Glencore lent itself money before passing ‘loan’ to govt

Glencore lent itself money before passing ‘loan’ to govt

GLENCORE LENT MOPANI MONEY, NOW ZAMBIA WILL PAY BACK THAT MONEY TO GLENCORE, CTPD SAY

By Logic Lukwanda

The Centre for Trade Policy and Development (CTPD) has noted with concern, that Glencore, the former owners of Mopani Copper Mines which the Zambian government has acquired at a cost of $1.5 billion lent itself money for the operations of MCM.

CTPD Senior Researcher-Extractives Webby Banda notes that this is clear that multinational enterprises borrow money from themselves to dodge tax payments and this subsequently translates into revenue leakages in the mining sector.

Mr Banda has also questioned the value of the loan and how confident the government is that this loan has not been overpriced at the benefit of Glencore and whether the state did undertake comprehensive financial due diligence to ascertain the true value of this loan.

He said looking at the sketchy details of this deal, one can safely conclude that Glencore has transmitted all technical and market risk to ZCCM-IH and is to benefit from the riskless docile position of debt servicing by ZCCM-IH and arbitrage opportunity emanating from having buying rights on copper output adding that the trend of undervaluing and overpricing of mining assets will continue in perpetuity if the country does not craft its own mineral asset valuation code.

Mr Banda also notes that what is not clear is if the loan settlement mechanism is sustainable, and whether the interest and principal payment shall be based on 10, 90, or 100 percent production as well as what happens when ZCCM-IH defaults in servicing the principal and interest amounts and if $1.5 billion transaction debt add to the current debt stock of Zambia.

Meanwhile, Mr Banda says looking at the circumstances in which the deal was negotiated it was unavoidable given the threat made by Glencore to place the mine on care and maintenance as this could have resulted in a loss of more than 15,000 jobs and this could have subsequently sent ripple effects to other businesses linked to mining adding that 2021 being an election year, the government could not trade the job losses with care and maintenance.

PHOENIX NEWS

Share this post

COMMENTS

WORDPRESS: 5
  • comment-avatar
    Muwerewere 2 weeks ago

    WE HAVE A LOT OF MINING EXPERTS SERVING AND RETIRED WHO COULD HAVE GIVEN THEIR INOUT IN THIS DEAL. I DONT KNOW WHAT IS WRONG WITH OUR LEADERSHIP. DURING UNIP REGIME WE HAD A MUZUNGU WHO PROMISED TO MAKE FUEL FROM GRASS AND THE WHOLE CIRCUS TOOK PLACE IN CHIAWA, LOWER ZAMBEZI VALLEY. INVOLVED WAS A MR WILSON, TO DATE NOTHING HAS MATERIALISED. WE HAD TIKA IRON PROJECT IN MUMBEZHI, NORTH WESTERN RESULTS NIKISI, WE HAD VANDETA RESOURCES TWO MAN SHOW IN PARLIAMENT BUYING KONKOLA MINE. NOW ITS MOPANI COPPER MINES DEAL, HOW IT WAS SEALED WITHOUT DOING THOROUGHLY DUE DELIGENCY NO WE ARE CRYING FOUL. WE NEVER LEARN AS A COUNTRY. IF DR CONGO DESPITE ALL ITS CONFUSION IS ABLE TO CONTAIN THE BAD BEHAVIOUR OF MINING HOUSES WHY CANT WE DO THE SAME?

  • comment-avatar
    Kamukwamba 2 weeks ago

    Ba Fimbwi No Plan at it again. And its always Bembas, first it was Chikwanda, then Kasonde, then Nawakwi and now Bwalya Ng’andu. If the Northern caucases were a country on their own, they would be like Somalia now, complete with Kasama as MogaTissue! Ba lazo imwe mwatushupa saane na busakalanyongo bwenu!

  • comment-avatar
    Buck Teeth Lungu 2 weeks ago

    The PFoool and his money are soon separated – except in this case it is Zambians who were stoopid enough to trust PFoools with running govt. Bye-bye USD1.5 billion; welcome hunger and poverty – make yourself at home!

  • comment-avatar
    nineo 2 weeks ago

    this banda pfool is a real classic. so how much did glencore lend to mcm? or are you trying to preempt what the idc will start pumping money into mopani for pf campaign?

  • comment-avatar
    nineo 2 weeks ago

    So what is wrong with a parent company lending money to its subsidiary? Are you normal? The little business law I know ther is a term called “caveat ump-ta” (no sure of the spelling) but this means “buyer beware”.

    If the buyer is a “chimbwi no plan” and did not do any due dilligence why are you ctpd or whatever you are talking about? Are you part of the PFools?????