MAC: Mines and Communities

The Limitations of Corporate Social Responsibility on Zambia’s Copperbelt

Published by MAC on 2008-09-26


The Limitations of Corporate Social Responsibility on Zambia’s Copperbelt

by Patricia Feeney, Oxfam (November 2001)

Konkola Copper Mines (KCM): Environmental Management Plan (May 2001)

People living on Zambia’s Copperbelt are confronted with a barrage of toxic chemicals and other pollutants all of which undermines their right to health and damages their livelihoods. But the development agreements between the Government of Zambia (GRZ) and the new owners of Zambia’s recently privatised copper mines, the UK-registered Anglo American Corporation and First Quantum (a Canadian company) give a green light to pollution. While sweeping claims have been made for corporate social responsibility, the truth of the matter is that – in Zambia at least - voluntary measures are often limited to actions that are of direct benefit to the companies’ operations or interests. Anglo American, which has so far failed to be included in the FTSE4Good Index (which lists socially and environmentally responsible companies), has to do much more to prove that it is serious about corporate social responsibility.

Oxfam has various concerns about KCM’s environmental and social plans and is calling on the company’s shareholders – the International Finance Corporation (IFC) and the Commonwealth Development Corporation (CDC) – to urgently address these issues, preferably before KCM’s next Board meeting at the end of February 2002.

The mission statement of Anglo-American’s subsidiary, Konkola Copper Mines (KCM) promises much:

We will uphold the values of good corporate citizenship and seek to contribute to the wider economic, social and environmental well being of Zambia.

But the rhetoric is not matched by company practice. Corporate socially responsible behaviour is heavily circumscribed by what is termed the ‘BATNEEC principles - best-available-technology-not-entailing–excessive-costs’.i In other words the company’s financial health takes precedence over the physical health of the workforce and local residents.

Women, men and children on the Copperbelt have to live with a range of environmental hazards. Heavy metals such as arsenic and lead and other industrial chemicals have contaminated streams and the main Kafue River. Waste dumps that scar the landscape, are prone to erosion and are highly unstable. The tailings dams, which are polluted with potentially toxic waste, provide a breeding ground for mosquitoes. Not surprisingly, malaria is one of the area’s major health problems. A variety of air pollutants, like sulphur dioxide, are pumped into the atmosphere from smelters and acid plants killing vegetation. Systematic health surveys are a luxury that Zambia, a heavily indebted poor country, cannot afford. But exposure to this kind of toxic cocktail is associated with birth defects, cancer, respiratory problems and a weakening of the human immune system.

‘Children are much more susceptible to these hazards than adults. Having higher metabolic rates than adults, children breathe air from closer to the ground, and ingest higher concentrations of pollutants; inhaling them more deeply into their lungs than do adults, they retain these pollutants and absorb them into their metabolism more readily.’ ii

The privatisation of Zambia Consolidated Copper Mines (ZCCM), which was actively encouraged by the donor community as a means of reducing corruption, inefficiency and waste, was supposed to bring new investment to the Copperbelt, reinvigorating the local economy and restoring its severely degraded and contaminated environment. In reality, despite all the talk about corporate social responsibility, the new mine owners have shown themselves remarkably reluctant to assist cash-strapped local councils improve social service provision. They are even less inclined to shoulder some of the burden of cleaning up ZCCM’s environmental legacy.

During negotiations, the large mining companies were able to dictate their own terms and exact maximum advantage for themselves and their shareholders. The Government of Zambia (GRZ) was not in a strong bargaining position given the parlous state of Zambia’s economy, the decline in world prices for copper, and the fact that a rapid sale of ZCCM was a condition for continuing international aid and debt relief. The development agreements (legal contracts), which apportion responsibility for meeting social and environmental liabilities, have not been made public. But it is clear that responsibility for dealing with the majority of the outstanding social and environmental problems facing former ZCCM mines and the communities living in the adjacent townships rests with the Government of Zambia (GRZ) and the remnants of the state-owned mining conglomerate, ZCCM-Investment Holdings plc (ZCCM-IH).

