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Alba Iulia
Thursday, September 23, 2021

Zambia is done for now with taking over mining companies-Finance Minister

Economy Zambia is done for now with taking over mining companies-Finance Minister

Finance Minister Bwalya Ng’andu says Zambia is not looking to take over more mining companies, nor is the government planning to nationalize the industry.

The government has acquired Glencore Plc’s and Vedanta Ltd.’s local operations in the past two years.

Remarks by President Edgar Lungu in December that Africa’s second-biggest copper producer wanted to take “significant stakes” in unspecified mines led to fears of a fresh wave of nationalization.

“We are at this point in time not looking at any other specific mining operations that we want to go into a relationship with,” Dr Ng’andu said in an interview.

“In some quarters the president’s statement was misunderstood to mean that Zambia is contemplating taking over other mining firms by force or nationalizing mining companies. We are not in that business at all.”

The minister’s comments may ease concerns among investors in companies including First Quantum Minerals Ltd. and Barrick Gold Corp., which operate the southern African nation’s biggest copper mines. It also follows a series of clashes between mining companies and government over taxes, retrenchments and electricity pricing.

Zambia last century had a painful experience with mine nationalization, which bled the treasury and saw production plummet, ultimately leading to the state reversing the policy in the 1990s. Output more than tripled after the operations were privatized.

Copper prices that dropped during nationalization and rose after mines were sold also played a role, according to economists including Grieve Chelwa at the Institute on Race and Political Economy at The New School in New York.

The country has learned lessons, Dr Ng’andu said.

The government can also use examples from other nations including Chile, where the state plays a significant role in copper mining, he said.

“We have to make sure we run these as proper businesses without interference in their operations,” Ng’andu said.

Zambia will also get a better understanding of mining taxation and royalties from running operations like those previously owned by Glencore.

“We never seem to get it right,” he said. “We feel we are not getting sufficient return from the exploitation of our resources.”

10 COMMENTS

  1. Taking over is one thing,running a mine is another thing.Pf took over zamtel but now zamtel is a sinking fund.You are even failing to order postal stamps for zambia postal services.Let me watch this comedy,more pop-corns please

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  2. How can you take over any more mines when you can not even pay the second EUROBOND repayment coupon of a mere $50 million? You have a minister saying one thing and the foooooolish President is out there saying something else instead of hosting a press conference.

  3. Excellent strategic decision making. You cannot take over the whole industry in days or months. These things take time but eventually zambian will control the industry. It might not happen during my lifetime but I would rather my children’s generation had ownership one day.

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  4. Reasonable approach. You don’t want to put all your eggs in one basket. Redominate some and leave some for investors but make sure they’re all performing efficiently and sustaining the economy as well as securing jobs.

  5. I fear for Zambia’s fiscal health in the nxt 24 months. I don’t see a new equity partner for Mopani Mining Co soon and I honestly hope I’m wrong. If no equity partner comes soon then wht happens? I hv this fear because I think the agreement btwn ZCCM-IH and Glencore will repel likely equity partners. And if I’m right, a conversation ought to begin now because it means government subsidies to Mopani. Where will the money come from? Glencore has left , fine but wht happens in the period btwn now and finding a new equity partner? Do u see how unpleasant it looks?

  6. And not that Zambia’s fiscal health is any better now. It’s just that it will get much worse. So let’s brace ourselves for ever higher inflation, corporate insolvencies with accompanying job losses. Politically, I foresee a difficult time for the nxt government. It will require a steady hand to navigate the turbulence that I see ahead.

  7. Nemwine – How can you have an entity partner when you have no control of the sales and you have taken over a huge loan? Chinese would also think twice ….I mean would you partner a friend in his commercial farm when the previous owner of the farm still takes 2/3 of the sales of produce for next 10+ years.

  8. The finance minister says one thing(which is sensible and reasonable), however, his boss says something else – PF nimarabishi!! Of course the minister is angling for an IMF loan or soft kicks from the country’s bondholders, he has to be at his best behavior. One wonders how long this game will go on for, or how long Lungu will keep his mouth shut from saying something contrary to the finance minister lol

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