporary work permits to allow them work on some specialised aspects of the KCM project for a period of three months. Labour and Social Security Deputy Minister, Austin Liato said in an interview yesterday there was nothing wrong with KCM engaging Onshore, "We are more concerned with the permanent jobs that the mining companies would create for the local people than how these companies bring in others on contract basis. As a ministry we would want more jobs created for the Zambians by the mining companies and these should be on permanent basis. That is the long-term investment that we are interested in," Mr Liato said.

Given the very high percentage of jobs being taken on the Copperbelt by sub-contracting firms, this seems a surprisingly lax approach to local job creation. Of course it is laudable to aim for the creation of a maximum number of permanent contracts. However, while the legal framework continues to provide very weak incentives for companies to do so, surely protecting even casual jobs for local labour has merit.

The story is particularly interesting to me because there are significant tensions on the Copperbelt, and indeed in Zambia more generally, about the importation of foreign labourers to work in Zambian industries, particularly those, like KCM, with Indian or Chinese owners. The assumption, commonly made by Zambians, is that these foreign workers enjoy much better terms of employment than local workers and that the interests of the two groups are in conflict.

The assumption of higher wages has two aspects. Firstly, the mines, historically run by white settler populations typically paid white, and ‘expatriate’ workers higher wages and special allowances. It is still true that foreign owned mine companies bring in their own management staff and that they are housed and paid better than locals, causing significant resentments. However, in the case of labourers on roads, in factories and in the construction industries, there is little chance that the reason companies bring in such labour is that they cannot get skilled Zambians. Rather, foreign labourers, as in much of the world, are brought to Zambia precisely because they can be exploited more thoroughly than locals – this seems to be the case in this instance. The workers are not protected by their own national laws, and they seem to receive minimal protection from the Zambian state.

Personally, I would love to see (maybe I am a dreamer!) a statement from the mineworker’s unions and local PF MPs, not condemning the failure of the Government to keep out migrant labour, but condemning the company, and acting in solidarity with the Indian workers. Why? Because the interests of Zambian and foreign workers are the same: they both need effective Government regulation of multinational firms such that companies cannot play off two groups of labourers, one against the other, driving wages and conditions down by forcing them to compete. At the root of the issue in the Zambian case, it seems to me, is inadequate labour legislation that allows for ever increasing numbers of temporary and contracted labourers, of whatever nationality, to be employed on such radically different terms from the permanent, unionised workforce.

More Metorex complaints about taxes

Mining Weekly have more detail on the story reported yesterday of Metorex's ongoing theats to sue over the new tax regime.

They quote Metorex CEO Charles Needham: "We have looked at the effect of what they are proposing, and it more than doubles our current tax rate, which is unacceptable to us, we are protected by international law." At the same time, Needham claims they aim to negotiate a change rather than sue.

The story claims that Metorex's Development Agreement signed in 1997 under the Zambian Mining Industry Privatisation process, is governed by English law and was established in conjunction with the World Bank. I am not sure either of those phrases are meaningful. Zambia is a sovereign country with its own legal system (historically based on British law, but since independence, a different thing). The World Bank had no official role in the process. Can anyone explain the claims? Presumably they come from an interview between the journalist and Needham.

Needham continues. "The government understands that there is a development agreement that protects the companies, and they could potentially run into legal problems. And, if this were implemented, there are a number of new prospects that are not going to come on line, and I think is probably the closest would be Equinox. They are spending enormous capital to get that prospect up and running, and if that tax regime comes in, it is our understanding that they fall foul of their arrangements before they even start," Needham indicated.

"We are clearly of the view that the government is open to negotiation on this one and we are going back to government as a united force, (all the mining companies in Zambia) and we are saying we understand where you are coming from, and the prices are higher than we envisaged in our feasibilities, so what we would like to propose a variable tax rate at variable copper prices, which we think is equitable both to the fiscus and to the company," Needham said.

Again, these claims are factually incorrect. At a minimum, NFC-A and KCM have already 'accepted' the changes, whatever that means. And they are both now members of the Chamber of Mines (NFC-A having held out for a long time. There is no unified voice of the industry, whatever Needham wishes.

Needham added that the increase in funds going through to the government should go into the community closest to the company's mines.

Firms raises spectre of legal action on tax.... again!

A business media hungry for scandal where I suspect there is none are reporting that Metorex, owners of the privatised Chibuluma South mine, are again threatening legal action over new mine taxes.

