By Chimwemwe Mwanza
A derelict settlement called Kapisha is one of the offshoots of several townships in Chingola that were created by migrant miners recruited to dig for copper at Nchanga Mine.Roads linking to this settlement from main town Chingola are littered with potholes – some big enough to swallow a tyre. As you drive through the town, it’s hard ignore the strong stench of poverty. After years of mining exhaustion, settlements such as Kapisha and by extension Chingola town, have little to show for being home to the largest open pit copper mine in Zambia operated by Konkola Copper Mine (KCM).
In the financial year to end March 31st 2018, KCM recorded a 9% jump in copper production output to 193 300 tons compared to the previous corresponding period. Operating revenue grew from K8m in 2017 to K13m in the year under review. On the strength of its balance sheet, it appears KCM has maintained a strong revenue momentum – this despite challenges in the global mining industry.
Yet, Clement Kasanda, a local businessman – who makes a living out of supplying mining equipment to KCM has not seen his pay cheque for the last 90 days. To survive, he like many other suppliers to the mine have resorted to borrowing money from shylocks – lenders who often lend at exorbitant prices – just so he could send his children to school. But there is caveat to the loan he obtained. In the event of failure to repay, he will lose his house which he offered as collateral. His anguish is even more palpable given the unraveling battle for control of this asset which has pit the state against Vendata.
Not far from Chingola in nearby Kitwe, about 10 illegal miners – who use rudimentary tools to scavenge for copper at the infamous black mountain died last year June, when a portion of the dump collapsed, burying them to death. At best, their death is reflective of the growing calls for resource nationalism in the country. Elsewhere on the Copperbelt, some youths backed by “Jerabos” recently took to the street urging the state to appropriate the old mine dumps from mining companies and hand them to indigenous Zambians. Only last week, the state disclosed that it would enact legislation that will compel mine owners to procure goods and services from Zambian owned companies. It’s tempting to ask, why now?
Typical of the proverbial “gift and the curse of commodities” scenario, the more things change the more they stay the same. Never has this old aphorism seemed more appropriate in Zambia than now. In this instance, one is aptly reminded of the legendary Bob Marley, who in his song “rat race” wonders aloud about the travails of injustice and inequality. In the song, he asks a poignant question – albeit rhetorically.“In abundance of water, a fool is thirsty.”
Indeed, it’s a rat race for how is it possible that a people can live in such squalor amidst the vast resources trapped in the bowels of their earth – and this in a country reputed to be home to 6% of the world’s copper ore reserves. By scavenging the dumpsite, this among many others, is one of the tacit but most fundamental questions that the 10 illegal miners that perished at the black mountain were asking.
Until the advent of privatisation, mine workers were the pride of the Copperbelt. In fact, it was an honour to be called “Mwana shi mine.” Workers were paid living wages with decent overtime and nightshift allowances thrown in the mix to compensate for their sweat and toil. Their children received health and educational subsidies which perhaps explains the deep sence of nostalgia that is firmly etched in their psyche.
How ironic then that mining investors such as Anil Argawal, Chairman of Vendata – the majority owners of KCM have failed to read the shifting dynamics on the ground. His indifference to the plight of Chingola residents and the 13 000 strong KCM workforce has not helped his cause. To the contrary, it has only emboldened the state’s resolve to repossess KCM.
After KCM disposed large amounts of toxic waste into Mushishima river – which is the only source of clean water – causing unbearable sickness in the area, the company rebuffed Chingola resident’s overtures for compensation. Left without option, the residents sued the mining giant in a matter which was arbitrated in a London court. Despite losing the case, KCM opted instead to show the victorious litigants its middle finger.
Despite losing the case, KCM opted instead to show the victorious litigants its middle finger.
When the state – in the face of a crippling liquidity crisis in the local economy recently asked the mining community to pay a reasonable share of taxes from their profits, Vendata threatened to shut some of its other operations within the KCM stable – a move that many easily interpreted as open defiance. The fact that Vendata owner, Argawal – a 65-year-old mining oligarchy renowned for his loose verbose has been using global mining forums to poke fun at the Zambian government for selling him KCM at a pittance – has only served to alienate him further from the state – a partner that he is now desperately begging to come to the negotiating table.
Unlike when the state literally served him the company on a platter after Anglo American bolted from Zambia, things have changed. It’s thus wrong timing to pick a bare-knuckled fight with the Zambian government, some might advise. China’s gluttonous demand for commodities among other reasons, ensures that KCM is not short of takers that are prepared to pay a premium for this asset. And sensing a people’s cry for “More Money in their Pockets”, the state’s patience with Vedanta has waned.
How times have changed for not so long ago, the two adversaries enjoyed cordial relations. Such was Vedanta’s status as a responsible investor that in its pursuit to effect a call option deed signed between the company and Zambia Copper Investments – governments investment vehicle in KCM, the company exercised this option with little difficult – in the process raised its equity in KCM to 79.4%. It’s unthinkable that such an act of benevolence could have been granted to an errant investor as the Vendata is now being portrayed.
Therefore, could Argawal’s arrogance turn out to be KCM’s comeuppance? It’s likely that government will argue that Vendata has been contemptuous in the manner it has operated KCM since it took ownership of the company. It has barely met some of the critical aspects of the service level agreement (SLAs) – a serious deviation from the business plan stipulated in the contract of sale.
The onus now rests squarely on Vedanta to prove otherwise. What is certain though is that Argawal won’t relinquish this asset without a fight or even soiling Zambia’s investment reputation. Indeed, he could be on the ropes for now yet those in the know would advise the state against popping the champagne – at least not just yet. This former scrap metal dealer who became the first Indian businessman to list their company on the London Stock Exchange is not only shrewd but has the nose to smell a good deal. And there is still a real possibility that he could outmaneuver the state in this high stakes court battle, the more reason stakeholders would be hoping for a favourable outcome – one in which both parties return to the negotiation table in the interest of stakeholders such as Kasanda.