Environmental impact assessment and management plan
Mopani Copper Mines will finalize a baseline environmental study of the contract area to define pre-existing conditions and will negotiate in good faith with the government to agree on the detailed terms and conditions of the environmental plan. Mopani Copper Mines will comply with the environmental plan and Zambian environmental and safety laws and regulations which are generally applicable, including requirements to make contributions to the environmental protection fund.
Mopani Copper Mines shall:
(a) examine ways to improve water management and mineral processing procedures to reduce contaminant levels in the effluent discharges;
(b) quantify the levels of air emissions from processing and smelting activities propose measures to reduce sulphur dioxide emissions;
(c) implement measures to reduce sediment release and wind erosion from dumps;
(d) assess aquatic resources during periods of high flow;
(e) assess the effects of air emissions on health, vegetation most affected townships;
(f) assess the socio-economic impact of mining activities and closure in the local and regional environs.
Mopani Copper Mines will undertake programs of progressive rehabilitation over the remaining life of Mufulira and Nkana mines in preparation for their eventual closure.
After operations come to an end, Mopani Copper Mines will clean up the mine site and plant areas with the objectives of:
(a) protecting public health and safety;
(b) minimizing or eliminating environmental degradation;
(c) allowing a productive use of the land.
The costs of the rehabilitation are estimated at US$ 11 million at Mufulira and US$ 19 million at Nkana.
The current tax regime is applicable to Mopani Coppers Mines in the conduct of its activities under this contract. While Schedule 8 of this contract is not intended to override applicable legislation, in the event of any ambiguity between applicable legislation and Schedule 8, the government and Chambishi Metals agree that the provision of Schedule 8 shall apply. The intent of the parties is that Schedule 8 clarifies any ambiguities in the legislation and tax regime applicable to Mopani Copper Mines or its operations.
Mopani Copper Mines shall pay a royalty of 0.6% of the gross revenue of minerals produced in the mining area provided that it shall be exempt from payment in the first 5 years.
Mopani Copper Mines will in its recruitment, selection, promotion and assignment personnel, not discriminate actively against comparably qualified and experienced Zambian citizens. Mopani Copper Mines acknowledges the government's policy to attract qualified Zambian citizens mining and metallurgical working overseas back to employment within the Zambian industry. In order to facilitate the fulfillment of this policy, Mopani Copper Mines will take all reasonable efforts in its recruitment and employment of employees in professional, managerial, engineering and scientific grades to bring to the attention of qualified Zambians positions of employment available within Mopani Copper Mines.
Mopani Copper Mines will establish a local business development program to provide advice and assistance to retrenched employees. This advice will focus on:
- husbanding of retrenchment packages to establish the basis of required capital;
- the identification of suitable entrepreneurial opportunities;
- preparation of a business plan;
- the establishment of a company/business vehicle;
- training in business techniques including marketing, bookkeeping, hiring, taxation, cash management, etc.
- ongoing assistance in the actual running of the business.
Mopani Copper Mines shall comply with the local business development program to encourage and assist the establishment of businesses within Zambia (particularly in the copperbelt and with a particular emphasis on businesses directly or indirectly and majority owned by Zambian citizens) to supply materials, equipment and services to Mopani Copper Mines, provided that it shall not be obliged to grant or lend money to any person or to enter into any contract person or entity. Mopani Copper Mines shall conduct an annual review of progress being made on the implementation of the local business development program and alter it to meet changing circumstances.
Mopani Copper Mines shall identify an employee experienced in setting up and managing small business enterprises to:
(i) assist Zambian citizens who wish to or have set up businesses to offer services to the Mopani Copper Mines and the facilities;
(ii) have primary responsibility for the implementation of the business development program and variations; and
(iii) to liaise with the appropriate officials from the government.
Manufacturers of processed and semi-processed goods involving copper content that have processing facilities in Zambia and which are willing and able to purchase copper cathode or other metal treatment products at current international market prices shall be given preference over manufacturers whose processing facilities are located outside the country. This preference shall apply to a maximum of 10% of Mopani Copper Mines’ annual copper production. This preference shall not apply if it results in Mopani Copper Mines breaching its delivery obligations under any sales contracts the company has under the sales and purchase agreement.
Mopani Copper Mines shall, on a regular basis, identify and invite through advertisement in the local press registration of businesses in Zambia (particularly those in the copperbelt and with emphasis on businesses directly or indirectly majority owned by Zambian citizens) which are capable of supplying materials, equipment and services.
The supply of materials, equipment and services may be tendered for and procured internationally and without restriction. However, where materials, equipment and services required for the programs are manufactured or substantially assembled (or in the case of services, are procurable) within Zambia from a business(es) with proven ability and reputation in performing work similar in size and nature as that required, or established, recognized and reputable suppliers of material and/or equipment, those business(es) shall have the opportunity to tender. If a tender submission from any such business:
(a) meets the specifications of the invitation to tender;
(b) meets quality standards;
(c) is competitive in cost with international sources; and
(d) meets the delivery requirements,
then Mopani Copper Mines shall not discriminate against such business(es) when it awards tender.
In assessing the tenders from local contractors and suppliers, Mopani Copper Mines will consider the extra costs it would incur if it were to grant the contract to a foreign supplier or contractor. These extra costs shall include, but are not necessarily restricted to, wharfage costs, shipping costs, stevedoring costs, customs clearance costs, customs duties and demurrage charges.