The article that appeared in South Africa's Business Day quotes Metorex operations director Edward Legg who told analysts on a visit to the mine last week that the company did not want to take legal action, but he said it reserved its right to do so, although it was continuing talks on the issue with the government through the Zambian Chamber of Mines.

What I suspect this means is that the companies have shareholders to appease and want to fight on in the propaganda war over mine taxes. The degree of desperation in the story is evident in the need to quote First Quantum's opposition to the taxes in front of a Parliamentary committee, in February, before the legislation passed, as if it shows the companies are forming a broad front.

This issue is over, it's a non-issue. Still, the Government perhaps don't help themselves by appearing to continue to need the companies' support to impose the law of the land. The Post quote Bank of Zambia (BoZ) governor Dr Caleb Fundanga as saying, "we are happy that KCM has accepted the regime, we urge all the other mines to accept the tax regime for us to develop our schools, hospitals and roads." I am unclear what all this stuff about 'accepting' the tax regime is. I don't have to 'accept' the VAT rate I pay on a chocolate bar but the man behind the till still collects it on behalf of the state, because it is the law.

PS - The unlikely suggestion, in the same Post story, from Bank of Zambia (BoZ) governor Dr Caleb Fundanga that $4bn was raised from mine taxes in 2007 is ridiculed by, Mr K and Cho in their excellent blogs.

MUZ call for tougher safety inspections, hammer Mopani's record

The Post report on a number of issues raised at the Mineworkers Union of Zambia (MUZ) supreme council meeting. MUZ President Rayford Mbulu urged the Mine Safety Inspectorate to intensify safety audits in the mines in order to curb mine accidents and further loses of lives.

He strongly condemned investors who were obsessed with maximising profits at the expense of safety. “Statistics indicate that Mopani is leading in the league of mine accidents which are due to sheer negligence by the company. We repeat our resolve of non-tolerance to unsafe conditions,” he said.

Mbulu also condemned employers who flout the provisions of the collective agreement by refusing to pay employees their dues as in the case of JVC and Mpelembe Drilling Company.

“We also condemn the decision by the First Quantum Minerals group of companies to unilaterally declare a dispute with us without following the provisions of the industrial and labour relations act. We are not averse to either party declaring a dispute but our fervent view is that this should be done within the confinements of the law,” he said

Mbulu also expressed worry over the attitude of some sub-contractors who he said were in the habit of paying their workers meagre salaries under the pretext that the rates at which they were getting the money was very low.

“In this regard we support the initiatives being taken by the labour ministry to at least peg salaries for contractors at 80 per cent of the permanent employees’ salaries,” he said. He added that paying contract employees meagre salaries was tantamount to casualisation.

And Mbulu said mining communities should be top on the list of beneficiaries of increased mine taxes. “We further wish to mention that the mining communities should be top on the list of beneficiaries through improved living standards and improvement to the infrastructure,” he said.

He commended Konkola Copper Mine (KCM) for complying with the government’s law to pay mineral taxes.

New rules on sub-contractors' wages?

In a long report on the ongoing Supreme Council meeting of the Minewrokers Union of Zambia, The Times today reports on what could be an extremely important reversal of the culture of casualisation affecting mine workers.

It quotes MUZ President Rayford Mbulu saying, "we support the initiatives being taken by the Labour ministry to at least peg salaries for contracted workers at 80 per cent of the permanent employees' salaries." This is the first I have heard of this proposal, but it would mark a huge improvement on current policy, which is, there is no policy. The comparative wages paid by the mine houses and the sub-contractors they employ are discussed at length in the 'For Whom the Windfalls?' report, which finds that two of the biggest subcontractors typically pay as little as 50% of the wages paid for precisely the same work in some mines. The report revealed a range of different approaches taken by the various companies, with some washing their hands of responsibility for wages paid to workers risking their lives in their mines, so long as they were sub-contracted, and others establishing rules on relative pay. Mbulu complained that some sub contractors in the mines were paying 'peanuts' to their employees under the pretext that the rates which they were getting from the mining companies were low. Rightly, it seems to me, the Government appears to have decided that an unregulated private sector was unlikely to come to a uniformly progressive answer to the problem.

Mbulu raised a vast range of other complaints against the mining companies. He expressed sadness that some companies are not respecting the provisions of the recognition and collective agreements, which they signed with the union. This statement was made in the context of criticism of First Quantum Minerals which has unilaterally declared a dispute with MUZ without following the provision of the Industrial and Labour Relations Act. Mr Mbulu said that the union was not averse to either party declaring a dispute but that the move should be done within the provisions of the law.

