ZAMBIA MUST STOP PAYING GLENCORE THE $1.5BILLION
LUSAKA-27th May 2022
Former Ambassador to Ethiopia, Emmanuel Mwamba has called on the Zambian authorities to immediately cancel the Agreement ZCCM-IH has with GLENCORE PLC.
In the deal, ZCCM-IH will pay GLENCORE $1.5billion and the firm holds absolute and exclusive marketing rights to sale MOPANI Copper Mines production.
In a demand letter written to the Minister of Mines, Hon. Paul Chanda Kabuswe and copied to the Attorney General, Mr. Mwamba who is also a presidential aspirant, said following recent developments where GLENCORE has been found guilty in the USA, Britain and Brazil, the Zambian Government had a legitimate and legal right to cancel or void the sale contract it had with GLENCORE.
Mr. Mwamba said the Supreme Court in Zambia in May 2020, found GLENCORE guilty of tax evasion and fined it $13million.
He said with these malpractices, the Zambian authorities must have sanctioned GLENCORE heavily and forced it to exit from MOPANI Copper Mines.
He said as global authorities closed in on GLENCORE, it began to exit from its global operations but forced Agreements that retained the lucrative marketing rights.
He said GLENCORE acted with deceitfulness and the contract must therefore be deemed null and void.
He said Zambia must stop paying the $1.5billion and must reposess its marketing rights that were unfailry given to GLENCORE .
He said, like the USA authorities have done, Zambia must fine GLENCORE with heavy penalties for it’s criminal conduct while it operated in Zambia.
Below is the letter;
The Minister of Mines
Ministry of Mines and Minerals Development
New Government Complex Building, Nasser Road
12th & 14th Floor
P.O Box 31969
Kamwala
LUSAKA
Dear Sir,
ZCCM-IH, GLENCORE $1.5BILLION DEAL IS A VOID CONTRACT
In a special report on Zambia in the publication “War on Want”; ‘Extracting Minerals, Extracting Wealth, How Zambia Loses $3billion a Year” details were published on how Zambia loses revenue in billions of dollars from just three firms that were listed on the London Stock Exchange; GLENCORE, VEDANTA and Associated British Foods.
It was calculated that the amount of taxes avoided by the three companies alone in Zambia was around $3 billion a year.
Looking at the three companies , the
report established that they engaged in extensive tax-avoidance schemes including use of complex corporate structures and mispricing, transfer pricing and illegal tax evasion.
The companies also illegitimately benefited from unwarranted tax incentives where the Zambian Treasury loses over $1billion a year because of tax incentives
agreed to by the government.
These assertions have also been established as true by various reports of the Extractive
Industries Transparency Initiative (EITI).
Further, In May 2020, the Supreme Court of Zambia found GLENCORE guilty of engaging in business and tax malpractices. It fined Mopani Copper Mines $13 million!
This was a case in which the Zambia Revenue Authority (ZRA) had been battling with Mopani Copper Mines and its Swiss parent company Glencore since 2009.
The background was that the ZRA conducted an Audit of Mopani Copper Mines for the period 2006 – 2009, which revealed that the transactions between the company and its Swiss parent multinational, Glencore International AG (GIAG) violated the Arm’s Length Standards (ALS). An arm’s length transaction refers to a business deal or transaction in which a buyer and seller act independently without one party influencing the other.
Therefore the latest revelation that Glencore Plc has been found guilty of bribery and market manipulation by USA, British and Brazilian authorities gives Zambia both a legitimate and legal right to void the $1.5 billion debt contract it signed with GLENCORE.
Authorities in the United States, Britain and Brazil announced that three of GLENCORE’s subsidiaries had pleaded guilty to crimes.
GLENCORE has agreed to pay $1.5 billion in the United States and Brazil, with Glencore representatives also appearing in courts in the United States and Britain.
SELL OF MOPANI NOT ISOLATED
It should be noted that as global Authorities closed in on GLENCORE’s crimes and illegalities, it engaged in abrupt exit from those markets.
So the exit from Zambia was not a normal business transaction but a pre-emptive action to walk away with billions of dollars before their guilty and criminality was established.
This move was not unique as GLENCORE did the same in their other global operations.
Glencore sold 20.5% stake in South African chrome unit to Merafe Resources.
GLENCORE also sold two zinc mine in Namibia and Burkina Faso for $400m to Trevali Mining Corporation, a Canadian listed company with ambitions to become a mid-tier zinc producer.
The mines in question were Glencore’s 80% interest in Rosh Pinah, a zinc mine in Namibia, and its 90% stake in the Perkoa mine located in west Africa’s in Burkina Faso.
Glencore has recently agreed to sell CSA copper mine in New South Wales, Australia, to Metals Acquisition (MAC).
VOID THE CONTRACT
A void contract is a formal agreement that is effectively illegitimate and unenforceable from the moment it is created.
GLENCORE engaged in negotiations and final Agreement to dispose off its interest in MOPANI Copper Mines when it knew very well that it acted in a deceitful manner.
Authorities at the time must have sanctioned GLENCORE for the malpractices listed above and forced it to surrender the MOPANI Copper Mine Assets.
Therefore the Zambian government must declare the contract sale illegal and cancel the absolute marketing rights of Mopani’s copper that were granted to GLENCORE.
The Zambian Government must also stop paying any money to GLENCORE towards the sale price if $1.5billion.
ZCCM-IH had agreed to take over Glencore’s majority stake in Mopani Copper Mines in a $1.5 billion deal funded by debt.
GLENCORE’s subsidiary, Carlisa Investments Corp. (“Carlisa”), in which Glencore held 81.2% of the shares, had signed an agreement with ZCCM Investments Holding plc (“ZCCM”) to transfer its 90% interest in Mopani Copper Mines plc (“Mopani”) to ZCCM-IH, the owner of the remaining 10% interest in Mopani, for US$1, the Transaction Debt of $1.5billion and surrender of marketing rights of copper until the debt is liquidated.
We hold that the conduct of GLENCORE whilst invested in Zambia was criminal as shown above and authorities in Zambia must have revoked it’s mining licence and forced it to shut operations and punish it with heavy fines for these flagrant actions to disregard the law and for engaging in extensive tax avoidance schemes that have deprived Zambia resources required for it’s national development.
Emmanuel Mwamba
emwamba26@gmail.com
CC; THE ATTORNEY GENERAL