CALLS by selected stakeholders for government to seize Mopani Copper Mines Plc will have ghastly consequences for country’s mining sector and economy, the Zambia Chamber of Mines has warned.
Last week, mine unions called on Glencore to surrender Mopani to government after it had announced that it would place its mining units in Kitwe and Mufulira under care and maintenance forcing 11,000 employees out of employment.
But Chamber president Goodwell Mateyo warned that such calls for were not viable.
He cautioned against the prospective action, saying the move would quickly erode investor confidence and affect mining productivity levels as evidenced by Konkola Copper Mines (KCM) Plc, which government seized last May.
“First, investor confidence is at an all-time low from our country and the jurisdiction. As we saw from the report from the Frazier Institute ranked us, I think among the bottom 10. It means it will move on even further down because we will then demonstrate that there is no security of investment in our environment. But also, for government to even takeover and if they have to pay compensation or such an exercise, we see that our reserves are already low…where we will find the money to pay compensation for such an expropriation later on to actually run and control?” Mateyo wondered.
“You see that there are challenges with KCM, their production figures are nothing to write about. [The call] It is not viable; it is not even something that someone can even be mentioning at the moment. I am not saying it is impossible, but the economic consequences will be to ghastly to even contemplate! To increase production, you need to make significant capital investment into any mine, and as a government, we don’t have the capacity to make the sort of investment that is required. It means, then, that we are taking precious resources from health, education, social (sectors) to take them into mining production; we simply don’t have the luxury to do that.”
He said the current mining conditions were not conducive for mining, adding that there was need to review government’s strategy for managing the sector.
“I think as an industry, and as a nation, we need to look at how we are managing this industry. A lot of what is happening is, unfortunately, what we had predicted a year ago. So, we have to seriously re-look of how we manage this industry. The fiscal regime around mines will have to be looked at. These challenges in the sector, it is not just here, it is the world over. So, we can get a leaf…it is not simply to do with the current fiscal policy that is there, it is a lot of things. But I think our industry would have been in a better position to take these shocks now in a less costly environment. At the moment, in a less costly environment with increased tax and this and that and Employment Code of obligations, we find that at the point where mines are desperate to preserve cash, they are in an environment where they have to spend a lot of money, but with very little inflows on the back of the low copper price,” he said.
And Mateyo, who is also Mopani Copper Mines’ senior legal counsel, called for more clarity on the status of transmission of power to mining companies following the lapse of the Bulk Supply Agreement (BSA) between Zesco Limited and Copperbelt Energy Corporation (CEC) Plc.
“We got a statement from the Minister, but it still leaves a lot questions unanswered. We need to get more clarity in terms of what the arrangement is going to be from now and moving forward. I hope that both Zesco and CEC will resolve this expeditiously,” said Mateyo.
The BSA lapsed, March 31, after several years of negotiations ended in failure to agree to new terms.
But prior its expiry, Energy Minister Mathew Nkhuwa told journalists that power would continue to be supplied to CEC on an interim basis, but on conditions dictated by Zesco because they remained the suppliers of electricity.