Stability Period

Under the Development Agreement for mine privatisation, GRZ has granted a 15- year stability period for all privatised mines, with the exception of KCM, which has been granted an extraordinarily generous 20-year stability period. This means that during the stability period the new owners are only required to conduct their operations in accordance within the agreed pollution and emission targets set out in the Environmental Management Plans. In other words, breaches of Zambia’s existing environmental standards will be tolerated. For the duration of the stability period GRZ has limited authority to enforce environmental laws: it will not impose fines or penalties (unless emissions exceed the licensed higher levels) nor will it make changes to Zambian mining-environmental legislation. GRZ must refrain from imposing requirements that are more onerous than those specified in the EMPs.

A major rehabilitation programme is required. In view of the scale of the problem, without support from the World Bank and other donors, ZCCM-IH, which holds more liabilities than assets, cannot even begin to tackle some of the most pressing environmental hazards.

But what about the private investors? Just how little the companies are prepared to do is only now becoming apparent. All the new investors have to produce Environmental Management Plans (EMPs) for the mines. The EMP for Anglo American’s subsidiary, Konkola Copper Mines (KCM), in which both the UK’s Commonwealth Development Corporation (CDC) and the World Bank’s International Finance Corporation (IFC) have equity shares, is the first to appear. The voluminous Environmental Management Plan - EMP refers to KCM’s three mines: Konkola, Nchanga and Nampundwe, which were purchased by the Anglo-American Corporation in March 2000. The EMP also covers the operations of SmelterCo, which, although not owned by KCM, is managed by the company. KCM’s plans need to be read in conjunction with the World Bank’s remediation programme, the Copperbelt Environment Project - CEP, which is being redesigned. The World Bank threw out the original proposal on the grounds that it had not given adequate consideration to the region’s acute social problems. The CEP’s limited budget was barely sufficient to remedy even some of the Copperbelt’s most glaring environmental problems.iii

Key Concerns Regarding KCM’s Environmental and Social Plans

The main concerns about the performance of Anglo American’s subsidiary, KCM, relate to three core issues that are crucially important to the mining industry: safety, health and environment. KCM has been slow to appreciate its obligations about disclosing information to local communities - a condition of IFC’s support. KCM is failing to comply - in a number of crucial respects - with the more broadly framed OECD Guidelines for Multinational Enterprises. These advise companies ‘to raise the level of environmental performance in all parts of their operations even where this may not be formally required’.iv Companies are expected ‘to take due account of the need to protect the environment, public health and safety, and generally to conduct their activities in a manner contributing to the wider goal of sustainable development’.v

Air Pollution - Kitwe

It is increasingly accepted that corporate social responsibility is a key requirement for creating a prosperous and ecologically and socially sustainable world. But KCM is quite simply failing to live up to its own definition of good corporate citizenship. Its operations, in many respects, are not in line with international standards: for example, the World Bank guidelines on pollution abatement and WHO Air Quality Guidelines.

World Bank experts have identified atmospheric emissions from the Anglo American run SmelterCo and First Quantum’s Mufulira smelter as ‘a priority impact’.

Ore concentrators, smelters and acid recovery plant are major polluters within the Copperbelt.vi

The EMP notes that the areas that have been most adversely affected by air pollution from SmelterCo are the residential areas to the north, south and east of the complex, such as Nkana West, Wusakile and Chamboli. Attempts by people living in these areas to grow vegetables in garden plots have been ‘largely unsuccessful’. The EMP also admits that the high ambient ground level concentrations on site also present serious risks for the health of the workforce.

