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Glencore copper and cobalt mining, Zambia


Description:

(Español, abajo) Summary of the conflict The main activity of Glencore in Zambia is the mining of copper and cobalt, which is carried out through the subsidiary Mopani Copper Mines mainly on the Copperbelt province in the areas of Mufulira and Kitwe. The environmental effects of mining activities specific to the Mufulira Kanyono site are mainly air, water and land/soil pollution, mainly due to sulphur dioxide emission above WHO minimums in the construction of the extraction plants, and causing permanent damage to livelihoods and cultivations. The pollution forms acid rain and endangers plant life. Furthermore, Mopani Copper Mines smuggles its profits out of Zambia without paying taxes and bringing profits to a tax haven, Switzerland, according to a leaked Financial Audit Report carried out by tax specialists Grant Thornton and Econ Poyry, analysing the balances of the company and mine activities from 2003 to 2008.

History of the conflict The mining sector in Zambia is consolidated and has been mining copper working for over a hundred years. Prior to the privatization of the mines in the 1990’s and early 2000s’, the Zambian mining sector was seen as a reflection of the state’s developmental philosophy and fruitful public investment of produced revenues. The mines managed the environment in the mine townships, maintained the roads, collected refuse and also supported and maintained recreation centres doted around the townships. Key industries related to the mining sector also flourished, and brought consistent wealth to the country.

However, the now privately owned mining companies have a focus on profit making and further been involved in serious incidents of environmental mismanagement that have compromised the health of the local people. The activities of Glencore in Zambia are now conducted by a subsidiary company named Mopani Copper Mines, and notwithstanding the incentives and the profitability of its mining operations, Mopani Copper Mines has reported zero profits for over ten years of operations in Zambia, until 2012.

Zambia needs tax revenue, in order to fund education, health and other infrastructures of public utility. In addition to this, the emissions of sulphur dioxide from mining are associated with diseases, acid rains, crops diseases, and other environmental damage that the company agreed to reduce but failed to do so effectively until this moment.

The environmental effects of mining activities are mainly air, water and land/soil pollution. The pollution of air is due to sulphur dioxide emission from the smelter. It was established that Mopani Copper Mines’ purification method allowed sulphur dioxide 70 times above the WHO minimums. The sulphur dioxide emitted in the air sometimes forms acid rain in the rainy season and this endangers plant life, and inhibits the growth of vegetation by poisoning the soil. The emissions of sulphur dioxide also pose serious risks of respiratory diseases for workers and populations exposed to it. A section of the mining site in Mufulira was even closed in 2012 because of its pollution levels, and since the acid mists produced was harming local communities and damaging the environment.

Furthermore, Mopani Copper Mines smuggles its profits out of Zambia without paying taxes and bringing profits to a tax haven, Switzerland, according to a leaked Financial Audit Report carried out by tax specialists Grant Thornton and Econ Poyry, analysing the balances of the company and activities mine from 2003 to 2008.

The role of the Architecture of Impunity During the nineties, via pressure of the International Monetary Fund (IMF) and the World Bank, foreign investors entered the liberalised market and overtook most national companies that were privatised and are now owned by foreign capital. Zambian authorities adopted fiscal and political measures required by international creditors and created an environment attracting foreign investment, especially through low taxes and an assortment of exemptions. Many of these measures were even softened through development agreements signed by the government of Zambia directly with several different transnational corporations individually, granting specific favourable conditions to each.

In particular, the Government tried to review the mining tax regime and introduce the windfall tax in 2008. This tax was introduced to establish an equitable distribution of the mineral wealth between the government and the mining companies. The measure obviously faced a lot of resistance from the mining companies and was revoked in 2009. In addition, that same year other reforms were introduced including the abolishment of several development agreements. Besides the tax benefits, Mopani Copper Mine received a massive 48 million Euros loan from the European Investment Bank for the purposes of smelter up-grade project.

Attempts of access to justice MCM had violated the OECD’s guidelines on Multinational Corporations and Human Rights, as it resorted to accounting manipulations to conceal its profits and to reduce its imposable tax base. Implying transfer pricing between Mopani and its distribution partner (Glencore), failed to comply with the OECD’s arm’s length principle. Further violations of the OECD guidelines violations include the breaching of local communities human rights, the failure to communicate and consult with communities on environmental, health and safety policies, and breach of the WHO limits on sulphur dioxide emissions.

