29 May 2019

Zambia - When You Get to the Bottom of the Hole, Stop Digging

opinion

Last week, the Zambian government applied to place Konkola Copper Mines, the country's largest private employer, into provisional liquidation. Is this a sign that an increasingly desperate government, starved of resources to pay the salaries of a burgeoning civil service and of cash to meet the international debt it has rung up in record time, is thinking of nationalising the mines? After all, Zambia has been here before -- and with devastating consequences the last time around.

Four-fifths owned by Indian commodity tycoon Anil Agarwal's Vedanta and the remainder by the government-controlled Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH), Konkola Copper Mines (KCM) is Zambia's largest PAYE provider with more than 13,000 workers at its mines at Nchanga and Konkola.

It has invested more than $3-billion into these facilities since its acquisition of a majority share after Anglo American's withdrawal from the project in 2002, including sinking a deep shaft in the Chililabombwe ore body in 2006, commissioning a new smelter in 2008 and opening three new concentrators between 2010 and 2012.

Whereas KCM's lack of productivity had made it one of the biggest contributors of the daily $1-million loss of the mines before ZCCM's privatisation in 2000, now it...

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