Mopani Copper Mines shall comply in all material respects with the training and human resources management program. The training and human resources management program identifies a target level of employees necessary to conduct normal operations. Mopani Copper Mines will, however, be entitled to modify such target level in accordance with its requirements with prior notification to the government. Mopani Copper Mines will spend approximately US$ 800,000 each year on training its workforce.
Mopani Copper Mines will rehabilitate and improve the Nkana mine, concentrator and cobalt plant as detailed in Schedule 1. Mopani Copper Mines shall invest a minimum of US 150 million to meet the targets of ore, copper and cobalt production.
Any dispute, disagreement, controversy or claim related to this contract that cannot be settled amicably or by a sole expert shall be submitted to the International Centre for Settlement of Investment Disputes (ICSID) for arbitration pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. Mopani Copper Mines shall be treated as a national of a state other than Zambia for the purposes of this convention. Arbitration proceedings will take place in London in English. Any award in arbitration proceedings shall be binding on the parties and any judgment may be entered in any court having jurisdiction. The parties waive any right to appeal to any court of law or other judicial authority in connection with any arbitration proceedings. The government irrevocably waives any claim to immunity from proceedings to enforce awards or from the execution of awards against government property outside Zambia.
All information supplied to the government by Mopani Copper Mines is confidential information and agree to treat it as secret and confidential and not at any time for any reason to disclose or permit to be disclosed to any person or otherwise make use of any such information where the information was received under this contract. Upon termination of this contract the government will deliver to Mopani Copper Mines all working papers, computer disks and tapes or other material and copies provided to or prepared by Mopani Copper Mines under this contract and still retained by it
The government will procure the permanent provision of municipal infrastructure services in the area where Mopani Copper Mines will operate, including: water, sewage services, solid waste, domestic electricity supply, street lighting, storm water drainage, roads, pest control services, markets and cemeteries.
The government will ensure the municipal infrastructure services will be provided by the local councils, and in the case of domestic electricity supply – ZESCO Limited, except for an interim period of approximately 5 years water, sewerage services and solid waste services will be provided by a wholly owned subsidiary of ZCCM under a government funded program. This is provided that the provision of such water, sewage services and solid waste services during this interim period does not fall below the level of service otherwise available to Mopani Copper Mines from ZCCM. Mopani Copper Mines will not be required to provide or pay for the municipal infrastructure services for its employees.
Mopani Copper Mines will cooperate with the local councils, the ZCCM subsidiary and ZESCO Limited in ensuring that any transitional arrangements agreed and put in place for recovering municipal infrastructure costs from employees.
During the stability period the government will not:
(a) increase the current corporate income tax or withholding tax rates applicable to Mopani Copper Mines; or
(b) otherwise amend the current VAT and corporate tax regimes applicable to Mopani Copper Mines; or
(c) impose new taxes or fiscal imposts on the conduct of normal operations, to avoid a material adverse effect on Mopani Copper Mines’ distributable profits or the dividends received by its shareholders.
During the stability period the government will also not increase:
(i) the current royalty rate; or
(ii) import duty rates applicable to Mopani Copper Mines so its weighted average import duty rate will not rise above 0% on the goods and materials required for operations and which fall under section 97(1) of the Zambian Mines and Minerals Act (Mopani Copper Mines is, as of the effective date, exempt from customs and excise duties); or
(iii) import duty rates applicable to Mopani Copper Mines so its weighted average import duty rate will not rise above 15% on the goods and materials required for operations and which fall under Clause 15.1(d)(ii) of this contract; or
(iv) the excise duty on power applicable to Mopani Copper Mines' electricity purchases above the rate at the time of this contract.
The government shall ensure that no law, statute, regulation or enactment shall be passed or made which would discriminate against Mopani Copper Mines in respect of these provisions or the conduct of normal operations or any other circumstances under this contract when compared to other mining companies conducting similar operations on a similar scale. The government will be at liberty to pass or make any such law, structure, regulation or enactment to enable the performance or amendment of a development agreement with a different mining company or joint venture prior to the expiry of such period.
The government will reimburse Mopani Copper Mines as soon as is practicable (or, make offsetting changes in any law, statute or regulation that applies to Mopani Copper Mines) to ensure it is fully and fairly compensated for any losses, costs or other adverse effects on its distributable profits incurred by it due to the government’s failure to follow these provisions.
Subject to Mopani Copper Mines’ compliance with the environmental plan, the government confirms that for 15 years from the effective date, it will not take any action (and will ensure no action is taken by any of its ministries, departments or agencies over which it has control) enforcing any applicable environmental laws with the intent of:
(a) securing Mopani Copper Mines' earlier compliance with environmental Laws other than those covered by the timetable and conditions set out in the environmental plan;
(b) requiring Mopani Copper Mines to clean-up or remove any stock of pre-existing pollution;
(c) imposing fines or penalties upon Mopani Copper Mines payable under environmental laws (or enacting new fines and penalties) for its non-compliance with environmental laws when the environmental plan provides for a remedy on a specified timetable and Mopani Copper Mines is in compliance with that timetable; or
(d) imposing fines or penalties for Mopani Copper Mines' breach of environmental laws in excess of those that applied on the effective date, (adjusted for inflation);
(e) effecting any changes or enacting new legislation and regulation or repealing existing legislation or regulation which would prevent Mopani Copper Mines from complying with the environmental plan and its timetables without making provisions for Mopani Copper Mines to be exempted or materially altering the scope, enforcement or application of environmental laws regarding the establishment, maintenance or operation of the environmental protection fund.