Following the appearance of the devastating effects of mining, in 2011 the Centre for Trade Policy and Development initiated a campaign called “Pay up, Clean up or Get Out!”. This is a Public Interest Initiative to Restore and Compensate Environmentally Damaged Communities resulting from operational activities by Multinational Companies operating in selected communities in Zambia. The Campaign focuses on empowering local communities that directly affected by the negative effects on the environment by the mining operations, while seeking to highlight, expose, and follow up on incidences and cases of environmental pollutions (air and water), soil degradation, and related damages. The campaign involved a number of regional and international organisations to highlight consequences of the mining, like the Zambia Alternative Mining Indaba and the Capetown Alternative Mining Indaba.

One of the major activities under this campaign has been a civil litigation case against Mopani Copper Mines in European courts, as well as Zambian courts, for the acid spoilage in the domestic water supply which contaminated the entire district of Mufulira in 2008 due to the ion consequence of the mining method “Acid leaching” process to extract copper from the ore body underground. The Centre for Trade Policy and Development and other organization including SHERPA (France), the Berne Declaration (Switzerland), l’Entraide Missionnaire (Canada), and MiningWatch (Canada), filed a complaint in 2011 against Glencore International AG and First Quantum Minerals Ltd before Swiss and Canadian OECD National Contact Points for violating the Guidelines for Multinational Enterprises. The argument for the complaint is in the financial and accounting manipulations of the subsidiary Mopani Copper Mines aimed at evading taxation in Zambia. An agreement with the company was reached through mediation, but this was a disappointment, as it did not go further than an agreement to disagree. The result shows that there is no point in dialoguing with the company on this, as it hads not even complied with its commitment to respond to a detailed set of questions regarding its tax payments. Moreover, some of these organisations together with Christian Aid, Oxfam International, Friends of the Earth France and Tax Justice Network Africa, wrote to the European Investment Bank urging it to give suit to the investigations on tax evasions by Mopani Copper Mines in Zambia. Despite this, the results of the investigation were not made public; the President of the European Investment Bank gave order not to accept new loan applications from Glencore and its subsidiaries due to the group’s concerning corporate governance.

What Justice could do: a say from the TPP In a hearing that was held in Geneva in June 2014, the Permanent People’s Tribunal (PPT) listened to the testimonies of Nkula Edward Goma, of Centre for Trade Policy and Development. In line with the evidence brought before the judges by this witness, the Tribunal recognized the actions of the transnational corporation as another example of violations of human and people rights. In line with its full judgement of Madrid, in May 2010, and just a few months before the session that was subsequently held in Mexico in December 2014, the PPT underlined once again how transnational corporations, including Glencore and its subsidiary in Zambia, systematically violate human and peoples’ rights to their own profit. In the same line, the PPT recognized in this widespread practice the current shortcoming of international law, namely the impossibility of accessing justice and obtaining a remedy that is increasingly becoming an unbearable burden for affected communities, as well as for the laws that are supposed to give them shelter. In the same spirit, the PPT acknowledged the necessity to improve international legislation, including through a binding treaty on transnational corporations, and/or a peoples’ treaty, in order to hold transnational corporations accountable for their actions.

Español Resumen del conflicto La principal actividad de Glencore en Zambia es la minería de cobre y cobalto, que la compañía lleva a cabo a través de la subsidiaria Mopani Copper Mines principalmente en la provincia Copperbelt en las áreas de Mulfulira y Kitwe. Los efectos sobre el medioambiente son principalmente la contaminación de aguas, del aire y sobretodo de terrenos, una polución que aumentó sobre todo durante la construcción de las planta de la compañía, cuando las emisiones de dióxido de sulfuro producidas se situaban de mucho por encima de los estándares mínimos de la OMS, dañando así de forma permanente las cultivaciones y medios de sustentación de la población local. Este tipo de polución, de hecho, favorece la formación de lluvias ácidas, que ponen en peligro la supervivencia de la vida vegetal. Además, Mopani Copper Mines trafica sus beneficios fuera del país si pagar impuestos y depositándolos en paraísos fiscales, sobretodo Suiza, como se evidencia en una auditoria financiaría de los especialistas Grant Thorton y Econ Poyry que analiza los balances de la compañía y las actividades de minería de 2003 hasta 2008.

Historia del conflicto El sector minero en Zambia está muy consolidado y tiene una historia de extracción de cobre de más de cien años. Antes de la privatización de las minas en los años 1990 y los años 2000, el sector minero de Zambia se consideraba una expresión de la filosofía del gobierno que era favorable al desarrollo, y también como una inversión pública de valor. Las minas gestionaban el medioambiente de forma sustentable, mantenían las vías y carreteras, recogían desechos y suportaban centros de recreo y educación en las ciudades mineras. Las industrias clave relacionadas con la minería también florecían, llevando así consistentes beneficios al bienestar y a la riqueza del país.

