Mopani Copper Mine - A Scandal In Zambia

The Mopani copper mine, Zambia How European development money has fed a mining scandal December 2010 CONTENTS The mission of “Counter Balance: Challenging the EIB” is to make the European Investment Bank an open and progressive institution delivering on EU development goals and promoting sustainable development to empower people affected by its work. The Counter Balance coalition consists of the following NGOs: CEE Bankwatch Network (Central and Eastern Europe), les Amis de la Terre (France),
of 15
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
  The Mopanicopper mine,Zambia How Europeandevelopment moneyhas ed a mining scandal December 2010  The mission o “Counter Balance: Challenging the EIB” is to make the European InvestmentBank an open and progressive institution delivering on EU development goals and promotingsustainable development to empower people aected by its work. The Counter Balance coalitionconsists o the ollowing NGOs: CEE Bankwatch Network (Central and Eastern Europe), lesAmis de la Terre (France), urgewald (Germany), Campagna per la Riorma della Banca Mondiale(Italy), Both Ends (Netherlands), Bretton Woods Project (United Kingdom).CTPD (Centre or Trade Policy and Development) is an NGO with the objectives o inuencingpro-poor trade reorm at national, regional and multilateral levels as well as acilitating or theparticipation o various stakeholders - including member organizations - in ensuring that tradeis used as tool or poverty eradication. CTPD carries on advocacy work, monitoring o policies,and awareness raising activities related to trade issues. The network gathers 12 memberorganizations in Zambia and regularly collaborates with European NGOs.Les Amis de la Terre is an association or the protection o Man and the environment. Createdin 1970, the organization participated in the environmental movement in France, and in theormation o the largest global environmental network, Friends o the Earth International, withmore than two million members in 77 countries. Les Amis de Terre engages in advocacy witheconomic and political policy makers and policy and raises public awareness o environmentalissues. It relies on a network o 30 local groups. CONTENTS 1.2. 3. 4. 5.6.7.INTRODUCTIONZAMBIA’S MINES: A KEY SECTOR FOR DEVELOPMENT? The privatization o Zambia’s mines: opacity and corruptionA tax system that deprives the state o mining proftsCommunities heavily impacted by privatizationEnvironmental impacts poorly managed MOPANI: MINIMUM TAX REVENUE AND MAXIMUM SOCIALDEGRADATION A minimal contribution to the Zambian budgetPublic services abandonedForced expulsions and violation o human rightsTemporary, dangerous and poorly paid jobs DISASTROUS ENVIRONMENTAL IMPACTS An essentially environmental project?Mopani and air pollutionAcid water pollutionContamination by mining waste CONCLUSIONRECOMMENDATIONSANNEXES57 78911 12 12131516 18 18192021 232526Written by: Anne-Sophie Simpere - Les Amis de la Terre  Edited by: Greig Aitken - CEE Bankwatch Network  Translated by: Liz Libbrecht  Photo credits: Petr Hlobil, CEE Bankwatch Network, Anne-Sophie Simpere Layout: Ola Dolinska December 2010 This publication was produced with the nancial support o the European Commission. The content o this document is the sole responsibility o CEE Bankwatch Network and does not necessarily refectthe position o the European Union.  The Mopani copper mine, Zambia. How European development money has ed a mining scandal. 5 The European Investment Bank (EIB) is the fnancialinstitution o the European Union (EU). It invests inprojects that contribute to achieving the EU’s objectives.In Arica, the EIB supports European cooperation anddevelopment policies. It acts on a mandate rom theCotonou Agreements, the top priorities o which arepoverty alleviation, sustainable development, and thegradual integration o the Arican, Caribbean and Pacifc(ACP) states into the global economy 1 .When we examine the EIB’s activities in Arica, we fndthat it invests millions o Euros in large mining projects.Since 2000, loans amounting to 650 million Euros havebeen granted to mining companies on the continent.From 2000 to 2007, over 80% o EIB unding in Zambiawent to the mining sector 2 . 1 See the EIB website: See the EIB website:or-mining-projects.htm?lang=en The European Investment Bank: a catalyst or investment(s) Founded by the Treaty o Rome in 1958, the EIB is not well knownand keeps a low profle, even though it manages a loan portolioo EUR 79 billion (2009). Its shareholders are the member stateso the European Union who contribute to its capital. The bank’sorientations are thereore decided by the European fnance ministerswho orm the Board o Governors. France, UK, Germany and Italy arethe our largest shareholders o the EIB and have a decisive positionwithin the bank.Although its initial mission was to invest in Europe, the EIB hasgradually expanded its activities throughout the world. It fnancesprojects in Arica, in particular, where it has a development mandate.It thus claims to support projects that contribute to the achievemento the objectives o the Cotonou Agreement and the UN MillenniumDevelopment Goals (MDGs).EIB unding is o particular interest to frms as the bank has atriple-A rating on the fnance markets and can supply them with“long-term fnancial resources either not available at all or atleast not available on terms suitable to ensure the sustainability oprojects, while oten having a strong catalytic eect to attract othersources o unding” 