Atmospheric emissions from smelting activities at Nkana [SmelterCo], Mufulira and Chambishi are a priority issue. Emissions of SO2 range from between 300,000 and 700,000 tons per year. Toxicological data collected worldwide suggest that human fatalities can arise from short-term exposure to atmospheric SO2 levels in excess of 1000 µg/m3.vii

KCM rejected the idea of installing a state-of –the-art, Flash Furnace at SmelterCo on the grounds of cost. This option is the only way of bringing emissions down to safe levels. KCM is committed to meeting GRZ and IFC/World Bank policies and guidelines for SmelterCo’s operational facilities within three years of the commencement of the contract but only where ‘technologically and commercially feasible’.viii Despite some refurbishment, paid for out of the British aid programme, emissions from the Kitwe smelter - even after 10 years – ‘will’ as KCM concedes ‘still exceed the relevant air quality guidelines’.ix

Danger to Health – Sulphur Dioxide

Exposure to sulphur dioxide in the ambient air has been associated with reduced lung functions, increased incidence of respiratory symptoms and diseases, irritation of the eyes, nose and throat and premature mortality. Children, the elderly and those already suffering from respiratory ailments, such as asthmatics, are especially at risk. Health impacts appear to be linked especially to brief exposures to ambient concentrations above 1,000 µg/m3 (acute exposures measured over 10 minutes). Some epidemiological studies however have shown an association between relatively low annual mean levels and excess mortality.x

According to the EMP, as the SmelterCo project is not on a ‘greenfields’ site but is ‘a continuation of existing operations’ a full public consultation and disclosure process is not required by Zambian regulations. Oxfam is concerned that people living in the vicinity of the smelter may not be fully aware of the risks to their health. Sulphur dioxide is not the only hazard: chronic exposure to particulates can lead to premature death by exacerbating respiratory illness, pulmonary disease and cardiovascular disease. Acute exposure can increase the chance that a person in a weakened state or an especially susceptible person will die.

Dust

There is a serious dust problem with people living near the slag dump at Nkana (both Nkana West and Wusakili ). There is reclamation of the dump currently going on and numerous complaints have arisen over dust problems. These people live or operate within a distance classified as "scheduled" under the Pneumoconiosis Act and the Mines and Minerals Act. It is imperative that this concern is raised or highlighted...xi

 

The World Bank notes that ‘good practice in airshed management should encompass the establishment of an emergency response plan which can be put into effect when levels of air pollution exceed one or more of the emergency trigger values’. According to the guidelines ‘the recommended emergency trigger value for sulphur dioxide is 150 µg/m3 for the 24-hour average concentrations.’xii Given that SmelterCo regularly exceeds this threshold it is imperative that KCM put emergency procedures in place to mitigate the negative impact on people’s health.

The Environmental Council of Zambia (ECZ, one of Zambia’s regulatory bodies) is responsible for granting SmelterCo and other mines a licence to emit air pollutants. ECZ is allowed to prescribe intermediate limits that are higher than long-term emission limits but these should not only be negotiated with KCM and SmelterCo. The wider community in Kitwe has a right to be involved in a decision of this importance.

The EMP makes clear that SmelterCo is "an integral part" of KCM’s operation in Zambia". Even though it has not yet purchased SmelterCo, KCM has been obliged to include these facilities in its detailed EMP because they are essential for the Konkola and Nchanga mines.

Confusion over Emission Targets

According to IFC requirements, KCM is obliged ‘to provide meaningful information’ and ‘to ensure the accessibility of information’.xiii But the way the information on emission levels and targets is presented in the EMP is confusing and contradictory. This makes it hard to understand precisely which standards KCM is committed to achieving within the specified time frame. KCM acknowledges that when it took over operations at SmelterCo, the monitoring stations around the site recorded daily maxima for sulphur emissions in excess of 10,000 µg/m3. Both Zambian air quality standards and the latest World Bank guidelines recommend that daily average ambient sulphur dioxide (SO2) emissions should not exceed 125 µg/m3.xiv But, despite the fact that Zambia’s permissible limits for SO2 and Selenium (Se) are 25 per cent higher than those adopted in other copper producing countries such as Peru and Chile, the EMP claims that these limits are too stringent. KCM is proposing much higher limits than permitted under Zambian law. The EMP offers reassurance by saying that:

