Law forcing 30 percent cargo onto rail is retrogressive-Chamber of Mines

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Transport and Communications Minister Brian Mushimba with Officials from Zambia Railways
Transport and Communications Minister Brian Mushimba with Officials from Zambia Railways

The Zambia Chamber of Mines has charged that government’s move to introduce a new Statutory Instrument that will compel 30 percent of bulky and heavy cargo to be transported by rail is retrogressive.

In a statement, Chamber Deputy Chief Executive Officer Talent Ng’andwe said the SI is punitive in nature and focused on imposing sanctions, including custodial sentence on non-compliant companies despite the concerns raised by stakeholders on the state of Railway infrastructure in Zambia.

Mr Ng’andwe said “Though, we acknowledge that consultation with the Mines by the Ministry of Transport and Communications did occur, the Mining Industry position has been ignored; all rather unsatisfactory.

He said despite sector representation, the legislation has seemingly been forced-through.

“The Copperbelt rail infrastructure in existence is in poor repair, lacks capacity, lacks adequate security provision; and certainly lacks resilience.  Moreover, it’s not a minor detail that the North Western Province mines have no access to a serviceable railhead closer than Chingola,” Mr Ng’andwe said.

He said the Industry views the SI as potentially retrogressive to commerce, trade and industry in Zambia.

Mr Ng’andwe noted that insufficient infrastructure exists to make this piece of legislation workable without imposing punitive costs onto Zambia’s principal means of generating revenue adding that the new law is economically inappropriate and unworkable.

“In order to maximize the value to a macro-economy the decision-making process for how to freight goods should be driven by the following parameters:

• Economics – promoting the most cost-effective solution is important; especially when logistical costs are expensive (as is the case for Zambia, a large and landlocked country) and where the margins of many businesses remain thin. Due to the large distances involved, the relative costs of logistics in the copper mining industry are significant.

• Reliability – the nature of the mining business (where the required capital cost investments are very high) is such that the reliability of logistics is essential. Mining and processing operations are dependent on the regular and reliable supply of inputs such as fuel, sulphur, coal, mill balls etc; without which operations would cease.

• Flexibility – there are many variables in the mining industry. Customers are fickle; it may become necessary to ship from different ports at different times due to commercial or political reasons. Railways in particular, are fixed and often a route is dependent on a particular piece of infrastructure (such as a bridge) or border post which becomes a critical point in the logistics chain. For example: in the event that a bridge is damaged or even destroyed; or a border post becomes inaccessible, then it is critical that an alternative route be found. Road trucks provide this flexibility.”

He added, “In the interest of a free-market where competition is allowed to flourish and so promote efficiency, the Mining Industry feels that rail freight should compete on a level playing-field with road transport without the unfair advantage of enforced quotas. To compensate for a lack of flexibility, rail transport must offer increased reliability and better economics over road.”

“In Zambia, in the current operating environment, there is no evidence that the economics of rail will be better than road – sample rates are not provided. Indeed, on first-look it seems most likely that rail freight will be a costlier option that road freight. Furthermore, currently there is no evidence to suggest that rail reliability will be superior to road transport reliability,” Mr Ng’andwe.

“Impact of a Rail Quota on the Transportation of Copper Anodes and Cathodes in areas without Rail Infrastructure This will result in copper having to be road hauled to the nearest siding where it is transferred to rail, which in turn will result in additional costs for the road haul; double handling of material; increased risks for theft of cargo; hence an impact on insurance premiums. The transit time for rail in Zambia is also very challenging.”

He said for this reason, the Chamber calls for a review of this SI and allow for more considered analysis of the effect on business and the national economy.

“The mining sector would of course wholeheartedly support re-development of the Zambian railways by Government.  But this SI contributes nothing to that development and is decisively investment-negative. In sum, this SI is not symptomatic of a Nation whose economic pillar is largely dependent on mining. It must be revoked or redrafted with substantial changes,” Mr Ng’andwe said.

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38 COMMENTS

  1. Mr Ng’andwe; just encourage the mines to transport their goods by rail; How I wish it was 70% by rail; i support PF on this one; Thanks;

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    • On this one… Brian has delivered again!!!

