Based on a company memo dated December 21, First Quantum Minerals (FQM), follows the lead of Mopani Copper Mines, of cutting thousands of jobs at their mining operations in Northwestern Province of Zambia. The irony of it all, the Director of Operations, Matt Pascall, wishes the employees ‘Seasons Greetings’, in the same memo. Christmas will definitely not be merry to the 2,500 men and women of FQM that will lose jobs. Going by Glencore’s (Mopani Copper Mines) website, an average miner in Zambia has 8 dependents. Therefore, an estimated 20,000 dependents of FQM employees would be affected by the announced job losses. To put this in context, FQM has so far made $1.256 billion (15 Billion Kwacha) in gross profits, and $243 million (2.9 Billion Kwacha) of net profit as at September 30th, 2018, as announced in their financial disclosures of Q3 earnings on the company website. To borrow the words of FQM’s CEO addressing analysts and shareholders, they are producing ‘solid results’. Clearly, FQM, and other mining multinationals, do not care about their social licenses, but continue to play lip service to corporate social responsibility, while sending tens of thousands of Zambians to the streets.
What is most troubling about this game of chicken The Government of The Republic of Zambia (GRZ) and mining multinationals are playing, is that both players do not feel the real consequences of their actions. It is the tens of thousands of Zambians that end up in the streets, while ministers live large, and so do mining multinationals and expatriates. GRZ does not seem to have contingencies in place to mitigate potential job losses from the mines, after increasing taxes. Negotiations and business disagreements like this should have positioned Zambia Consolidated Copper Mines – Investment Holdings (ZCCM-IH) to increase equity stake in some of these mining houses, to take control of Zambia’s destiny. To the contrary, ZCCM-IH seems to enjoy minority ownership status in world class mining assets, with little to no plans for growth, while paying fake dividends. MEE would ensure ZCCM-IH reaches the size of Chile’s Codelco by competing aggressively against the public sector. To add salt to injury, the government continues to view high grade mine tailings such as Kitwe’s Black Mountain, a project from which FQM was born some 20 years ago, as youth empowerment projects.
Due to high levels of national indebtedness, which the government continues to deny, low accountability of national coffers, and the continued misplacement of meagre investments, the country continues to lose leverage in strategic negotiations. GRZ continues to double down on public enterprise equity loss, by listing ZAFFICO. What does the country do, to regain leverage?
The Zambian government needs to put ethical leadership and fiscal responsibility front and center, if the mining industry is to take the PF government seriously. As a country, we lose our moral standing to call the mining industry to account, if we continue having the president reportedly building mansions in Swaziland, unaccounted for wealth accumulation among elected officials, and government agencies procuring luxury planes. While government officials and mining investors feast, there is famine in Lumezi Constituency of Eastern Province where villagers are living on mangoes.
If we must borrow as a country, we need to invest in areas of highest returns to be able to service the debt and increase equity in joint ventures. We also need to stop paying fake dividends, and plough funds back into businesses, or diversify. There are much bigger companies in the world, undergoing exponential growth, that don’t pay dividends. Amazon and Tesla are two examples, among many. This government prioritizes dividends over employee salaries, as reported at ZamPost.
To the mining industry as a whole, MEE implores them to put core values front and center, and not lay off poor employees to get the attention of government. These are tens of thousands of humans not to be used as pawns in business negotiations. Where are business ethics when they are needed most?
By Victor K. Mwaba, MBA CSSBB
MEE Head of Mining and Mineral Resource Development