KCM and SmelterCo are committed to meeting GRZ and WBG requirements for their facilities with[in] 3 years of vesting (i.e. by 31 March 2003). The only exceptions are achievement of the site-specific guideline value for SO2 ambient air quality and stack particulate concentrations at SmelterCo where full compliance will only be achieved by March 2006.xv

However, close scrutiny of the EMP reveals that the standard to be achieved by 2006 is an ambient air quality limit of 500 µg/m3 for a daily averaging period.xvi The EMP states that this is in compliance with pre-1998 World Bank guidelines, but fails to mention that it is four times the current World Bank limits. In other words, even by 2006, the KCM managed operations at SmelterCo will fall far short of domestic and World Bank limits on air quality.xvii

Problems in monitoring compliance

Responsibility for overseeing implementation of the Final Environmental Management Plans lies with ZCCM-IH. Enforcement and monitoring of compliance with obligatory actions assigned to both ZCCM-IH and private investors remains with GRZ’s numerous regulatory agencies that include the Environmental Council of Zambia (ECZ) and the Mines Safety Department (MSD) of the Ministry of Mines and Mineral Reserves (MMMD). The World Bank project will attempt to build up the capacity of ECZ not only to fulfil its own tasks but also to coordinate the activities of other regulatory bodies. But an assessment of the CEP casts doubt on the ability of these bodies to fulfil the crucial role of monitoring and enforcement. ‘From this review it is evident that managerial and technical capacity in critical institutions is lacking’.xviii This institutional weakness cannot easily be corrected and it highlights the need to involve local communities and NGOs in monitoring.

But affected communities face a number of difficulties in monitoring KCM’s compliance with these thresholds. Firstly, the levels to be attained are not clearly explained in the EMP. Secondly, there is a worrying lack of available data. Zambia does not at present generate the appropriate data even to prove compliance with existing statutory thresholds (Statutory Instruments No 119 and No 141). In an appendix to the EMP, there is the admission that SmelterCo is unable to carry out in-stack emissions monitoring and that due to ‘the limitations of monitoring equipment caused by high gas velocities’, dust emissions from the oxyfuel reverberator cannot be measured.xix In Zambia, atmospheric monitoring focuses almost exclusively on sulphur dioxide: data on other harmful volatiles is not collected. While ground level sulphur dioxide emissions around the SmelterCo plant are collected, no information is available to track the impacts on communities living along the ‘plume path’ at a distance of 50 – 100 kms, who are also exposed to potentially dangerous levels of emissions.xx

Recommendations

The proposed limits for continuing emissions of sulphur dioxide and other pollutants from SmelterCo are unacceptably high given that they will grossly exceed legal levels permitted under Zambian law and World Bank standards for many years. These emissions pose a major threat to the health of people living nearby. In view of the unacceptable risks to health, Oxfam believes that the Board should urgently review the adequacy of the refurbishment plans. KCM should endeavour to:

Water Quality

The KCM environmental assessment confirms that the legislated Zambian effluent standard prescribes, respectively, limits of 1.5 mg/l and 100 mg/l for copper and suspended solids.xxi This contrasts with more stringent limits of 0.5 mg/l for copper and 50 mg/l for suspended solids in IFC/World Bank guidelines. It is acknowledged that 'these two parameters are typically the most problematic at the current operations.' In other words, KCM is not intending to bring water quality up to the required World Bank standards. Whereas, in respect of air quality, the company uses its powers of derogation to avoid stringent domestic limits by using obsolete World Bank standards, in relation to water quality it adopts legislated Zambian effluent standards precisely because these are lower than existing World Bank guidelines.

