Southern African Resource Watch and Zambia: What are they trying to achieve?

The advantage of mining is that it can bring development through corporate taxation and income to communities from a resource which otherwise would be likely to remain dormant given the technical difficulties and cost of extraction at depth and in scale, processing and shipping. The advantage of getting private sector companies rather than public sector agencies to do this is one of efficiency, as the bitter experience of Zambia’s mine nationalisation shows. At the end of that sorry period, far from making a profit, it was costing the government $1-million per day simply to keep the mines open.

The challenge of mining, especially in poorly governed environments, is that this fiscal benefit depends on a reasonably efficient and ethical government, without which many of the tax benefits can be squandered. Achieving such an advantage also thus inevitably relies on having a corporate player interested in taking a long-term view, and one which is intent on investing in the communities in which it operates.

Read Edward Lange’s review of his own Southern African Resource Watch (SARW) report, Living in a Parallel Universe: First Quantum versus the mining communities in Zambia, and one would believe that First Quantum, the largest investor in Zambia, was an evil extractor, not a long-term stakeholder.

Yet it is the report’s authors who are living in a parallel universe in presenting such a shoddy piece of work which remarkably did not include an interview with the mine itself or even space for First Quantum to present its perspective. Perhaps that should be expected of a simple hatchet job riddled with factual inaccuracies and bogus assumptions.

The report begins:

“Instead of growing hope, Zambia’s Kansanshi mine’s corporate social responsibility programme is undermining the hope of poor communities. The mine does not attach significant importance to the economic and social transformation of mining communities, and most of the company’s corporate social responsibility activities reflect a total lack of seriousness in conceptualisation, design, financing, implementation, monitoring and evaluation.”

The mine’s 13-year history and the development trajectory of Solwezi suggests the contrary.

Before First Quantum arrived to invest in a defunct mine, Solwezi was one of the poorest towns in Zambia. To date, First Quantum has invested more than $5.7-billion in Kansanshi’s mine and smelter along with Sentinel Mine in Kalumbila. It has paid more than $3.3-billion in corporate taxes. More than that, it has created employment for 8,500 people.