Mr Mbulu expressed concern at the increasing number of foreign labour in the mines, which could easily be obtained locally. He said there were cases where foreign workers learnt their skills in Zambia, tutored by Zambian experts but only to take over the jobs later.It was sad that some firms sidelined highly qualified Zambians in preference to foreign nationals who were less qualified and had no experience. He implored the ministry of Labour and Social Security to scrutinise work permits of foreigners and only allow those with skills, which could not be easily obtained locally. Mr Mbulu said that the union was concerned at the high rate of mine accidents in some companies, which had resulted in serious injuries and deaths. Some companies, he said, were not complying with safety standards. Mr Mbulu has since called on the mine safety department (MSD) to intensify audits in the mines to curb the rising number of accidents resulting from non-compliance of safety regulations.

Mbulu said the greatest challenge the union was facing was the recruitment of new members in the light of the increased mining activities on the Copperbelt, North-Western, Central and Southern provinces.Mr Mbulu said that MUZ had made strides to establish linkages with most mining houses abroad. To this effect, MUZ had signed a recognition agreement with LTA in Konkola, an access agreement at Albidon Nickel Mine in Mazabuka and would soon have members at the mine.

On the increased mineral royalties from 0.3 to six per cent, MUZ commended the Government for the decision, which was long overdue.He said the investors were reaping far beyond their anticipated profits."Today copper prices stand at more than US$10,000 per tonne and we see no need for investors to claim that the taxes are too high," he said.

Vendanta pressed to pass on ZCI shares to Zambian public

The Daily Mail, The Post, The Lusaka Times and The Times
all cover an interesting development in the ZCI / Vendanta negotiations for the transfer of shares in Konkola Copper Mines. It appears that the price Government has set for removing the Competition Commission enquiry into the sale, a development which enabled the sale to go ahead, has been to demand that some of the shares are released to the Zambian public via the Lusaka Stock Exchange.

All papers were reporting comments from Acting Finance Minister Felix Mutati who announced firstly that the call option deed was binding between Vedanta Resources Plc and Zambia Copper Investments and was not subject to any further approvals or consent of Government and secondly that Konkola Copper Mines (KCM) has pledged to offer part of its share holding in the mining company to the Zambian public.

Mutati announced "an agreement has been reached in principle for Vedanta to offer part of its Shareholding in KCM to the Zambian public, cognisant of the need for greater participation of Zambians in corporations operating in Zambia." Mr Mutati said the Government was now in the process of constituting a 'negotiating team', which would soon be meeting with a team from Vedanta.

Of course, under the previous arrangement many of the 28.4% of KCM's shares were already held by the Zambian public! That was part of the reason why Vedanta's decision to exercise its call option, agreed as one aspect of a deeply flawed Development Agreement caused some consternation in Zambia. The business friendly MMD Government has been looking for ways to appease popular anger at the minimal benefits flowing to the country from the copper boom. 'Zambianisation' has become one of their answers - a cynical reading would describe the process as the transfer of ownership of exploitative firms from the hands of rich foreigners to rich Zambians.

The Post also reports that Standard Chartered Bank regional head of research for Africa Razia Khan recently made the case that encouraging mining companies to list on the Lusaka Stock Exchange (LuSE) would increase local ownership in the sector which has been dominated by foreign investors. An editorial in the business section expands on the case.

Khan is quoted as saying, "The question that we would ask is, if the basic intent is to try to allow Zambians to gain more from copper mining, are there not other policy choices that might be considered alongside the choices that have already been implemented? Say for example looking at more domestic ownership, encouraging local listings of mining companies through tax incentives,” she said.

She observed that the mining sector in Zambia had been perceived to be owned and operated by foreign investors. “Already the tax regime has been designed so that it doesn’t make that much commercial sense to export copper in unrefined state. But what other room is there for tax policy to try to encourage increased beneficiation or increased value addition within Zambia?” she said. “Zambia’s economic outlook is still favourable. We are all looking at six per cent growth being sustained in the near future and the medium term as well despite the global economic slow down and given Zambia’s history that is very significant... If for example Zambia was seen to be a relatively cheap place to rise financing then you might see a change in behaviour of international companies wanting to seek that local listing.”

I am unconvinced this will lead to great benefits for the wider population on the Copperbelt, but we will see. Certainly the process has already angered many not-that-rich shareholders in ZCI - some of whom are Zambian. For some reason a mass of small shareholders in France have been the most vocal opponents of this process (see much previous debate on minewatch).