      Brian is removing unnecessary accidents and road damage.

      How is Ng’andwe even a chief executive? If the rail line is dysfunctional in such a manner that no goods can reach anywhere, then Ng’andwe has a point.

      Being a chief executive I expect him to understand that any endeavour in life has bottlenecks and we should work to resolve towards efficiency and effectiveness. Ng’andwe statements and demur on the SI tells us all what Zambians are used to… “inertia”

      Brian muntuwandi… you are going down as great in history to me as I have always maintained. Carry on my man!

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    • Thank you Mr. Talent Ngandwe. Finally someone speaks some sense. Such laws only make these lazy and politically abused public entities even perform worse. The govt needs to ensure that such entities are raised to very competitive performance levels before such rubbish is instituted. If the Euro-bond had been used properly maybe ZR would have been standing on its two legs and suppliers of large/heavy equipment would see the need to use it. Mr. Mushamba i urge you to go back on that decision as it is taking us back to Kaunda days when we had parastatals that were a burden on the national budget.

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    • MUZ always has its way…this will reversed. I think govt needs to invest more in ZRL….trains are still derailing and taking days to reach a destination.

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    • The problem with a Zambian is that WE think once something is constructed it is supposed to live forever without ever investing and maintaining. That is a major reason we are where we are as a nation.

      This SI will get both government and the mines to work together and remove the bottlenecks in the rail systems even create new lines to reach the mines.

      Mines used to invest heavily so am told in the past… Kabwe and the copper belt used to be socially and economically great. Nowadays you have mines going 17 years telling you there’s no profit and Zambians are busy supporting that sort of rubbish.

      Government cannot go it alone. In the UK, it is the same thing, heavy bulk transportation is off the roads. They moved goods onto the rails and work on the rails every single day from…

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    • Cont– imperfect conditions they used to be to what they are now. They are still imperfect in comparison to Japan and Germany including France. They are still using the rails and creating new lines… They transport by road where there’s no rail connection to the nearest available line and whilst doing so creating new lines to connect.

      Zambian wants to argue without a solution… Yes The government has mismanaged the Euro-bonds but we still need to make things right!! We cannot stop there can we?

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  2. Your conduct makes us the Chamber of Mines as a devil’s advocate. You are the same chaps who vehemently resisted road tolls despite the damage caused by your trucks on roads in mining areas. You do you really want? To exploit minerals and don’t plough back anything? ZCCM always used railways for bulk transport and lifespan of our roads was longer

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    • Zccm used rail transport and were is ZCCM today? That said, the Chambers of Mines is right is saying the SI provisions should be imposed only alongside well-considered improvements to the railway infrastructure. Use of rail should not come at an economic cost to the mines.

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    • Guys… I think there’s a selected few who are understanding the gravity of this issue…

      30% 30% 30% 30% 30% 30% of the haulage by rail, no? So what is your suggestion? do nothing? 100% on road?

      To he11 with the mines, they will certainly have to dance to our tune!

      Chapwa!! We want to develop, these guys are making money and need to be ploughed back into our infrastructure they are using.

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  3. Well presented assessment of how governments shouldn’t force decisions of economjc viabilty onto commerce in zambia. Do not kill the goose that lays the golden egg.

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  4. Chamber of mines

    Think before your talk. U are the same chaps who have no qualifications. Allow the government to do it’s job. Rail transport is the only way forward. The only thing u can do is push the government to have electric trains that would move fast.

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    • And what are the “qualifications” of the Government? Shall we start with the top? Embezzlement, corruption, incompetence…………….?

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  5. North western province mines should construct a rail line to Lobito in Angola from the windfall profits of high copper prices.
    Alternative is to charge a premium for bulky cargo transport by road especially for DRC.

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  6. Railway development is a national priority. It will improve transportation of goods and persons. It will reduce road damage from heavy cargo and thereby improve road lifespan. Negotiations can be at proportion level or at tariff level. Any demagoguery will be met with contempt.

