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.
Have you realized that no credible investor will buy an asset which is under disputed in court? How did Zambians become so DULL
Just keep quite u dull chap. what do u know about the matter at hand.
@ DULL Engineer, Investors as well infestors have already lined up for the same asset even before blood from this kill clots and you are busy as usual throwing toddlers dundumwezi punches in the air. try to be patriotic atleast for now even before your small gods becomes republican president.
The Engineer: I agree entirely. I hv yet to meet a person in Zambia who doesn’t know that Vedanta are bastards. But the sad truth is that the bastards hold the aces in this dispute. ECL can’t afford to keep the mine in limbo for too long. PF govt doesn’t hv the money to keep KCM in the so-called liquidation because of the financial and political risk to the PF. Vedanta knows this and they will exploit it to their advantage. ECL will be kneeling down to the bastards very soon.
You must be a Zambian of Indian origin, or one with an inferiority complex. We are done with you scavengers as Zambians and Africans. All investors from here on out should be scanned for human rights violation where ever they originate from. Vedanta needs to pack their filthy hands and go away. This is actually a fight the AU should take up in earnest. May God bless us all, and open up the eyes of sleeping Zambians.
Like so many times on this blog I will have the last laugh due to your dullness
You must be from the far far east? Mwe…..n…e!!
U are Right no Investor will buy Assets under dispute and in Court. Vedanta is not in a bind at all. Thru International Arbitration Vedanta will disinvest from KCM at a Premium. GRZ and the New KCM Investors will get a hefty Pay Out in damages and Compensation while Zambia will soil its image to Investors and Creditors. Vedanta will clear its Name and walk away from KCM with “Kasaka kandalama” in USD. Just wait and see!
What a well written article! You can see the difference between a well trained journalist and the Exam leak reporters in Zambia. The grammar is good and the narrative is flowing. One can easily follow the logic. Lusaka Times stick with this reporter
Just keep quite u dull chap. what do u know about the matter at hand.
‘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.’
Very good observation Chimwemwe.Despite ZCCM-IH and Vedanta having equal number of members on the KCM board( 3 each) plus a golden vote for ZCCM-IH,which give/gave ZCCM-IH veto powers over Vedanta in decisions they deem(ed) were not in the interest of…
which give/gave ZCCM-IH veto powers over Vedanta in decisions they deem(ed) were not in the interest of Zambians,ZCCM-IH had no problems letting Vedanta increase shareholding to 79.4% and today ZCCM-IH wants to cry wolf over KCM when they had been complicit in the first place.ZCCM-IH is a shareholder in KCM AND not a creditor and where are they getting the locus standi to invoke liquidation of KCM when they have always had board representation on top of a golden vote? I am not supporting the Indians,however,due diligence must be exercised.
When Supper Ken ( Kenneth Kaunda ) Zambianised the mines, we managed these mines and the townships in the Copperbelt. From the 60’s to the 80’s Chingola was called the cleanest town in Zambia.
Run by Zambians and Managed by Zambian Professionals from all the sectors of life. The Copperbelt had the best sports complexes run by the mines. The mines or ZCCM even had its own Air Line ( Roan Air )
We can do this again. What is needed is willingness, determination, taking ownership and pride to our beloved Zambia. That means every Zambian being part of the solution. But good leadership is very vital.
and we lived as one single nation without looking at someone’s surname if he/she is +Bemba, +Tonga, +Lozi, +Ngoni, +Kaonde. But just Zambians as a whole
cont..
We may not have liked KK for being a dictator, but he had the best interest for Zambia. Until when the IMF screwed and put him against the wall. ++ Then came Chiluba (Kafupi), championing Democracy, opened up Free Markets Capitals, while he was stealing money to cloth himself.
GOD BLESS: Supper KK
This nostalgia will not help. Actually it was a waste of money running RoanAir whose job was to fly the executives to the Copperbelt from Lusaka where they lived although the mines weren’t based there. ZCCM would hv avoided financial problems if it had been slowly relieved of providing municipal services in mine townships. The tradition dated from the early days of mining when no towns existed and there was nobody else except the mining companies and their employees.
Super Ken could have saved the mines in 1984 buy partial privatization. President Kaunda was not the full saint we paint him to be. The Chiluba nonsense could have been avoided had the Kaunda government only done that. Zambia and Africa should always march on, solutions are always plentiful.
@ NEMWINE
And the INDEPENDENT OBSERVER chose not to observe that it was KK that over-borrowed to subsidies the operations of ZCCM including ROANAIR and municipal services in mining townships leading to Zambia being a highly indebted(HIPC) country by 1988.He also chose not to observe that it was Chiluba who implemented the Structural Adjustment Programmes(SAP) World/IMF had given KK to implement but could not and further could not still observe that Chiluba despite corruption, led a foundation ( Zambia reached the HIPC decision point in 2000) for debt relief under Mwanawasa.
5.1 Nzelu
No one is calling Kaunda a SAINT. You are the one saying that.
Actually, i have never come across a saint in my life.
Governments are run by human beings. And human beings dont have all answers.
Kaunda did a good job if you look at Zambia from 1964 to the time he was booted out in 1990. No doubt he over stayed and the world was changing. But we progressed under him compare that to most African Nations. We just need to look at our neighbours.
@sharpshooter the bottom line is the copperbelt had roads during Kaunda s time. Now there are no roads in the townships or between towns. If you find potholes you are lucky. There are just no roads and Kaunda was removed 30 years ago. What are the new governments doing?
All this time ZCCM IH was a shareholder with a 20% stake(Golden shares).
This falls squarely on our leaders, even if you bring in a new investor nothing will change poverty will continue. The place looks like it has no representative in parliament or even a functioning local government. The government too is to blame, they don’t care all they care about is votes, so even this move is for votes not really to help the poor souls of this town. Drinking water contaminated and the people had to sue outside the country that shows that there was no help inside the country.
Putting the development of towns on the shoulders of investores is wrong…..they and others would argue that’s what they pay taxes for…..so GRZ develops the place….
Only KK did the right thing….he developed whole industries around the mines to be supplying the mines like kafrironda explosives and the many large metal engineering companies …..
80% of all supplies bar heavy marchinery , to mines should be produced in Zambia , not imported , even if you say imported by Zambians , that still robs us of jobs and development.
Vendatta has messed up the Copperbelt, however it may be the better option to renegotiate with ba mwenye , with the hope that they have learned the lesson from this battle. This is for the sake of many suppliers and contractors owed by KCM. With the route of liquidation, the new mine owner is not likely going to inherit liabilities, who then will pay the contractors and suppliers?
As the saying goes: “FOOL ME ONCE, IT IS ON YOU. FOOL ME TWICE, IT IS ON ME.”
And the great poet Maya Angelou once said: ” IF SOMEONE SHOWS YOU WHO THEY ARE, BELIEVE THEM!” Timely advice.
So you want let Vedenta back in so you can be fooled again? And what will that say about you as Country?
He is not the first indian to list on the LSE
The wealthiest family, famed to be even wealthier than the royal family, wealthier than even the duke of westminster… are the hindujah brothers. They were listed well before Agarwal
So was Mittal, the steel guy who controls most of the worlds steel companies
Agarwal is just a chi indian baby.
Financials are very poor for this size company; $1.3m revenue? Or are the figure in the article wrong?
‘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.