Mine taxes no excuse for poverty wages

I noted a couple of days ago that the new mine taxes are likely to be used by all sides in the Zambian mining debate as leverage in making the same old arguments they always have. Mine companies seek to lower worker expectations about wage increments every year as negotiations approach. This year they have one more rhetorical arrow in their quiver of shaky arguments, most of which boil down, as usual to the position: we can't afford to pay miners a living wage. We have profits to make.

Happily the Zambian Government seem to be on the case. The Daily Mail reports that the Minister of Labour and Social Security, Ronald Mukuma, has advised investors in the mining sector against measures that will result in labour cuts and the imposition of a freeze on wage increments to make savings for payment of new mineral taxes.

Mr Mukuma said in an interview yesterday in Kitwe that there was no justification for mine owners to think of reducing their workforce or imposing such a freeze because they still remained viable even after the introduction of the new taxes.‘’The fact that they are supposed to pay the windfall tax does not mean that it has changed their financial status in anyway, they are still viable organisations. Therefore, there is no reason for them to reduce the labour force,’’ Mr Mukuma said.

The first mine at which tensions seem to be running particularly high is Mopani Copper Mine (MCM), although NFC-A have also linked threats of wage restrain to the new taxes. Instructions have allegedly been given to personnel managers at MCM to identify areas where the mine could reduce the labour force to ameliorate the mineral taxes. MCM Chief Services Officer, Passmore Hamukoma, declined to give details of the new measures. However, he said management would consider the interests of Zambia.

Mr Mukuma said government’s priority at the moment was to reduce unemployment levels because that was the best way of reducing poverty.‘’The excuse of tax for reduction of labour cannot be accepted by government. They have to give another reason, not the reason of tax that government has introduced,’’ he said. Mr Mukuma said government was extremely cautious when it arrived at the new tax figures because it took into consideration the fact that mines had to sustain their workforce and make reasonable profits. He said the action government took was fair and in the interest of the country and that the mines should not create an impression that government was unjustified in introducing the new mineral taxes.‘’We took all that into account and found that it was a fair action by the government. They should not show a picture that government took this action without taking a lot of things into account,’’

KCM social responsibility computer project

The Daily Mail reports that Konkola Copper Mines (KCM) has financed a major project to raise computer literacy in 19 Government high schools on the Copperbelt and in Nampundwe in Lusaka west at the cost of US$470,000.

Ministers disagree on labour relations

The Daily Mail reports that at the end of a three day tour of the Copperbelt Minister of Labour and Social Security, Ronald Mukuma has slammed mining companies for their approach to labout relations. The Mininster claimed some mining firms on the Copperbelt want unions to be abolished because they are indifferent to collective bargaining.

The Minister said while some of the mines had adhered to the labour laws, the problems of casualisation and poor pay were still common. Mr Mukuma said he expected companies to listen to the needs of workers while the workers were also duty-bound to appreciate the constraints of management regarding improved salaries and conditions of service.He said it did not please Government that workers quickly resorted to riots to air their grievances without exhausting the available procedures of collective bargaining.“Strikes are not good to the employer and indeed for the nation…so, let us strictly adhere to the principle of dialoguing; and I put this responsibility on the shoulders of the union representatives to educate our workers on the need for dialogue,” he said.

He said employers should not have a negative attitude towards workers because that only strained the relationship at the work place. Government wanted workers and management to maintain industrial harmony and to ensure that the working environment was conducive for production. The minister noted with disappointment the high number of illegal strikes on the mines.

I am glad this issue remains on the political agenda, but it seems a shame then he didn't mention the need for reform to the Labour legislation itself. As theis blog has repeatedly noted, the high number of illegal strikes on the Copperbelt relates rather closely to the fact that it's almost impossible to strike legally!

On the other hand, The Post reports that Copperbelt minister Mwansa Mbulakulima has told a human resourcses managers conference that ill-trained unionists are a menace to industrial peace! On the other hand, Kaputa said human resource had to take a lead in driving institutional and organisation performance by not only formulating policies and strategies that helped organisation attract, motivate, develop and retain the desired human capital, but also tailor talent management strategies that helped employers become sensitive to vices like casualisation of labour.

The Government seems split. So long as there are senior officials around who understand the labour crisis so badly they assume it results from uppity union officials, not from massive popular anger at poverty wages and casualisation, what hope of progress?

Unions accuse Kansanshi of illegal approach to wage talks

The Post reports that Kansanshi Mining Plc has given its non-unionised workers a 15.8 per cent salary adjustment but has been rejected by the unions.

