The privatisation of the country’s copper mines which were previously under the state-run Zambia Consolidated Copper Mines (ZCCM) has brightened economic prospects for the country’s struggling economy as a whole, and the Copperbelt province in particular.

Nearly all the new mining companies that have bought Zambia’s copper mines have made firm commitments of substantial recapitalisation programmes that will see Zambia, once again, boosting its copper exports by as much as 100% Mopani Copper Mines (MCM), which owns Nkana and Mufulira, has, since acquiring the two mines in March last year, spent over $130m on working costs and new capital equipment, resulting in significant copper production increments.

MCM chief executive Tom Dale recently told local journalists that in its first year of production, the mining company is likely to produce at least 75,000mt of copper ore, a figure way above what ZCCM used to produce from the same mines.

The company’s shareholders are soon to inject $30m for the acquisition of more capital equipment such drills, smelting machinery and rolling stock (railway wagons) to transport the company’s increased copper output.

Tom Dale said: ?Our plan is to increase copper output to over 200,000mt in two years time. We realise it is a hard task. But we are confident that we can make it with the right levels of investment and manpower.?

MCM has also commissioned a study on the rehabilitation of its Mufulira copper refinery. MCM special projects manager Penny Dickson told the state-run Times of Zambia newspaper that: ?We have commissioned a study of the Mufulira copper refinery in terms of rehabilitation and expansion with a view to improving performance.?

Key to the future

Konkola Copper Mines (KCM), the other major company which owns Nchanga, Konkola and Nampwe mines, has also lined up massive recapitalisation programmes. According to Konkola News, a publication of the mining company, over $256m has been targeted for refurbishment of its mines. $77m will be spent on Konkola mine, $8m on Nampundwe mine, and $20m on pre-implementation work for the Konkola Deep Mining Project. Major rehabilitation work is currently on-going, funded by a $96m injection from shareholders.

The refurbishment work has increased job opportunities from 9,996 when the mines were sold, to 14,500 at present.

The Konkola deep mining project is set to be the biggest single copper mining investment in Zambia. KCM is to spend $523m on the project, whose full development is expected to be completed in 2002. Albert Kashimu, permanent secretary in the Ministry of Mines, said the successful development of KDMP holds the key to the future of the Zambian mining industry. He said: ?The Government wants the company to commit itself to the success of the project because it can make a big change in terms of a contribution to the Zambian economy.?

In addition, KCM has embarked on an exploration aimed at the ?possible extension of the life of the Nchanga open pit beyond the present forecast of three-and-a-half years.?

Tim Wadeson told journalists, during a tour of the mine, that if the studies being done should yield positive results, the life of Nchanga mine could be extended by 15-20 years.

KCM has even gone so far as to make social investment in the communities around the mines. KCM vice president for health and environment, Dr Sixtus Mulenga said the company has established a fund to tackle unemployment and poverty among the communities in the mining areas.

Dr Mulenga explained: ?It is our objective to uphold the value of good corporate citizenship and seek to contribute to the wider economic, social and environmental well-being of Zambia.? MCM, for its part, has also set up social programmes aimed at re-training retrenched miners to give them skills for careers. Both companies also have malaria roll-back, and anti-Aids programmes.

Economic catalyst

AngloAmerican, through Zambia Copper Investments (ZCI), has 65% interest in KCM which owns Nchanga, Konkola copper mines, and the Nampundwepyrite mine.

The other shareholders in KCM are the International Finance Corporation and CDC Group plc each holding 7.5%, while ZCCM has a 5% free and 15% repayable interest stake-holding.

Chambishi mine, which is owned by a Chinese firm, China NFC Africa Mining plc, is scheduled to resume production in June. Prior to privatisation, ZCCM had closed the mine because of its failure to manage it profitably.

According to a company spokesman the mine will to start production in June this year with an initial output of 3,000mt of copper ore per day. This follows a rehabilitation programme worth $39m spent over the last two years.

The company is putting final touches to the shaft, tunnels, power supply, ventilation systems, and the concentrator. China NFC Africa mining, has since increased its capital commitment from the initial $70m to $159m to be spent over the next five years.

As a result of the new developments in the mining sector, other sectors have also started to show signs of improvement. There is increased business activity with mining companies paying their suppliers promptly and in full for all goods and services supplied.

Enrico Storti, a businessman whose firm Piggot Maskew supplies metal balls to the mines, said there has been a marked improvement in efficiency.

Storti said: ?Since the mines are paying promptly, this means that the firms doing business with them have also improved their capacities. The result is that everyone is getting paid on time.?

The government is also pleased with what is going on in the Copperbelt province. Mines Minister Dr Siyamukayumbu Siyamujaye said: ?Government is very happy with the expansion programmes in the Copperbelt province since privatisation.? He noted that, except for Roan Antelope mining in Luanshya, which has been facing serious liquidity problems, the other companies are firmly on course with their re-investment and development programmes.

He also said that privatisation has encouraged other international mining companies to come and prospect in Zambia. So far over 125 exploration licenses have been issued, and 65% of the country has been mapped.

Siyamujaye said even other sectors in the economy like agriculture, transport and tourism have improved as a result of the reinvigorated copper-mines. He said hotels and lodges in many Copperbelt towns are frequently fully booked.

To augment the post privatisation programme, the World Bank is to provide a loan of $38m to the Zambian government for the improvement of mining-related and non-mining assets that have not been bought by the new owners of Zambia’s copper mines. World Bank resident representative Dr Laurence Clarke that the programme will start this year. Among other things the money will go into the improvement of water reticulation, solid waste disposal, and environmental management.

Dr Clarke said the loan has a 40 years repayment period, with a grace period of 10 years.

However, despite significant improvements in copper production and exports, there has not been a corresponding increase in the amount of foreign exchange coming into the country. Late last year, this forced government to intervene in the money market through the central Bank of Zambia (BOZ) in a desperate effort to salvage the fall in the value of the kwacha against the US dollar.

At its height in 1994, the then ZCCM used to earn an average of $400m per annum. But since the sale of the mines, that figure has shrunk to just $18m. As a result of this, prices of nearly all goods and services have increased.

The manufacturing sector has been particularly hard-hit. Mark O’Donnell, spokes-person of Zambia Association of Manufacturers (ZAM) said: ?The business community cannot put up with the falling kwacha. We foresee big problems ahead of us, if nothing is done about saving the kwacha from sinking deeper.?

Copperbelt chambers of commerce and industry vice chairman Eugene Appel said a good number of mine suppliers have been affected. He said the gains that have been made following the sale of the mines might be eroded completely if the kwacha does not regain strength quickly enough.

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