Compañías de minería que ahora están completamente privatizadas, por contrario, se centran solo en los beneficios, y han estado involucradas en serios accidentes de mala gestión medioambiental que resultaron en perjuicios para la salud de las personas. Las actividades de Glencore en Zambia son conducidas por una subsidiaria llamada Mopani Copper Mines, que a pesar de recibir consistentes incentivos para sus actividades, ha declarado beneficios nulos durante más de diez años en Zambia, hasta 2012. Zambia obviamente necesita renta fiscal, sobre todo para financiar educación, salud, y otras infraestructuras públicas. Además de esto, las emisiones de dióxido de sulfuro que vienen de la mina están asociadas con enfermedades, lluvias ácidas, enfermedades de las cosechas, y otros daños medioambientales que la empresa prometió reducir, aunque todavía no haya cumplido con esta promesa de forma efectiva.

Los efectos de las actividades de minería son principalmente la polución de agua, de aire, y sobre todo del suelo. Esta se debe a emisiones de dióxido de sulfuro que vienen de la fundición. Fue probado que los métodos de purificación de Mopani Copper Mines permitía la subsistencia de niveles de dióxido de sulfuro 70 veces mayores que la máxima cantidad permitida por los estándares mínimos de la OMS. El dióxido de sulfuro en el aire puede formar lluvias ácidas en la temporada de lluvias, y estas dañan irreparablemente formas de vida tanto animales como vegetales, además de inhibir aún más el futuro crecimiento de vegetación por el envenenamiento del suelo. Estas emisiones también suponen graves riesgos de enfermedades respiratorias para los trabajadores que estén expuestos a ellas. Una parte del sitio minero de Mufulira incluso se cerró en 2012 por sus niveles de polución, y porqué la niebla y el vapor ácidos estaba dañando a comunidades locales y el medioambiente.

El papel de la Arquitectura de Impunidad Durante los noventa, gracias a las presiones del FMI y del Banco Mundial, inversores extranjeros accedieron al mercado liberalizado, y muchas compañías nacionales ahora están en mano de capitales extranjeros. Las autoridades de Zambia adoptaron medidas fiscales y políticas que requerían los acreedores internacionales, creando así un entorno favorable para la inversión extranjera, particularmente a través de impuestos más bajos y de varias exenciones fiscales. Algunas de estas medidas incluso se ablandaron a través de acuerdos de desarrollo firmados específicamente entre el gobierno de Zambia y algunas empresas transnacionales, que conceden condiciones todavía más favorables.

En particular el gobierno trató de revisar el régimen fiscal para la minería y de aprobar un impuesto sobre dinero no trazable en 2008. Este impuesto fue introducido para establecer una distribución equitativa de la riqueza de la minería entre el gobierno y las empresas. Obviamente se enfrentó a mucha oposición por parte de las empresas mineras, y tuvo que abandonase en 2009. El mismo año se introdujeron otras reformas, inclusas las que abolieron muchos acuerdos de desarrollo. A parte de los beneficios fiscales, Mopani Copper Mine recibió un masivo préstamo del Banco Europeo de Inversión, vinculado al objetivo de SMELTER UP el proyecto.

Intentos de acceso a la justicia Mopani Copper Mine ha violado las líneas directrices de la OECD sobre multinacionales y derechos humanos, porqué recurrió a manipulaciones contables para esconder sus beneficios y reducir su renta imponible. Mediante técnicas de transferencia de precios entre Mopani Copper Mine y su socio de distribución – Glencore – la empresa violó el principio OECD “arm-lenght”. Otras violaciones de las directrices de la OECD incluyen las violaciones de derechos humanos, la falta de consultaciones con la población local sobre cuestiones relativas a medioambiente, políticas de seguridad y salud, como asimismo a la violación de los limites emisiones de dióxido de sulfuro de la OMS.

Después de la aparición de los efectos devastadores de la minería, en 2011, el Centro para Políticas de Comercio y Desarrollo inició una campaña llamada “Pagar, Limpiar, y Salir!”. Esta es una iniciativa de interés público para restaurar y resarcir comunidades locales afectas por daños medioambientales resultados de actividades de las empresas transnacionales en Zambia. La campaña se enfoca en apoderar a comunidades locales directamente afectadas por las actividades mineras, mientras también trata de subrayar, exponer, y dar seguimiento sobre la incidencia y otros casos de polución medioambiental, degradación del suelo, y daños relacionados. La campaña involucró a varias organizaciones regionales e internacionales que evidencian las consecuencias de la minería, como por ejemplo Zambia Alternative Mining Indaba y la Capetown Alternative Mining Indaba.