Kansanshi Mine general manager Russell Alley in a letter dated April 8, 2008 addressed to non-unionised workers at the engineering and workshop department said management had adjusted their salaries and commended them for hard work and for being loyal to the company.

“In terms of your employee contract with Kansanshi Mining Plc your salary is hereby adjusted from K4,061,760 to K4,748,094 effective April 1, 2008. Management has also granted you a compensation adjustment of K2,500,000. This compensation adjustment is a one-off pay in recognition of your demonstrated support and commitment to the company,” read the letter.

And in a memo to members of staff, Alley said it was almost impossible for management to close the gap between the unions’ demands and what the company was able to offer.

Alley stated that much effort had been put into the negotiation process by management but as the bargaining progressed, it became clear that the unions were not prepared to accept management’s counter-offers in relation to their demands.

But both Mine Workers Union of Zambia and National Union of Miners and Allied Workers (NUMAW) branch officials have accused management of “bribing” workers so that they withdraw from the two unions.

The officials said management’s decision to adjust salaries for unionised workers was disregard of the labour laws of the country. “The management did not follow laid down procedure in declaring dispute according to Cap 269 section 75 of the industrial and labour relations Act, by not even outlining specific areas which the two parties have not agreed on. And now they have decided to adjust salaries after they have declared a dispute in disregard of the law."

The unions are among other things demanding for is 30 per cent salary increment across the board, management to take up tax on housing allowance, contract period to be reviewed from two years to five years, education allowance be raised from K120,000 to K900,000 per month and annual leave passage increment from K120,000 to K2,800,000.

However, Kansanshi Mine management’s final offer on salary increment is 15.8 per cent, education allowance K140,000 and leave passage K200,000. The officials accused Kansanshi management of doing everything possible to destroy unionism at the mine.

The officials urged the government to intervene in the impasse before the situation goes to worse because the demands by workers are very genuine.

RAMCOZ pensions to be paid eventually?

One of the least dignified episodes in the history of the Zambian copper mine privatisation saga may be winding to a conclusion. The Post reports that mine workers in Luanshya whose pensions somehow slipped through the gaps of a range of deals between shady companies and the Zambian Government may eventually be about to get their long overdue payments.

And still who exactly has paid remains in dispute. PF member of parliament Chishimba Kambwili, who represents the Roan constituency yesterday refuted claims by the government that it had released about K5 billion to pay former Roan Antelope Mining Corporation (RAMCOZ) workers their Mukuba Pension contribution funds.

Kambwili said that the money that was due to be paid to the workers was instead sourced by Mukuba Pension and not the government. He explained that as area member of parliament, he wrote to President Mwanawasa requesting him to intervene in the matter of paying the former workers.

Kambwili said President Mwanawasa through the Secretary to the Cabinet acknowledged that the issue be dealt with expeditiously. “And based on the letter, there was an understanding that while the government is looking for the money, Mukuba was to find the money to pay the workers, which is exactly what they have done. In short, government has not realised the money up to now,” he said.

Kambwili has since appealed to the government to honour its obligation of coming up with the money to repay Mukuba pension. On Thursday, Luanshya district commissioner George Kapu said that the government had released close to K5 billion to pay former RAMCOZ workers their Mukuba Pension contribution funds.

“Yes I can confirm that funds have been released and former miners are expected to start getting their money through Zambia National Commercial Bank this week," he said. Kapu said about 1000 miners were likely to receive their money. Patronisingly, he managed to advise them to put the funds to good use for the benefit of their families.

NFC promise new jobs, threaten wage restraint

New mine taxes in Zambia seem likely to become an excuse for all manner of political manouvering by government, opposition, unions, global shareholders and investors and the mine companies over the next few months. Eventually everyone will calm down and realises Zambia remains a low-tax mining location, and with metal prices still high, a location for mega-profitable copper extraction. In other words, the boom continues. Questions about the equitable distribution of benefits between mine owners, government, workers and local communities remain.

Nonetheless, today's report in the Daily Mail that NFC-A will be investing $150 million in the Chambishi area, and wants to keep its wage bill down is treated as part of the mines tax debate.

NFC deputy chief executive officer, Gao Xiang, told the Daily Mail that the best way to respond to the challenges of the new mineral taxes was to increase the volume of investment. He said NFC was poised to be the biggest mine in the country once the two projects were completed in the next six years.On the new mineral taxes, Mr Xiang said: “Do you think we have any choice, no, we have no choice but it will have a very bad effect on our employees who expect 18 to 20 per cent salary increases every year.’’