1 . Thus, apart rom particularly avourable loanconditions, the EIB’s involvement sends a strong signal to privateinvestors, who will perceive the projects as less risky because theyare supported by this public institution.Since 2007, Les Amis de la Terre has been campaigning to challengethis international fnance giant and to redirect its investments.They have also participated in the creation o “Counter Balance:Challenging the EIB”, a coalition o NGOs in the bank’s shareholdercountries, set up to put international pressure on the institution.1 See the EIB website:or-mining-projects.htm?lang=en Even though the mining industry is highly controversial,the EIB considers that these investments can contributeto development, mainly because they create tax revenueor the host states and jobs or the local populations. Itrecognizes that the mines can have heavy environmentalimpacts, but claims that it pays “particular attention toenvironmental sustainability”, and “strong attention tothe social and governance acceptability o projects”. 3 Focus on a controversial project: Mopani  The present report examines the real impacts ondevelopment and the environment o a project unded bythe EIB: the Mopani copper mine in Zambia.This mine belongs to the consortium Mopani CopperMine (MCM), whose main shareholder is the Swiss frmGlencore. MCM owns the mines at Nkana and Muulira,both situated in the Copperbelt, a mineral-rich areastretching across a part o Zambia and the DemocraticRepublic o Congo. The Muulira mine borders on thetowns o Kantanshi, Kankoyo and Muulira. It consists oan underground mine, a concentrator, a smelter anda refnery. In February 2005 the EIB granted a EUR 48 millionloan to MCM or the construction o a new smelter atthe Muulira mine. The aim o this loan was to make itpossible to reduce pollution in the area by cutting dustand sulur emissions, to saeguard jobs, and to alleviatepoverty through economic growth and the spin-o oMCM’s activity (wages, taxes, social services) 4 .Our report was drawn up ater two missions to Zambia,in March 2009 and August 2010 with the NGO Center 3 Les Amis de la Terre, “Banque européenne d’investissement : six ansde fnancement du pillage minier en Arique”, November 2007.4 See the EIB website:or-mining-projects.htm?lang=-en 1.Introduction Map o Muulira. The mine is surrounded by three towns :Kantashi, Kankoyo and Muulira.  The Mopani copper mine, Zambia. How European development money has ed a mining scandal.The Mopani copper mine, Zambia. How European development money has ed a mining scandal. 67   6 or Trade Policy and Development (CTPD). We heldinterviews with Zambian government ofcials, localcouncillors, miners at MCM, and inhabitants o Muulira.We visited the smelter fnanced by the EIB and the areaaround the mine, especially the town o Kankoyo.We also collected ofcial reports and studies by localand international NGOs. Unortunately the managers oMCM reused to meet us.Our study also draws on inormation communicated bythe EIB on the mining projects that it fnances (oundon its website and in our correspondence – letters andemails – with the bank). Note that this inormationis oten limited. For instance, when we asked theEIB to supply us with environmental impact studies,presentation documents and project monitoringreports, we received nothing but 3-4-page “descriptivesummaries” 5 . On the basis o these data, our study leads us toconclude that: ã The mining context in Zambia does not enable us tobelieve that the Mopani project is likely to supportthe country’s development ã The project is benefting neither the Zambian statenor the local communities ã The project has disastrous environmental impacts.The positive eects o the project that were announcedhave thereore not been orthcoming, and its social andenvironmental impacts have been negative. Even worse,in this Zambian context, this situation was oreseeable.The Mopani project is only one example o the manymining projects that have received EIB support.Without being identical, many o the acts recorded atMopani apply to other cases. Thereore, roma broader perspective, this analysis raises the questiono the impacts o EIB-unded mining projects on theenvironment and development in general.Our conclusions suggest that the EIB is no longerendeavouring to meet its objective o implementingthe EU’s cooperation and development policies. Itis thereore necessary to urgently reorm the EIB’sactivities and the modalities o European unding ordevelopment. 5 EIB, “Summarized description o the project” (see Annex 1). Mining is a key activity in Zambia. It is important to beaware o its history and current situation i we are tounderstand the situation at Mopani. 1. The privatization o Zambia’s mines:opacity and corruption “Whatever the weaknesses o Zambia’s negotiators,there is no excuse or massive multinational investors toblackmail one o the world’s poorest countries to providespecial concessions rom its national laws.”   