Press Briefing: Mining, taxation and development – The Glencore/Mopani case

A Summary

Glencore, the world’s biggest commodity trader, excited the financial world by announcing its entrance to the London Stock Exchange on May 24th (!). With shares totaling the amount of an estimated 6.3 billion pounds, Glencore will immediately be one of the biggest companies on the LSE.

However, in the running up Glencore came under fire. An independent tax audit revealed its Zambian subsidiary, Mopani Copper Mine (MCM), artificially increased its costs and sold its commodities far below marked prices in order to siphon its profits to Glencore International, registered in the tax attractive Canton of Zug, Switzerland (http://www.counterbalance-eib.org/?p=751). In reaction to these revelations 5 NGOs put in a complaint against Glencore for violating OECD ‘arm’s length’ principles (http://www.counterbalance-eib.org/?p=1184).

But the problems go beyond tax dodging. In December Counter Balance and les Amis de la Terre published the report “The Mopani copper mine, Zambia: How European development money has fed a mining scandal” which concluded that Mopani’s contributions to Zambia’s economy and budget are inexistent, the mining company’s social policy is marked by a race to the bottom and it leaves a devastating impact on the environment.” At the same time it denounced that the company nevertheless was able to obtain a EUR 48 million development loan from the European Investment Bank.

Mopani is not a standalone case. Low social and environmental standards are the rule rather than the exception and the hosting countries barely profit from it financially. Nevertheless EU public money keeps on flowing to these projects without delivering the desired results. Since 2000, the EIB for example, invested EUR 234 million in mining projects in Zambia that means 81% of all loans to that country.

EIB’s investments in the mining sector are not about to slow. In the context of a fierce competition for access to resources, notably with emerging economies like China, the European Commission explicitly asked the EIB to increase its investments in the sector. This race for raw materials should not take place to the detriment of European values of human rights, transparency and protection of the environment.

To denounce this more than 50 MEPs from 4 different political parties (Greens, S&D, GUE/Nordic Left and ALDE) signed on to an open letter addressed to the European Council and the European Commission, calling for a moratorium on the EU public funding for mining as long as strict standards are not in place.

Speakers:

Thijs Berman (MEP S&D) will present the open letter they signed on to and will comment on the signal they want to give with this letter.

Savior Mwambwa (Director of the Center for Trade Policy and Development) will come over from Zambia where has been the main driver of the case which has led to a heated public debate. He will explain this exemplary case from a Zambian perspective.

Maria Jose Romero (Eurodad) will explain the importance of Country by Country reporting to avoid tax dodging cases like these in the future.

Anne-Sophie Simpere (author of the Mopani report) will moderate the event.

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