ActionAid supports KCM liquidation, cautions against politically inclined handlers

Action Aid Zambia country director Nalucha Ziba says her organisation supports government’s move to liquidate Konkola Copper Mines but cautions government to appoint credible experts who are devoid of political influence to handle the transition.

In a statement, Wednesday, Ziba said Action Aid was of the view that the taking over of KCM was long overdue but that government should avoid mistakes that were made in the past during the transition period.

“ActionAid Zambia is of the concerted view that disengaging KCM is a welcome move if only done in a proper manner that ensures sustainability and respect for human rights in the operations of the Mine. Over the years, KCM has argued that high operational costs have been limiting its prospects for profitability. KCM General Manager recently made claims by officially stating that, “the company is yet to receive a positive return on this investment.” This is contrary to a statement given a couple of years ago by Vedanta Group Chairman Anil Agarwal, who owns significant shares in KCM, that the Company was making 500 million US dollars profit each year. Additionally, we fail to understand why a company like KCM for many years have always claimed to have operational challenges and threatened to either suspend operations or the workforce whenever new tax laws are introduced. This arm-twisting game is not appropriate in promoting a win – win situation between the country and the investor,” Ziba said.

“It is against this background that we are in support of the recent announcements by government to disengage KCM. However, this should be done in a proper manner as follows: Appointment of Credible Key Experts to Manage the Transition. It is important that experts from key institutions are engaged in a transparent manner to manage the transition period. However, these experts should not be individuals or proxies to individuals with private interests in KCM. These experts should work independently outside any political influence and within the agreed scope of work by both parties.”

She said a credible investor with a proven track record should be engaged to take over KCM.

“The Minister of Mines was a couple of days ago on record urging KCM Workers and all Zambians to be vigilant and protect KCM Assets following reports purporting that the Mining company has been involved in the selling of some scrap and equipment. Whether there is merit in these claims or not, we urge government to undertake a thorough audit of the company’s assets and liabilities and make public the audit findings. Thereafter, engage all key stakeholders on the best way possible to manage the assets and liabilities,” Ziba said.

“There are many lessons from KCM that provide a basis in terms of moving forward towards engaging new investors to run the Mines. We are aware of the need for finances to cover the debt service payments that are increasingly becoming expensive due to the weakening kwacha; a situation that can tempt government to fall for a lower bid price. This should not be entertained especially learning from the previous experience were KCM was sold for just $25 million, when the actual value of the entity was US$650million. It is therefore necessary that there is value for money and that the mine is sold at its actual value; following the due process of the Law and agreements.”

Ziba cautioned government to adhere to the due process of the law during the liquidation process in order to avoid costly litigations.

“In the spirit of fairness, and adhering to all contractual provisions, it is imperative that Government follows the due process of the Law in its endeavor to protect the interest of the nation to avoid unnecessary costly international litigations as the case has been in similar circumstances before. Clear plan of engagement with local communities on human rights violations. Local people have been victims of human rights violations as a result of disregard by the mining company to oblige with standards set out in the environmental management act. One of the cases is still in the courts of law and many other complaints are sitting with the Zambia Environmental Management Agency. For instance, Tsopano community in Chingola district has been a victim of violations with nearly 2000 households affected due to blasts that have cracked housing structures; putting lives at risk. Further, the environment has been degraded to an extent where livelihood activities such as agriculture can no longer be supported,” said Ziba.

“It is against this background that we call upon government to seriously consider this issue and ensure the assessment that will be done to manage the current risks takes into consideration these human rights issues to ensure local people are engaged and a plan to address this problem is sought before the next investor.”

         

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