The Centre for Trade Policy and Development has cautioned the Government over the suggested nationalisation of the Konkola Copper Mines or any other mines in general.
“While we understand the displeasure from the government over the continued push back by some mining firms on most policy pronouncements meant to maximise revenue collection from the country’s mines, we still feel a cautious approach must be taken to address the matter at hand,” CTPD Policy Lead-Extractives Mrs.Natalie Mwila Kaunda said.
Mrs Kaunda said this is because KCM employs over 13,000 workers and is a significant contributor to the nation’s exchange earnings.
“Any disruption in operations, would increase poverty and result in continued depreciation of the Kwacha, thereby further compromising macroeconomic stability,” he said.
Mrs. Kaunda said the government’s concern over the poor returns that the country has been getting from the mines is well recognized.
“As Civil Society, this has been our cry for a long time. We have been advocating for a mechanism that will enhance community beneficiation from our God-given resources. We have also advocated for government to increase its stake in the mines through ZCCM-IH since this would ensure that there is more state ownership of public resources and therefore more control over profits and tax revenue, especially at this time when Zambia is grappling with the raising debt.”
“However even as we endeavour to maximize on domestic revenue, we must not do it at the expense of efficiency. We must learn from our past experiences of running the mines which proved disastrous. The same mines that are now seemingly making profits, howbeit not every year, were loss making at the time they were being controlled by the government due to inefficiencies.”
She added, “As CTPD would like to believe that government’s intention is not to start running KCM but to transition it towards improved operational efficiency and profitability through securing another investor. Therefore, the “liquidation” process initiated should not result in the selling off of strategic assets of the mine in order to secure payments for creditors, shareholder, and commissions for the liquidator, as is the case in a “classic liquidation”.
Mrs. Kaunda said performing actual liquidation of KCM will result in closing down the company, laying off over 13,000 workers, tax revenue and forex losses among others.
“It will be extremely difficult to find another investor to take over the mine after asset disposal since the required investment would be very high. CTPD is of the view that KCM remains a going-concern and thus government should follow proper legal process and restraint to mitigate against these potential losses.”
“In the meantime, it is highly recommended for government to undertake a comprehensive audit in order to determine the true value of KCM’s assets and liabilities before proceeding with securing another investor. This will be useful in ensuring that the shares of the mine are valued correctly so that appropriate investment is made in taking over the mine. It is well known that KCM was previously sold for less than its market value, this should not repeat itself in this case.”
She added, “As the president is currently engaging with the different stakeholders in a process of consultation concerning the KCM issue, CTPD would like to advise government to also engage with Civil Society organisations working in the extractives sector. CSOs play a key role in bridging the gap between policy and community engagement.”