Session 4 - Views of extractive companies on EITI

This session - Views of extractive companies on EITI: Kamoto Copper Company (DRC) and Mopane Copper Mining (Zambia) - was was designed to allow representatives of companies in the region to give their views on the way the EITI operates and to make recommendations about how to increase and improve the participation of companies in the initiative.

Claude Kabemba's picture

Director of the Southern Africa Resource Watch (SARW)

October 3rd, 2012

This session - Views of extractive companies on EITI: Kamoto Copper Company (DRC) and Mopane Copper Mining (Zambia) - was was designed to allow representatives of companies in the region to give their views on the way the EITI operates and to make recommendations about how to increase and improve the participation of companies in the initiative.

Simon Tumawaku, President of the Kamoto Copper Company (KCC), presented the views of mining companies on the implementation of the EITI in the DRC. Tumawaku stated that the EITI/RDC 2007 report listed 20 companies, whereas the 2008-2009 report listed 21 mining companies in production, 14 in exploration and 22 mineral buying counters – in addition to six oil companies. He indicated that the EITI provides an opportunity – and indeed an incentive – for companies to pay taxes correctly and to contribute more to the nation’s economy. He decried the fact that many people believe that extractive companies take all the profits and do not pay taxes. In his opinion, the companies are transparent and some of them are helping to fund the EITI process.

In conclusion, Tumawaku highlighted the following key issues:

  • The number of companies involved in the process should be increased;
  • The fact that companies are financing the process demonstrates that they are interested in seeing the process continue and make progress; and,
  • As the EITI process makes progress, companies will see their management improve.

Charles Nakasama, Tax Manager for Mopani Copper Mines in Zambia, stressed that the initial responsibility of mining companies is to provide the conciliator with information. This information is given in the form of financial reports, which are duly audited and approved. Mopane has been working with the EITI since the beginning of the process and submits information for conciliation. A high level official of the company participates in the EITI process. However, Mopani is not the only company that is involved. The Chamber of Mines appoints five representatives from its member companies to sit on the council of the multi-stakeholder group.

Discussion

The participants discussed several key questions, including the:

  • Credibility of the information provided by companies;
  • Truthfulness of the figures that companies declare;
  • Benefits gained by the companies; and,
  • Publication of company or project data.

With regard to the reliability of data, the companies referred to the law that stipulates what must be done – adding that sometimes declarations are made on audited accounts. In relation to the payment of taxes, the companies said that they have to pay far too much, as considerable budgets are also set aside to fund social projects. With regard to declarations, they are either based on the company or on the project. The stakeholders have indicated that when there is a single project, it is confused with the company and it is the latter which makes the declarations. However, when a company has several projects, each project corresponds to one company and declarations are made per company.

According to Mopani, each project has a separate licence and each one has particular conditions pertaining to it. Mopani has two projects – or two mines – in Zambia, which are situated in different parts of the Copperbelt. Cobalt and tin is extracted from the mines but under the same single license. Therefore, production takes place at two different sites but the data is compiled into a single report.

In their replies, the representatives of both companies came back to the question of the publication and transparency of contracts. And they both identified the following challenges:

  • Delay in the transmission of information to the conciliator; and,
  • Poor communications between the Secretariat and the conciliator, which causes a delay in the process.

The participants also discussed the fact that deviations have been noticed between the companies' declarations and those of financial bodies. Factors responsible for this discrepancy include:

  • Time lapse between receiving the required information and the length of time it takes to compile and publish the report (for example, the publication in 2010 of the 2008 report);
  • Problems posed by different types of taxes; and,
  • Intentional errors on the part of government officials.

Lessons learnt by Mopani include producing financial reports that cover contract terms and not just the project’s operations. For KCC, one of the most positive steps is the fact that mining contracts in the DRC have now become public documents, which are published on the website of the Ministry of Mines.

About the author(s)

Claude Kabemba is the Director of the Southern Africa Resource Watch (SARW). In 2006, the Open Society Initiative for Southern Africa (OSISA) asked him to spearhead the formation of SARW. He holds a PhD in International Relations (Political economy) at the University of the Witwatersrand (Thesis: Democratisation and the Political Economy of a Dysfunctional State: The Case of the Democratic Republic of Congo). Before joining SARW, he worked at the Human Sciences Research Council and the Electoral institute of Southern Africa as a Chief Research Manager and Research Manager respectively. He has also worked at the Development Bank of Southern Africa and the Centre for Policy Studies as Policy Analyst. Dr. Kabemba’s main areas of research interest include: Political economy of Sub Saharan Africa with focus on Southern and Central Africa looking specifically on issues of democratization and governance, natural resources governance, election politics, citizen participation, conflicts, media, political parties, civil society and social policies. He has consulted for international organizations such Oxfam, UNHCR, The Norwegian People’s Aid, Electoral Commissions and the African Union. He has undertaken various evaluations related to the work of Electoral Commissions and civil society groups interventions in the electoral process in many African countries. He is regularly approached by both local and international media for comments on political and social issues on the continent. His publication record spans from books (as editor), book chapters, journal articles, monographs, research reports, and newspaper articles.

Contacts

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