Una de las actividades principales de esta campaña ha sido la litigación en casos civiles contra Mopani Copper Mines en Cortes tanto Europeas como de Zambia, para la contaminación de cuencas de agua y aprovisionamientos domésticos que afectó al entero distrito de Mufulira en 2008 en consecuencia de la utilización del método drenaje ácido para extraer cobre del subsuelo. El Centro para Politicas Comerciales y de Desarrollo, y otras organizaciones entra las que están SHERPA (Francia), la Berne Declaration (Suiza), l’Entraide Missionnaire (Canadá), y MiningWatch (Canadá), en 2011 interpusieron una querella en los puntos de contacto nacionales de Suiza y Canadá de OECD, por violación de las directrices OECD sobre multinacionales y derechos humanos. Se consiguió un acuerdo con la compañía por la mediación, pero este mismo fue una decepción, ya que no fue más que acuerdo de desacuerdos. El resultado muestra como el dialogo con la empresa sea difícil y también de dudosa utilidad, ya que esta ni siquiera cumplió con su compromiso de responder a una detallada serie de preguntas sobre sus pagos de impuestos. Además, algunas organizaciones involucradas en la campaña, junto con Christian Aid, Oxfam International, Amigos de la Tierra France y Tax Justice Network Africa, escribieron una carta al Presidente del Banco Europeo de Inversiones para que este se negara a aceptar otros requerimientos de financiación de Glencore y sus subsidiarias por sus discutibles conductas de gobernanza corporativa.

Lo que la justicia podría hacer: una opinión del TPP En la sesión en Ginebra de junio, 2014, el Tribunal Permanente de los Pueblos (TPP) escuchó el testimonio de Nkula Edward Goma del Centro de Politicas de Comercio y Desarrollo. De acuerdo a lo expuesto ante los jueces del tribunal, éste reconoció las acciones de la corporación transnacional como otro ejemplo de violaciones de derechos humanos y de los pueblos. De acuerdo a la sentencia de Madrid, en mayo de 2010, y unos meses antes de la sesión que tuvo lugar en México en Diciembre 2014, el TPP resaltó de nuevo cómo las corporaciones transnacionales, incluida Glencore, violan sistemáticamente estos derechos para su propio beneficio. El tribunal reconoció en esta extendida práctica la evidente limitación del derecho internacional. La imposibilidad del acceso a la justicia y a obtener remediación está convirtiéndose en una carga cada vez mayor para las comunidades afectadas, así como las leyes que deberían protegerlas. Así mismo, el TPP reconoció la necesidad de mejorar la legislación internacional, incluyendo un tratado vinculante para las corporaciones transnacionales y un Tratado de los Pueblos, para que así estas empresas sean consecuentes con sus acciones.

Basic Data

Name of conflict:Glencore copper and cobalt mining, Zambia
Country:Zambia
State or province:Copperbelt
Location of conflict:Mufulira and Kitwe
Accuracy of locationMEDIUM (Regional level)

Source of Conflict

Type of conflict. 1st level:Mineral Ores and Building Materials Extraction
Type of conflict. 2nd level:Mineral processing
Mineral ore exploration
Land acquisition conflicts
Specific commodities:Copper
Cobalt

Project Details and Actors

Project details

Mopanis stated production capacity is 250,000 tonnes of copper and 2,400 tonnes of cobalt per year

Source: Glencore International Plc. Mopani production briefing: http://www.hkexnews.hk/listedco/listconews/sehk/2011/0513/00805_1074520/EWPGLENCORE-20110511-43.pdf

Project area:19,000
Level of Investment:Mopani Copper Mines claims US$2 billion spent
Type of populationRural
Company names or state enterprises:Mopani Copper Mines PLC from Zambia
Glencore Public Limited Company from Switzerland
Relevant government actors:Zambia Environmental Management Authority , Zambian Ministry of the Environment, Environmental Council of Zambia , Ministry of Mines and Minerals Development
International and Finance InstitutionsEuropean Investment Bank (EIB)
The World Bank (WB) from United States of America
International Monetary Fund (FMI)
Environmental justice organizations (and other supporters) and their websites, if available:Citizens for a Better Environment, Centre for Trade Policy and Development, Earth and Environmental Organisation, Green and Justice, Global Campaign to Dismantle Corporate Power, Permanent Peoples Tribunal