Recommendation

Malaria - Kitwe

The sale of ZCCM has meant that many critical social services formerly provided by ZCCM are no longer available. But if corporate social citizenship has any meaning then it should include a company taking affordable measures to help communities protect themselves from life-threatening hazards like malaria. But corporate social responsibility was not much in evidence in 2000 in Kitwe. KCM and the Canadian-Swiss consortium (First Quantum and Glencore who jointly control Mopani Copper Mines) could not agree about sharing the relatively minor costs of providing anti-malarial spraying for Kitwe. So the majority of the residents of Kitwe – one of the poorest towns on the Copperbelt – were abandoned to their fate. While KCM and First Quantum sprayed the three townships closest to their main centres of operations neither volunteered to take responsibility for Kitwe. In the end only the homes of their employees were treated. KCM’s health and safety manager refused a direct request from local NGOs to extend the spraying to the rest of Kitwe. Yet Anglo American has a better appreciation than some of the other investors about the dangers of malaria.

Malaria is the number one killer on the Zambian Copperbelt. The malaria incidence rate averages on in three people and increases to one of every two children under the age of five.

Anglo American plc Safety, Health and Environment Report 2000

 

Two other UK companies, Midlands Power International Ltd and the National Grid Company plc, which run the Copperbelt Energy Consortium (CEC), also failed to support the anti-malarial spraying in Kitwe. The companies can take refuge behind the development agreements absolving them from ‘liabilities related to public health and safety’ but health data for 1999 suggests that the consequences of inaction will have been devastating.xxiii

In 1999, 168 out of every 1000 persons in Kitwe (with an estimated population of half a million people) contracted malaria: seven out of every 100 cases proved fatal. Out of the 81,000 people affected, 5,700 died – 7 per cent of the town’s population. Many of the victims were children under the age of five.xxiv

Anglo American has rejected Oxfam’s view that they had sole responsibility to spray the town of Kitwe, pointing out that Mopani and CEC are much larger players in the town’s economy.xxv But the significant, deleterious health impacts of KCM’s SmelterCo operations (outlined in the previous section) should have provided sufficient justification for the company to undertake the spraying on its own.

Recommendation

Safety – Fatal Accidents at Nchanga Open Pit

There are also questions concerning the compliance of KCM with the OECD’s recommendation that companies ‘should take adequate steps to ensure occupational health and safety in their operations’xxvi

A major slope failure occurred on 8 April 2001 in the South face of the Nchanga Open Pit. The failure, which was along the southern perimeter road of the Nchanga mine, killed 10 miners who were buried in the slide. Observers report that one whole section of the vast Nchanga open-cast mine near the town of Chingola had collapsed from top to bottom. Remedial work is being undertaken and a statutory investigation by Zambia’s Mines Safety Department (MSD) is in progress. KCM has commissioned a separate report, which will be presented to the Board at its next meeting. So far, Anglo American has declined to share the KCM report with Oxfam. This is of great concern in view of the general recognition that ‘MSD resources are severely over-extended’ which affects ‘the department’s ability to carry out its mandate’.xxvii Few anticipate that the MSD will be able to produce a full health and safety report into the accident.

Recommendations

The EMP and Anglo American’s Corporate Policies

A major objective of the EMP is to ensure that KCM is operating in accordance with Anglo American’s Corporate Safety, Health and Environmental (SHE) Policies:

The EMP also has a number of specific objectives:

But the EMP warns that this should not be taken too literally: ‘KCM has to strike a balance between being socially responsible and re-creating dependency on the mine in an environment where lack of local government capacity to manage delivery and development services makes the potential reliance on mining companies high’. Elsewhere the EMP adopts a more reassuring note ‘social responsibility is more than mitigating direct impacts but also about making a contribution to society’. It adds ‘Corporate social responsibility is an asset to the company and can improve benefits to stakeholders’.xxviii

Just as there are important omissions in the environmental plan, the social component of the EMP has a number of deficiencies. This suggests that KCM will have great difficulty in meeting the goals it has set for itself.

Social Management Issues

The incidence of poverty in Zambia makes depressing reading and the situation has not shown much improvement since the mines were privatised.

Given this level of household poverty and deprivation the withdrawal of basic health, sanitation and education services, which on the Copperbelt were formerly provided by ZCCM, has been catastrophic.

Social Plans or Empty Gestures?

