By Chimwemwe Mwanza
You ‘ve got to hand it to President Lungu for his resolute stand on government’s decision to grab KCM. He has been decisive and unwavering; at least he wasn’t going to loosen his grip on this asset without securing a deal that puts Zambia’s interests above any other.
As this saga continues to unravel, Vendata’s relentless strategy to blackmail government by conjuring a storm of legal bravado, is floundering. Looking back, its victory in the Court of International Arbitration in Johannesburg was of little significance as the Zambian High Court reciprocated by turning down its bid for stay against a KCM winding up order.
What is remarkable about the government’s approach is that it stood its ground amid threats and intimidation disguised in lawfare. No illusions here, it is precisely why Argawal took it upon himself to travel to Zambia. His mission was clear. He didn’t come to State House for coffee, he came to plead for this asset. Its thus not surprising that whispers of an imminent cessation of hostilities began to do the rounds soon after Argawal left our shores.
Then bang, our President is suddenly off to India ostensibly to honour an outstanding one – year old invitation from his Indian counterpart. The timing of the trip to India might well have raised suspicions but this is inconsequential in the bigger scheme of things. The country is owed a swift resolution to this matter as the prolonged closure of this asset isn’t in the best interest of the economy. So, no amount of speculation should distract from achieving a lasting solution.
Truth is that Vedanta needs KCM and the desperation to hold on to this asset, stems from the reason that KCM is the princely jewel in its stable. Isn’t it ironic that Vendata’s successful global expansion strategy – coincided with its acquisition of KCM in 2002?
It can’t be further from the truth that Agarwal used some of the proceeds of profits from KCM to bulk up mining assets in the holding company thus enabling him to buy a controlling stake in mining behemoth, Anglo American. And today, he is one of the single largest shareholders in Anglo American – a factor perhaps made possible with a bit of money from Chingola. More than anybody, he knows that losing this asset will severely impact his fortunes.
Where to from here?
Now that Vendata is on the verge of capitulation, President Lungu must surely be smelling blood. Not only is he emboldened but he will certainly have a huge say on how this sequel finally concludes. Understandably so, he like many citizens have had enough of dodgy investors taking advantage of the generosity of Zambians. Does he go for a kill? One might advise, this is a period for cool heads and sober minds. After this long disruption in production, nursing KCM back to a stable entity will be a daunting task.
In addition to earning a few Memoranda of Understanding (MOUs) which the President signed with his Indian counterpart whilst there, all that government needs to do now is beef up its negotiating team and extract as much concessions as possible before it hands back the licence to Vendata.
This is not to suggest that any of the Russian, Turkish, or possibly Chinese firms that bid to buy KCM in the wake of this saga, should be discounted from the race. It might just well be that discussions with these prospective buyers may have reached an advanced stage.
What are the lessons from the KCM debacle? It’s acceptable that naysayers were possibly salivating that the repossession of KCM would prove to be a reckless gambit; this is because our political terrain is so fractured and polarised along party lines that opposing camps stand ready to capitalise on any misfortune to advance nefarious agendas. And the biggest challenge here is that, the single dimensional focus on the PF government, has blinded us from confronting other deep-rooted challenges facing the country. What happened to the mantra, ‘United we stand, and Divided we fall’?
Need we forget that it’s not PF that sold KCM but the late President Levy Mwanawasa’s MMD, guided off course by Mr Hakainde Hichilema – who now heads the opposition UPND. The deal that handed Argawal this mine and many others pursued in the privatisation of Zambia’s mining assets were rotten to the core. They are littered with greed and this is the reason for the despondency we are now witnessing.
Did we really need to privatise some of our best performing assets such as Zamox, Kafironda Explosives, Mpelembe Drilling and other mining beneficiation and associated entities? Lest we forget, a privatisation exercise that creates a few rich people is not only immoral but is a danger to sustainability of a democracy.
Revisiting the Binani/Ramcoz debacle, the then ruling MMD government chose to look the other way when Luanshya residents took to the streets to complain about the poor working conditions that the new owners of the mines had introduced. Only later did government realise that it had been duped into selling Luanshya Mine to a group of scrap metal dealers masquerading as mine operators. By then, the mine had been stripped off, with all its key equipment sold as scrap metal.
Drawing on lessons from Russia – from where we seem to have modelled our privatisation project – the fire-sale of state assets in the wake of the collapse of the Soviet Union was dubious and only served to create a new breed of oligarchs such as steel baron, Uli Usmanov, oil tycoon Mikhail Khordovosky, oil and gas merchant Roman Abramovich, among others. Dare we ask? Are Russians better off today than they were prior to the collapse of the Soviet Union? Be the judge.
On the flipside, the British could well argue that their privatisation of state assets including British Telecoms – which was cautiously managed – was the best decision ever. Today, assets sold by the British government are not only fledging but do contribute taxes to the British fiscus. It’s really about the ‘how’.
Off significance though, some of the individuals that gave away our mines for a song are still alive and surely they must be called to account. It shouldn’t be for purposes of persecution but to help the country find closure. As the KCM impasse draws closer to ending, this should mark the beginning of a process that allows government to renegotiate all its contracts with mining investors, just a thought?
The author is an avid reader of political history and Philosophy. He loves Nshima with game meat.