Conflict & Mobilization

IntensityLATENT (no visible organising at the moment)
Reaction stageIn REACTION to the implementation (during construction or operation)
Groups mobilizing:International ejos
Local ejos
Neighbours/citizens/communities
Forms of mobilization:Development of a network/collective action
Involvement of national and international NGOs
Lawsuits, court cases, judicial activism
Official complaint letters and petitions

Impacts

Environmental ImpactsVisible: Air pollution, Food insecurity (crop damage), Soil contamination, Waste overflow, Surface water pollution / Decreasing water (physico-chemical, biological) quality, Groundwater pollution or depletion, Mine tailing spills
Health ImpactsVisible: Occupational disease and accidents, Other environmental related diseases
Potential: Exposure to unknown or uncertain complex risks (radiation, etc…), Mental problems including stress, depression and suicide, Deaths
Socio-economical ImpactsVisible: Increase in Corruption/Co-optation of different actors, Displacement, Lack of work security, labour absenteeism, firings, unemployment, Loss of livelihood, Land dispossession

Outcome

Project StatusIn operation
Conflict outcome / response:Strengthening of participation
Do you consider this an environmental justice success? Was environmental justice served?:No
Briefly explain:Although the leaching plant that was closed in 2012 has reopened after certain conditions were met by the mine, there are numerous reports going back over 10 years which indicate that environmental pollution is a recurring problem. It therefore seems likely that there will be further cases of pollution.
Aunque la planta cerrada en 2012 ha vuelto a abrir después de que varias condiciones fueran respetadas por la mina, existen varios informes de los últimos 10 años que indican que la contaminación medioambiental es un problema recurrente. Por tanto parece probable que surjan nuevos casos de contaminación.

Sources & Materials

Juridical relevant texts related to the conflict (laws, legislations, EIAs, etc)

Environmental Protection and Pollution Control
http://faolex.fao.org/docs/pdf/zam5388.pdf

Guidelines on Multinational Corporations and Human Rights (OECD)
http://www.oecd.org/corporate/mne/oecdguidelinesformultinationalenterprises.htm

(Environmental Impact Assessment) Regulations, 1997

Mines and Minerals Act 1995
http://faolex.fao.org/docs/pdf/bhu85137.pdf

References to published books, academic articles, movies or published documentaries

Glencore in Zambia: The Tax Questions That Persist
http://www.christianaid.org.uk/pressoffice/pressreleases/may_2015/glencore-in-zambia-the-tax-questions-that-persist.aspx

Case overview, Sherpa et al vs Glencore International AG
http://oecdwatch.org/cases/Case_208

Stealing Africa: How Copper Industry Leaves Zambia in Poverty, November 26, 2012
http://www.ibtimes.co.uk/stealing-africa-mining-zambia-poverty-glencore-mopani-408563

Glencore report: European Investment Bank must drag its secrets into the light, 20 August 2014
http://www.theguardian.com/global-development/poverty-matters/2014/aug/20/glencore-report-european-investment-bank-secrets

Global Campaign to Stop Corporate Impunity
stopcorporateimpunity.org

Centre for Trade Policy and Development
http://www.ctpd.org.zm/

The Guardian - European Investment Bank accused of suppressing Zambian mining report
http://www.theguardian.com/global-development/2014/apr/03/european-investment-bank-inquiry-zambian-miner

Testimony of the case in the Permanent Peoples Tribunal Hearing - Corporate Human Rights Violations and Peoples Access to Justice. Geneva, 23 June 2014
http://justice5continents.net/fc/viewtopic.php?t=1065&vplay=1

Accusations of Glencore-Zambia tax probe cover-up
http://www.mining.com/accusations-of-glencore-zambia-tax-probe-cover-up-80762/

Glencore report: European Investment Bank must drag its secrets into the light
http://www.theguardian.com/global-development/poverty-matters/2014/aug/20/glencore-report-european-investment-bank-secrets

Glencore halts copper projects in Zambia over tax row
http://www.mining.com/glencore-halts-copper-projects-in-zambia-over-tax-row-83784/

Other comments:See more at: http://www.ctpd.org.zm/

Meta information

Contributor:Global Campaign to Dismantle Corporate Power, Transnational Institute - TNI, Centre for Trade Policy and Development (CTPD)
Last update08/06/2015

Images

 

Glencore plant

Source: http://www.mining.com/accusations-of-glencore-zambia-tax-probe-cover-up-80762/

View of the Mobani plant

Source: The Guardian