He said the new taxes would entail that Government would take away 75 per cent of the US$30 million profit that the mine makes. But the mine would look for best ways of funding the west ore development project. He said the only concession they wanted from Government was to waive the export tax on concentrates because it was 15 per cent of the company’s profits. He said the mining company was spending K42 million per truck load of concentrate to the border. “I want to take this opportunity to appeal to Government, our export levy for concentrate is a very heavy tax on our income. We want to be waived for 12 months since we are focused on the construction of our new smelter,” he said.

He also said it would be difficult to substantially increase salaries for workers next year because apart from paying the new taxes, a lot of money would be spent on new investments. The company had no plans of reducing its workforce because the intention was to increase productivity and be able to increase the profitability of the mine. “We have to increase our production…that is the only solution for this. I don’t think reducing of employment will be the best way to overcome the difficulty. We hope the prices of copper stay like this at the international market,’’ he said. NFC employs 2,262 but the west ore body development project would employ an additional 800 Zambians during the construction phase while 1,000 Zambians would be employed once the project was at full production. Mr Xiang appealed to the Ministry of Home Affairs to approve an application for work permits of 163 Chinese experts who were expected to execute the west ore development project. A South African company has been contracted to sink a shaft at the west ore body whose lifespan is estimated at 25 years. And Minister of Labour and Social Security, Ronald Mukuma who visited NFC yesterday told management that Government was impressed with the investments the mine had made. The minister advised NFC management to integrate the Chinese and Zambian workers to avoid misunderstandings that arose as a result of lack of integration. Mr Mukuma said the mines should ensure that they employed Zambians on permanent basis and train them in various fields to ensure transfer of skills from the Chinese to the Zambians. NFC chief executive officer, Luo Xingeng, said the company was seeking assistance from the ministry of labour and social security to help it understand the country’s labour laws. He said it took the mining firm three years for managers to start understanding the labour laws.

At Mopani Copper Mines, Chamber of Mines president, Passmore Hamukoma, told the minister that mine owners tended to give contracts to foreign firms because Zambian companies were not very competitive.The minister said Government wanted the mines to give business to Zambians so that this could have a multiplier effect on employment levels.He urged the mines to support colleges and universities so that they could produce well skilled staff to work in the mines. Mr Mukuma urged the mines to come up with session plans so that executive jobs could be taken up by Zambians. He said it was dangerous for the country to sustain its mining operations using foreign expertise because there was bound to be a crisis in the event that they left suddenly.

Govt removes ZCI case from Competition Commission, sale goes through

Mining Weekly report that the sale of ZCI's shares in Konkola Copper Mines (KCM) to Vedanta Resources has finally gone through. Vedanta have also issued a press release. So have ZCI.

The story is slightly strangely worded, "The Government of the Republic of Zambia had removed this transaction from the jurisdiction of the Zambian Competition Commission, ZCI said." Odd. The ZCI press release contains the same concept, "the Government of the Republic of Zambia invoked section 3f of the Zambian Competition and Fair Trading Act, which effectively removes this transaction from the jurisdiction of the ZCC." Does that mean the competition commission never completed its investigation and was politically interefered with?

Conspiracy theorisist (I don't necesarilly include myself, but there are plenty buzzing around this issue) will no doubt note the 'good news' of Vedanta's acceptance of the new tax regime in the last couple of days, and the Government's very welcoming response.

The story continues: "ZCI has, in turn, provided Vedanta with the requisite documentation to effect transfer of the remaining 28,4% of Konkola Copper Mines," it stated in a note to the Johannesburg bourse."As the transaction has now been completed, caution is no longer required to be exercised by shareholders when dealing in their securities," said ZCI. "The directors are currently examining the options for the future of the company and will shortly present shareholders with these proposals in order to involve all stakeholders in this process."

How to get foreign firms to comply with labour law

This blog has noted many of the weaknesses of Zambia's labour laws. But a start in winning workers rights involves at least ensuring adherence to the laws by Zambian employers and foreign firms operating in the country. Tensions at Chambishi and other mines have often related to the flouting of labour laws, somewhat understood by the Zambian employees, and ignored by their bosses. With a properly operating labour office, firms not complying would be fined and it would soon become business sense to learn the laws and abide by them.

However, the Zambian state machinery is actually very small and weak and does not have the army of inspectors needed to monitor employers. The government is also aware of the ticking timebomb of disaffection at the mistreatment of workers on the Copperbelt. So, it's therefore interesting that the Daily Mail reports today that government plans to circulate