Glencore: Severe Health and Environmental Damages at Mopani Copper Mines plc

project description

Mopani Copper Mines is an integrated copper and cobalt producer located in the Copperbelt of Zambia. It is the largest mining corporation operating in Zambia and at the same time one of the biggest producers of copper and cobalt in Zambia. Its operations encompass the mining sites of Mufulira and Nkana.

Glencore International holds 73% of Mopani via Carlisa Investment Corp. (81,2% Glencore Finance Ltd., Bermuda, 18,8% Skyblue Enterprise Inc./First Quantum).

impacts

Health:

Mopani Copper Mines uses harmful acids to extract copper at its Mufulira and Nkana Mines. Only one of three safety pumps was ever installed in the extraction system. Consequently, a damage of this single pump led to severe contamination of drinking water in 2007.

The emission of sulphur at the Mopani mines is 70 times higher then the maximum healthy limit set by the World Health Organisation. Locals suffer toxic rains and respiration problems.

One of the mines operated by Mopani at Mufulira was closed in early 2012 because of its pollution levels. An investigation commissioned by the Zambia Environmental Management Authority (ZEMA) found acid mists harming local communities and damaging the environment. The plant was to remain shut until all health concerns were addressed. Glencore showed surprise by the suspension of the operation after the Zambian government had only recently renewed the mine’s license.

In August 2014, Mufilira continued facing accusations for its high sulfur dioxide emissions. Protests broke out against the plant due to claims that seven people had been hospitalized from the sulfur dioxide emissions from the Mufulira mine. Police forces deployed tear gas to disperse the protesters. Earlier measurements (March 2014) showed pollutant values that exceeded the WHO´s limits by up to 30 times.

 

Tax Evasion:

5 NGOs filed a formal complaint with the OECD in April 2011 against Glencore and First Quantum (among others the Bern Declaration/Switzerland, Sherpa/France, and Mining Watch/Canada) because of breaching the OECD Guidelines. The complaint is based on an audit report of Mopani Copper Mines by Grant Thorton and Econ Pöyry conducted in 2009 on behalf of the Zambian Revenue Authorities.

Mopani Copper Mines is alleged of increasing its operating costs in 2007 (+$380 million), of reporting stunningly low volumes of extracted cobalt when compared to similar mining companies operating in the region, and of manipulating the copper selling prices in favor of Glencore. The result was the reduction of the company`s net income by several hundreds of millions dollars, hereby substantially lightening the company’s tax burden (violation of the “Arm´s length” principle).

The government looses  £ 76 million a year (€ 88 mio.) because of Glencore´s tax avoidance. The Zambian tax angency settled disputes with two unnamed mining companies on outstanding tax payments.

In its Interim Report 2011 (p. 24), Glencore said that the “Zambian Revenue Authority is currently undertaking a review of prior tax years”, which may be related to these allegations. The results of this revenue were expected at the end of 2011.

The President of the European Investment Bank (EIB) has given order to the offices of the bank not to accept any new loan applications to commodities trading giant Glencore and its subsidiaries, citing “serious concerns” over the group’s corporate governance.

Meanwhile, the involvement of the EIB in the Mopani Copper Mines is criticised by NGOs.

More on the EIB´s loan to Mopani Copper Mines, its premature repayment and an internal EIB investigation that has never been published can be found here.

 

Further resources:

a series of articles about Glencore in Zambia at Mines and Communities

article in This is Money (November 2011) on the health problems at the Mopani mines.

article in Al Jazeera

audit report on Mopani

article on Mopani in AlertNet

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