Alastair Fraser and John Lungu, For Whom the Windall ?Zambia is an inland country in southern Arica that isparticularly rich in mineral resources, especially copper.At the end o the 19th century, the country was colonizedby Cecil John Rhodes’ British South Arican Company(BSAC) which mined its mineral wealth. The mines weresubsequently taken over by two mining giants, RoanSelection Trust (RST) and Anglo American.In 1964 Zambia gained its independence and in 1969the government announced the nationalization o themining industry. The state took over a majority share inall the country’s mines, through two national companiesthat merged in 1982 to orm the Zambian ConsolidatedCopper Mines (ZCCM).At the time, ZCCM was responsible not only or miningbut also or public and social services throughout theCopperbelt: maintaining the towns, health, education,housing, recreation, etc. Through a system sometimesqualifed as paternalist, ZCCM acquired crucialimportance in the region, where it was present inall aspects o the lives o its employees andneighbouring communities.At the time, on a macro-economic level, Zambiaremained a moderate-income country with a GDPhigher than that o Brazil. But with an economy basedessentially on copper mining and exports, it was hit veryhard by the oil crises and plummeting copper pricesin the 1970s. The result was a drastic increase in itsdebt and, in the 1990s, structural adjustment policiesimposed on it by its fnancial backers.Thus, under the inuence o its lenders – especiallythe World Bank – and ollowing the election o a newgovernment in 1991, Zambia decided to dismantle andprivatize its mines. The price o copper was very lowat the time, and the country was heavily in debt. MrsEdith Nawakwi, ormer fnance minister responsibleor supervising the privatizations, commented: “Wewere told by advisers, who included the InternationalMonetary Fund and the World Bank, that not in mylietime would the price o copper change. Theyput production models on the table and told us thatthere [was] no copper in Nchanga mine, Muulirawas supposed to have fve years’ lie let and all theproduction models that could be employed were showingthat, or the next 20 years, Zambian copper would notmake a proft. [Conversely, i we privatised] we wouldbe able to access debt relie, and this was a huge carrotin ront o us – like waving medicine in ront o a dyingwoman. We had no option [but to go ahead]” 6 .From 2004, the price o copper shot up to record levels,even topping the 7,000 dollar per ton mark: a 350%increase compared to prices at the time o privatization.The process o privatization o the mines rom 1997to 2000 was characterized by Zambia’s weakness anda context o rampant corruption. Frederick Chiluba’spresidency (1991-2001) has been called the “decadeo plundering”. In power during the privatization, thisormer president was prosecuted and sentenced ormisappropriation o unds by the London High Court in2007. The sentence will not be applied in Zambia.In this context, privatization negotiations took place inopaque conditions, resulting in the mines being sold o.Dr. M. Mpande, proessor at the University o Zambia(Lusaka) and ormer vice-minister o mining, explained 6 ACTSA, SCIAF and Christian Aid, “Undermining Development?Copper mining in Zambia”, October 2007. 2.Zambia’s mines: a key sectoror development? EIB loans in Zambia 2000-2010 The EIB’s lending policy in Zambia is striking. Between2000 and 2010, ten out o ourteen projects involved themining industry. This comes down to a share o 81%o the total amount o the EIB loans engaged in thisperiod. For some o these projects, such as the KansanshiCopper Mine, the 8th largest copper mine 1 , anEnvironmental Impact Assessment is untraceable.Neither the EIB nor the Environmental Council oZambia (ECZ) was able to provide this document.Ater pressure rom civil society organisations theEIB published only a two-page ‘Project SummaryInormation’ saying “Mine and plant design appearsto be compliant with international best practice andnational laws”. 2   EIB lending in Zambia to the mining sectorbetween 2000-2010 Project: Munali Nickel Mine Project Loan amount: 29.5 million eur Project description: Development o new underground nickel mine andconstruction o processing plant in Munali, south o Lusaka Signature date: 24th April 2007 Project: Small scale mining sector loan (sysmin) Loan amount: 8,5 million euros Project description: Financing or small and medium-scale ventures in thenon-traditional mining sector Signature date: 13th December 2006 Project: Lumwana Copper Project Loan amount (in 3 dierent contracts): 85 million euros (in total) Project description: Development o new copper mine near Lumwana inNorth-Western Province o Zambia Signature date: 29th November 2006 Project: Mopani Copper Project Loan amount: 48 million euros Project description: Rebuilding and modernisation o Muulira copper smelter Signature date: 25th February 2005 Project: Kansanshi Copper Mine Loan amount: 34 million euros Project description: Development o open-pit copper mine in Kansanshi,north-west Zambia Signature date: 11th December 2003 Project: Bwana Mkubwa Mining Expansion Loan amount: 14 million euros Project description: Expansion o a copper production acility near Ndola Signature date: 9th August 2002 Project: Lumwana Study Loan amount: 7 million euros Project description: Feasibility study or mining o copper deposits in Lumwana Signature date: 18th October 2001 Project: Small scale mining sector loan (sysmin) Loan amount: 8 million euros Project description: Financing or small and medium-scale ventures in thenon-traditional mining sector Signature date: 12th October 2000 Source: EIB website, 02.12.2010 1/Kansanshi_Fact.pd2 Project summary inormation: Kanshanshi Copper Mine And PowerSystem (Zambia). Source: EIB website A copper mine around Kabwe (Copperbelt)
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks

We need your sign to support Project to invent "SMART AND CONTROLLABLE REFLECTIVE BALLOONS" to cover the Sun and Save Our Earth.

More details...

Sign Now!

We are very appreciated for your Prompt Action!