Chingola

Chingola faces a potential crisis in service delivery due to the large numbers of retrenched mineworkers who have been unable to secure alternative income sources and who are therefore unable to pay for water, electricity and maintenance services. This has reduced cost recovery of bulk service utilities (i.e. Asset Holding Company and Mulonga Water and Sewerage Company) and has rendered the sustainability of these utilities questionable.xxx

KCM acknowledges that both of the newly created private water and sanitation service on the Copperbelt ‘face serious capacity problems and are unable to provide quality services without KCM support’. The World Bank is trying to devise support programmes to improve services but there is a constant threat of collapse. But while KCM recognises that it has a social responsibility to provide ‘some assistance’ to the local authorities to ensure mutual benefit from effective service delivery, this seems limited to ‘emergency repairs’. The EMP notes that a large proportion of the population in towns like Chililabombwe are mine employees. But it adds ‘the challenge for KCM is to be socially responsible but at the same time not to create dependency on the mine …in the current local context of social and institutional poverty this challenge is immense’.xxxi

But in many social areas the EMP merely describes the problems but offers few solutions. For example, the EMP notes that it is critical that the public should be able to continue to obtain quality health care once provided by ZCCM. But it then explains that that there is uncertainty over the future of Nchanga North, an ex ZCCM hospital. After July 2001, KCM staff will no longer need to use the Nchanga North facilities and the company intends to withdraw its support staff from the hospital. The EMP concedes that this will have serious financial implications for the hospital. But it makes no proposal about how to assist the government hospitals meet this shortfall in funds. For Chingola this is particularly problematic. There has been an alarming downward trend in health standards in the town as indicated by the increase in the number of cases of people ‘brought in dead’ to hospitals. Before privatisation there were approximately nine cases of ‘brought in dead’ a week. The figure has now risen to fifteen.xxxii The EMP states that the public will be able to use mine hospitals and clinics on a fee-paying basis. It will be of little benefit to the impoverished, majority of people in the region who will in effect be denied access to health care.

The EMP’s proposals for other social areas seem equally perfunctory. The immediate challenge, the EMP reports, is for Chililabombwe’s local authorities to absorb the responsibilities previously held by ZCCM. KCM has a role to play in this shift – not through doing the work of the Council. Although the eventual development of vast copper reserves in the Konkola Deep Mining Project (KDMP) is expected to create 5000 construction-related temporary jobs, this will also have create negative impacts. It will lead to the influx of a large number of job seekers and contractors into the town, which will put a significant strain on already overstretched services. Once construction is completed the labour force required to operate the Konkola mine will drop from 4,300 to about 3,900.xxxiii

It is anticipated that there will be an increase in crime, increased health risks (especially HIV-AIDs and malaria), an increase in rentals in existing townships and the spread of informal settlements.xxxiv

Resettlement and Land Use

Anglo American to avoid having to deal with all the informal settlements on former ZCCM land, decided to relinquish its rights to certain areas like Kapisha, in Chingola. But KCM failed to inform the residents or the local council of Chingola of its decision. Consequently, for over a year people were uncertain about the status of the settlement and their future. The residents in ‘site and service’ townships like Kapisha receive little support from the local council. Water supplies depend on shallow water wells the people dig themselves. They dispose of their refuse on a self- help basis. The former miners and widows who live in Kapisha are poor and they are unable to get connected to the grid because of the high user charges and connection fees. So it is not obvious, in view of KCM’s own analysis of the bankruptcy of the local council and the impoverishment of people living in informal settlements, what benefit the action proposed in the EMP could possibly bring:

‘Chingola Council and DDCC [District Council] will be made aware of settlements and their needs for services e.g. weekly mobile clinics, feeder road maintenance, basic schools’.xxxv

KCM is managing the resettlement of about 1000 people who are living close to the Lubengele Tailings Dam with funding provided by the World Bank. Implementation of the Resettlement Action Plan (RAP) appears to be consistent with World Bank guidelines. But Oxfam is concerned about the lack of clarity in the EMP about the measures that will be taken to resettle people living or cultivating land in hazardous areas (e.g. within 100 metres of plant and mining activities). Not only does the EMP fail to provide information as to how many people might be affected but also it simply notes that KCM intends to evict them. No reference is made to the need to treat these people in the same way as the others who are benefiting from a full resettlement programme.

