Thursday, November 01, 2007

Copper exploitation in Zambia

The price of copper is exploding, and money is pouring in to an impoverished African nation. That should be good news for the people of Zambia. Except they're barely seeing any of it - and sometimes it's even going to shareholders in the UK.

It is claimed that less than one penny in every pound is going to the impoverished Zambian government, whose health and education programmes are collapsing for lack of resources. One-third of children do not get even basic schooling, and hospitals have to make do with paracetamol tablets for pain relief. Zambia is now one of the poorest 10 countries on the globe, with a life expectancy of just 37, and the life chances of a baby born there today are worse than for one born in a Victorian slum in Britain. The majority of people struggle to live on less than $1 a day; the basic global poverty line is considered to be about $5 a day. One-fifth of the population is living with HIV.

A report by the Scottish Catholic International Aid Fund (SCIAF), says the Zambian government was blackmailed into privatising its nationalised copper industry by the IMF and the World Bank, who threatened to withhold debt relief and other aid, eight years ago.

"We were told by advisers, who included the IMF and the World Bank, that not in my lifetime would the price of copper change Zambian copper could not make a profit. Conversely, if we privatised we would be able to access debt relief, and this was a huge carrot in front of us - like waving medicine in front of a dying woman. We had no option." - Edith Nawakwi, the finance minister at the time . ( But the advisers were wrong. A few years later, a manufacturing boom in China and a worldwide surge in demand for electrical goods led to the price of copper trebling. It is now almost £8000 a tonne. UK shareholders and pensioners are reaping the rewards while Zambians struggle.)

The weakened government signed away most of the rights to its own minerals. Instead of the average 5%-10% mineral royalty rate most developing countries receive, Zambia's Mines and Minerals Act specified 3%.

The largest, Konkola Copper Mining (KCM), which is majority-owned by the British firm Vedanta - managed to negotiate a rate of just 0.6%. Although the company extracted copper worth more than $1 billion last year, and made three-quarters of the country's foreign export earnings, it was obliged to pay only $6 million to the government. Indeed, SCIAF believes the real amount paid might be as little as half that. The company refuses to release the figures.

KCM has also secured opt-outs from environmental legislation and is allowed to emit more than 25 times the internationally recognised safe levels of sulphur dioxide under Zambian law. It has not been prosecuted despite claims that it was responsible for polluting rivers including the Kafue, which sustains one of the world's greatest wildlife habitats and is a major tributary of the Zambezi. Villagers told the SCIAF investigators that, after their water source became polluted, making them ill with vomiting and diarrhoea . They are also concerned about their health as the pollutants are believed to have contained elements that can cause long-term heart and lung problems, and liver and kidney damage.

Abi Dymond, SCIAF policy analyst and principal author of the report, says:

"It's outrageous that the people of Zambia are living in crippling poverty while mining companies like Vedanta and KCM are making huge profits...The miners and sub-contracted workers are in a desperate situation, with many not able to meet their basic needs despite huge profits being made by the companies and investors...Many thousands live in abject poverty while the company bosses and investors get rich."

While such well-meaning but far-wrong organisations such as the Scottish Catholic International Aid Fund call for a fairer distribution of the profits and a more ethical social responsibility - appealing to that rare quality generousity of the British investor and , even harder to find , the humanitarianism of mine operators - Socialists simply accuse the international Capitalist class and their accomplices in the national bourgeousie of being thieves and demand that the wealth and natural resources of the world be turned over to the common ownership of all to benefit all .

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