The announcement by President Edgar Lungu that the government is ready to cut its ‘relationship’ with some mines and take over their running gives some hope to the people of the Copperbelt Province and the country as whole.
It may seem like a bad decision but a quick look into recent history will show that the government of Zambia has previously managed to run mines abandoned by some investors that promised heaven but failed to live to their word. Very few are ready to sail through the problems and would rather call it quits and move to the next possible investment destination with hopes of taking advantage of weaker governments, wherever that may be.
Having KCM investors, Vedanta Resources, pulling out of Konkola Copper Mines will not be a new thing. And that the government desires to take over the running of this mine is not a queer move – it has happened before and things were just fine! Here is a quick reminder of what happened 17 years ago:
On January 25, 2002, Anglo-American made an announcement that it was pulling out of Zambia. The company gave similar excuses we have heard from others when they want to run away from the country – that they had been struggling to turn around the crumbling mines it bought from the State some 22 months before.
As you can guess, the news of Anglo-American’s decision to pull out of Konkola Copper Mines was devastating to not only the government but the entire Copperbelt Province that relied heavily on these mines for jobs and other related services. Mining is an industry that has for many years held this country’s economic base, as hopes of complete diversification are still not fully actualized. Thousands of jobs were on the line – where were they going to go?
An emergency Cabinet meeting was called by then Republican president Levy Mwanawasa after learning of Anglo-American’s plan’s to withdraw its shareholding in KCM, the biggest copper mining operation in the country. It was a shattering experience! Then chief executive of the base metals unit of Anglo-American, Simon Thompson, made a statement to the effect that without additional financing, Konkola Copper Mines, a subsidiary of Zambia Copper that operated the mines, “would be out of business within a year”. At that time, Anglo-American owned 65 per cent shareholding in KCM and accounted for about two thirds of the country’s total production. But a slump in copper prices was enough for Anglo-American to pack their sacks and go, claiming an unfavourable environment yet the reason for their departure was political – Anderson Mazoka whom they heavily supported had lost the 2001 elections. Remember that current UPND president Hakainde Hichilema has previous promised to bring back Anglo-American to take over from Vedanta Resources if he wins the presidential elections!
When they (Anglo-American) did this, the government took hold of the situation and promised the Zambians that everything would be under control. This was done under an initiative which was called “Tubombe Tusunge” that was managed by Zambian Jordan Soko. Others in the top team were Pius Mambo and a Mulenga who took charge of things at KCM after the unexpected and unfortunate pull out of Anglo American from KCM. Things kicked off very well such that government and investment advisors in Europe told Zambia not to sell the mine as the copper boom had just begun. But they didn’t listen – Rajan Mahtani played a key role in bringing Vedanta in to take over KCM for song. The mine’s value in assets which was over $400 million never counted at all and Vedanta couldn’t believe its luck such that the chairman, Anil Argawal, had to mock the country and Mwanawasa for cheaply giving away Zambia’s mine and its assets for peanuts.
With this background, President Lungu is justified to make pronouncements to the effect that he is ready to let Vedanta Resources go so that the resources of KCM can be preserved until a suitable investor is found to take over. To be honest, government can do it. There is nothing that it can fail to do when it comes to running of these mines. This country has more than enough capacity to run the mines and proof of this is there. We have very educated and experienced Zambians who only need a chance to prove their worth!
What Sunday Chanda, the PF media director, has said it true. Zambia’s mineral resources belong to the people, “only the people can dictate when one can stop mining them”.