The handing over of ownership of Mopani Copper Mine to ZCCM-IH by Glencore, has stirred up more debates among Zambians.
One section of the Zambian society alleges that the state does not have capacity to run the affairs of the mine; they should either hand over to Zambian nationals, by way of offering them stakes in it , so that it can just run privately or just give it back to other investors.
“There is a difference between Nationals runing a business and their government! If a private sector National group, made of Citizens, gets majority stake there would be no problem as long as they are competent”, wrote one Bright Chizonde, an economist specialised in public finance.
While on the other hand, another section of society is of the view that, it is time for Zambia to own back the mines so as to acquire the full benefits. “ Some of us grew up in an era where government owned most enterprises and you should not be lied to it was a wonderful era,” lamented another economist, Dr. Lubinda Haabazoka, who is also the current Economics Association of Zambian (EAZ) president.
Haabazoka further stated that , “Everyone who is saying we can’t run companies as Zambians should never apply for any job in a Zambian company because it is pointless to give a job to a person that doesn’t believe in their own abilities.”
As a result of the mixed feelings that have been showcased among different sections of Zambian society, the Industrial Development Corporation (IDC), an entity established to spearhead the development of Zambia’s domestic industrial capacity, was forced to issue a statement in order to assure the Zambian populous that they are on top of things. Mr. Mateyo Kaluba, the IDC group CEO, is quoted in the press release as saying, “In terms of our confidence that the mine will be professionally run, we have no doubt.” This was in response to fears by some people that the mine will be innefficiently run due to political interference. Others went further to even cite Zambian Airways as one of the state enterprises that went under due to costs that were as a result of inefficiencies that were brought about by political interference.
One write up by a British named David Whitehouse, seem to suggest that the Mopani deal has just piled up on the already existing unsustainable public debt that the Zambian government has. David wrote, “ State-owned Zambia Consolidated Copper Mines Limited (ZCCM) this week agreed to take on $1.5bn of debt and pay a nominal fee of $1 to take over a 73% stake in Mopani Copper Mines from Swiss commodities trader and mining company Glencore.” He further goes on to quote another, named Irmgard Erasmus by writing, “Zambia not only added a sizeable chunk of debt to its already unsustainable public debt burden but took on responsibility for a larger share of the mining labour force that it ill afford.”
In response to worries about the increase in the already unsustainable levels of public debt, IDC in their press release wrote; “Regarding the payment of the US$1.5 billion transaction debt by Mopani to Glencore, Mr Kaluba said that the debt was the burden of the mining company itself and not the State. He added that the mine’s debt as a result of this transaction had no impact on the country’s sovereign debt”.
Mr Kaluba explained that the deal was structured in such a way that Glencore would be the off taker of Mopani’s copper and that a 10% portion of the proceeds would go towards debt repayment. He said the debt would be fully paid over the next 10-17 years depending on the mine’s production capacity and fluctuations of the copper prices.
To conclude here are some questions; To those with a view that the state does not have the capacity to run the mines, what is it that you mean exactly? Is it that there are no Zambians in government with the expertise required to run the mine? And what about the affairs of the 15000 workers that were poised to lose jobs, were we willing to overlook the impact of that to society? Furthermore, to those with a view that the state can actually run the mine; what guarantee is there that there will be no political interference? Are there any mechanisms that will be put, deliberately, in place to prevent such occurrences? Pertinent questions that need to be answered especially when there is information asymmetry when many have not had an opportunity to view the termsheet or contract that guides the sale.