Mines minister Richard Musukwa says there is no connection between the liquidation of Konkola Copper Mines (KCM) and the Chinese government’s decision to write off Zambia’s US$22 million debt.
And Speaker of the National Assembly Dr Patrick Matibini yesterday chastised Musukwa for losing his temper while responding to questions from members of parliament.
After giving a ministerial statement in Parliament, Thursday, on the status of the KCM liquidation, nominated PF member of parliament Mumbi Phiri asked Musukwa if there was any connection between the KCM liquidation and the debt written off by China.
She said the KCM takeover had been welcomed by well meaning Zambians but “at the same time, we have individuals and politicians who strive on rumours and propaganda as a way of gaining political mileage”.
In response, the mines minister said there was “absolutely no connection” between the two issues.
“This is a non-political matter, it’s about Zambia and must never be politicised. The propaganda being perpetuated by the enemies of Zambia will not be accepted by our own people. You are doing a lot of damage than any good. There is absolutely no connection between China debt relief and KCM. As a matter of fact and as minister of Mines, I’m not even aware about such a process because they are totally different,” Musukwa said.
Asked by Sesheke Central UPND member of parliament Romeo Kang’ombe what criteria government had put in place to ensure that a company that would take over from KCM would not put Zambians through the same problems that led to the liquidation, Musukwa said government wanted to ensure that it gets a credible investor in an open and transparent manner.
“Indeed, government wants to ensure that in an open and transparent manner, together with all stakeholders, we get a credible investor that is going to run the mine so that we don’t get to this level again,” he said.
Zambezi East UPND member of parliament Brian Kambita then asked whether there was any relationship between the person who called for an audit of KCM and one that eventually made the decision to call for the provisional liquidation or the one that was about to sell KCM or “whether it was a calculated move for Zambians to believe that it was a normal process”.
But in response, the minister accused Kambita of cheap politicking.
“I would like the members of this House to be objective when they are asking. That will help me run the ministry. The purpose of this statement is for members of parliament to help us move forward and to [keep you] abreast with what is happening. The member of parliament is clearly trying to relate issues which do not exist…numbers don’t lie. I expect honourable members to cross-examine in terms of what I have put across in numbers instead of cheap politicking which I’m seeing now,” Musukwa said.
However, Speaker Matibini chastised Musukwa for losing his temper, saying he still had a number of questions to respond to on the KCM matter.
“Honourable minister, you have to maintain your temperament here. You need to maintain your temperament. You see, the subject itself demands that you maintain your cool. This will go on for a while. I can assure you from the list, there will be a variety of questions. It’s too early to lose your cool,” Matibini guided.
And when responding to the next question, Musukwa said he was grateful for the counsel and that “I’m very calm and I will remain calm”.
Earlier when giving an update on the status of KCM, Musukwa said the mining company had been facing operational challenges as evidenced from the declining mineral production at its various operations and failure to meet its obligations to employees and contractors.
He informed the House that the audit conducted on KCM in 2013 had revealed high indebtedness and insolvency, among other findings.
“In 2013, an audit of the entire operations of KCM was conducted in order to understand the challenges the company was facing and how it can be helped to survive. The audit which was conducted by a technical audit committee appointed by government revealed high indebtedness and threat of insolvency,” Musukwa said.
He said government had held several engagement meetings with KCM to find a lasting solution but it was “regrettable” that to date, the business improvement plan that was agreed upon had not yet been implemented.
“Based on the findings of the audits, government had held several engagement meetings with KCM to find a lasting solution and steer the company out of its desperate solution. To that effect, a business improvement plan was agreed upon which should have resulted in KCM increasing its production from 132,318 tonnes of finished Copper in 2013 to 178,994 tonnes by 2017. It is regrettable that to date, the business improvement plan that was agreed with government has not yet been implemented and further causing huge stress in terms of the company’s viability,” he said.
And Musukwa charged that Vedanta Resources, the majority shareholder in KCM, had no capacity to run the mine.
“The future of KCM in the hands of Vedanta Resources is questionable. There is no doubt that KCM under Vedanta has no capacity to run the mine and that there is no capital injection if the mine has to be resuscitated and survive. It is clear that Vedanta has failed to run and operate KCM. The current state of affairs at KCM poses a risk of imminent closure of KCM operations. Efforts by the ministry to push the company to improve have not yielded positive results, leaving the government with no choice but to proceed with the divorce processes as provided for by the law,” he said.
Musukwa further informed the House that at the time the liquidator was appointed for KCM, the mining company’s indebtedness had reached over US$2.5 billion.
“The House may wish to know that at the time the liquidator was appointed, KCM’s indebtedness had reached over US$2.5 billion. Once the court proceedings regarding the liquidation process are finalised, the ministry will proceed to handle the matter in accordance with the Mines and Minerals Act, which not only provides for issuance of licences, but also provides for the cancellation, disposal of the licences to erring licence holders. Mines under KCM are viable and therefore government is doing everything possible to ensure that a credible investor is identified to continue to operate the mine,” he said.
Musukwa said what government was doing to KCM should not be interpreted as nationalization but was a matter triggered by the investor’s failure to comply with the licence’s conditions.