20 February 2019

Zambia: Southern African Resource Watch and Zambia - What Are They Trying to Achieve?

analysis

Read Edward Lange's review of his own Southern African Resource Watch 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.

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...

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