There is a lack of clarity too about the fate of people using other sections of mine land who may be evicted. The EMP states that KCM will support the continuation of land cultivation inside the mine surface area providing it is taking place outside of hazardous areas. But the EMP warns that this situation ‘may change depending on mine operations’. People cultivating in these area will be ‘made aware’ of this. Although KCM mentions that it will increase Mine Police Patrols and use Mine Police to evict cultivators, it is unclear whether KCM and IFC intend to include these people, whose livelihoods depend on growing food on small plots, in the Resettlement Action Plan (RAP).

Recommendation

Why Anglo American should contribute more to the environmental clean-up

Corporate social responsibility apart, there are a number of strong reasons why Anglo American should offer more generous social provision and shoulder more of the burden for helping to clean up past environmental problems. First, the Anglo-American Corporation has had a long historical association with Zambian mining. Second, the company was the largest minority shareholder of ZCCM, which puts it in a rather different position from the other investors. And, third, the terms on which Anglo American purchased the mines provoked IMF directors to express concern about the generosity of the tax concessions which would entail significant fiscal costs in the long term. The Zambian Institute of Chartered Accountants, welcomed the investment incentives, but observed that the concessions should have been spread across the industry.xxxvi Instead, because of its dominant market position, Anglo American obtained more concessions and better terms from GRZ than any of its competitors.

Tax and other Concessions Awarded to Anglo American

KCM will not be charged any excise duty on electricity consumed. Neither will they be required to pay withholding tax on interest, dividends, royalties and management fees paid to shareholders and affiliates. Mineral royalty was to have been reduced from an already low 2 per cent to 1 per cent. In the event, the reduction has been even greater, to just 0.6 per cent of the gross value. Furthermore, a ceiling of $16 million in the first year and $15 million in subsequent years has been set, above which the mine operator will cease to pay royalties. Fees relating to copper and cobalt price participation will be tax deductible. Finally, for the purposes of the Income Tax Act, the mines will be deemed ‘a 1975 new mine’, allowing them to qualify for the deduction of 100 per cent of capital expenditure.

The concessions were granted in order to facilitate recapitalisation and encourage investment in the mining industry. As justification for their exclusivity, it was stated that the remaining assets suffered operational problems, which translated into lower output and export earnings. However, the bottom line is that the company insisted upon these concessions as a precondition for completing its purchase of the core of ZCCM. They are over and above the level of incentives written into existing legislation at the time and the sequence of their subsequent incorporation is clear: first the concessions were included in legally binding development agreements, then were announced in the budget and were finally consolidated though amendments to the Mines and Minerals Act, the Income Tax Act, and the Customs and Excise Act.xxxviii

 

The extraordinary agreement whereby KCM manages SmelterCo (even though ‘KCM plans to take ownership of the smelter facilities for the future treatment of its concentrate.’xxxix), is another major perk to the company. It means, in effect, that KCM is being subsidised to utilise SmelterCo facilities for three years at the British taxpayers’ expense. To all intents and purposes, SmelterCo (which is ‘owned’ by ZCCM-IH) is little more than a flag of convenience for KCM. During this period the company will be able to maximise the benefits of using the facilities in its own operations while evading responsibilities for SmelterCo’s significant contribution to airborne and waterborne pollution in the surrounding areas.

In view of these incentives, KCM or the parent company, Anglo American, might reasonably be expected to finance some greater portion of the remediation work. But while there are a number of commendable initiatives proposed in the EMP on training and HIV/Aids awareness, the overall impression is that KCM’s social goals are less than generous. In both its environmental and social plans, the EMP falls well short of the standards KCM sets for itself and those set by the Anglo American Corporation.

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