Accusations of Glencore-Zambia tax probe cover-up

Nkana open pit and headgear in Kitwe by Per Arne Wilson
Nkana open pit and headgear in Kitwe by Per Arne Wilson

The findings of a two-year investigation into possible tax avoidance by a Zambian copper operation of Swiss commodities giant Glencore (LON:GLEN) will not be made public by The European Investment Bank.

In 2005, the EIB – which is owned by EU member states and in 2013 provided some $75 billion in loans – loaned $50 million to Mopani Copper Mines, the the southern African nation’s largest copper mine for the overhaul of a copper smelter to reduce sulphur dioxide emissions.

In 2009, a leaked audit report suggested that Mopani, 73%-owned by Glencore, avoided paying tens of millions of dollars in Zambian taxes. The EIB decided to stop any further lending to the mine and launched an investigation.

Zambia tax haul from mining amounts to just 2.4% of the value of mineral exports

In 2011 a group of NGO’s led by human rights campaigner Christian Aid filed a complaint. This is Money reports the findings of the report will be kept secret, despite a recommendation by the bank’s own internal complaints team that details of the investigation be made public:

‘This is a scandal,’ said [Christian Aid’s] economic justice spokesman Toby Quantrill.

‘The Bank is covering up a report on a matter of huge public interest both in Europe and in Africa: did a Glencore-controlled company evade tax or not?

‘It is time that they dragged the Bank into the light, so people can find out more about the projects to which it lends – including whether they pay their taxes.’ In a response to Christian Aid, the EIB’s complaints team ‘expresses its preference to disclose a redacted version of the Fraud Investigations Report’.

Glencore bought the Mopani complex from the Zambian government in 2000. Canada’s First Quantum Minerals holds  16.9% and state investment company ZCCM owns 10%.

Mopani operates four underground mines, a concentrator and a cobalt plant in the town of Kitwe and an underground mine, concentrator, smelter and refinery in the town of Mufulira.

The refurbishment of the Mufulira plant, blamed for sulphur dioxide respiratory diseases and environmental damage,  has now been completed. Mopani is also nearing completion of a $322 million underground expansion at Kitwe’s Nkana mine.

Mopani employs 17,000 people in Zambia and its stated production capacity is 250,000 tonnes of copper and 2,400 tonnes of cobalt.

According to the 2013 Africa Progress Report  while Zambia’s minerals industry exported a total of  $10 billion in 2011, Zambia itself collected only $240 million in tax mining revenue, which amounts to just 2.4% of the value of mineral exports, reports Global Journalist.

Image of Nkana open pit and headgear in Kitwe by Per Arne Wilson