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    • Heavy cargo like haul trucks are not usually transported by rail. Haul trucks will damage the rails.

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    • Yes it is a priority, but that SI is retrogressive. Don’t forget that it is the same PF govt that got a Euro bond for improving rail services and look at the train we ended up with in the 21st century. Zambians open your eyes even to simple economics that Malema sings about every day

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  7. We definitely cannot go back to One Party State governance where the Government starts supporting the inefficient parastatals by passing retrogressive laws that limit market flexibility. The Railways must compete on equal basis with the other modes of transportation. Let the Government sell these inefficient railway companies to more capable private owners , the way they did with the mines – that’s the way forward. You cannot force the mines(or indeed any other business) to use transportation methods that will just delay the delivery and increase the costs. This is a free market we declared from the onset of multi party democracy in 1991- we cannot go backward. The Government should in fact just expand our roads to cater for more traffic for more efficient delivery – after all they are…

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    • I totally agree. It is not fair to force companies to transport their cargo by rail. And do we really have a viable rail network to talk about? Let the rail companies improve their rail lines and compete effectively with the road transporters

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    • @ The Economist. alternatively, The government can impose a huge levy per ton per kilometer on all heavy goods haulage trucks so that the railway system becomes a good option for the mines. I know your comment is not bad intentioned but most of these capitalists in the mining industry have been contributing nothing in form of taxes but busy damaging our Eurobond roads with their trucks. At the end of the day you find that you’re actually funding them with your borrowed money. Can you imagine a big mining company claiming that they’ve never made profit since coming to Zambia 17 years ago. Who stays in business that long while making losses? The chamber of mines has become an irrelevant mouth piece of neo colonialism.

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  8. We need to improve on the infrastructure.

    I don’t want to go into details, but transportation can transform our young peoples lives. Ownership is a key. 2021.

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  9. First of all who are this fools called chember of mines i cry for mother zambia ,kanshi what do u want govmnt to do imwe bankusa ,i think this has be a cry for long time but why this nonsense iwe ngandu behave yourselves if at all 50% was going to be ideal

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  10. Hon. Mushimba while we are at the issue of making draconian laws, tell your counterpart in Ministry of Finance to instruct all mines to deposit 30% of their weekly mineral sales with NATSAVE Bank seeing it is in dire need of a shot in the arm and 100% govt owned.

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  11. On this I support the PF one hundred percent. Our railway system is falling to ruins due to not working. All heavy goods should be transported by rail to give our roads a longer life span and to de congest it from the heavy loads.

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  12. The railways first need to improve effciency in order to attract business. For arguments sake, it takes a truck 7 days to move copper from the copperbelt to Durban. However, last time I checked, it used to take upto 30 days for a wagon of copper to move from the copperbelt to Durban. Reason being the varying efficiencies of the railways in the transit countries ( Mostly Zimbabwe in this case ) and also the delays in interconnecting sidings. In this case, the wagons need to go to Johannesburg before proceeding to Durban. The mines cannot affort such delays. The SI will only make ZR become more efficient. Let ZR make itself more attractive to attract suitors! Period!

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  13. Let’s improve the railway system, it save our roads. I hope if the system is worked Mr Ngandwe will support the government on this.

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  14. Why fight over roads when railway system can be used without any without bitter words exchange , these roads have been abused by these greedy truck owners who force those heavy truck on the roads .
    It will be progressive to reroute all heavy goods to the railway system and indeed it will save our roads , and probably their life span will last longer , and carnage on the roads will be reduced to some extent . If there are challenges in railway system that can also be looked at but status quo is not the solution.

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  15. If I was a decision maker, i would do the exact opposite of the Chamber of mines say. These guys protect the interest of their pay masters.

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  16. It’s a good move and of possible find investors in the rail so that it’s brought to the correct standards, if we wait till all is perfect we will never develop

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  17. Musimbsla and government may have good intentions but crude regulatory measures such as thus one have no space in s market economy. Free advice: increase tarrifs on road transport to make the railways competitive. St the same time, address the dysfunctionalities of the railways

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