Thursday, April 18, 2024

No Zambian owns a large-scale mining firm – ever wondered why?

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By Chimwemwe Mwanza

In his attempt to discourage government from proceeding with the sale of Mopani Copper Mines (MCM) to the Emirati based International Resources Holding Company, Professor Clive Chirwa makes some interesting arguments – unfortunately most of which are grounded in economic irrationality. Against the backdrop of socio-economic challenges we face, nostalgia can be used as a dose for pain. But the reality is that times have changed, we live in a new global economic order.

Commendably, what he achieved in his write up titled ‘Chirwa Presents Opposition to Sale of Mopani Shares’ and appearing in Lusaka Times, was to stoke grievances among citizens that are weary of exploitation of their mineral resources by foreign firms. True, the mines of yester-years operated by ZCCM created a socio-economic boon for their communities. However, the stench of poverty in Kitwe, Mufulira, Luanshya, Chingola, Chambishi, and Kabwe among others and ostensibly exacerbated by the new mine owners, betrays the abundant mineral reserves lying beneath the bellies of these towns.

When juxtaposed against these poverty levels, resource nationalism to which Chirwa panders to in his write-up becomes a justifiable mantra. Zambia is the second biggest copper producing country in the continent. It is home to 6% of the world’s Copper reserves with the metal accounting for 80% of its export earnings. It also boasts substantial Cobalt, and gold reserves, including Lithium, Nickel and Manganese – a triumvirate of minerals often referred to as Minerals of the future.
While multi-nationals have been making bounty profits from mining the country, there is evidently nothing for locals to show for the abundant mineral resources. Scavenging for ore reserves in mine dumps spread across the Copperbelt is the only source of income for Jerabos, a moniker loosely coined to describe – a marauding gang of youthful artisanal miners who want in on the spoils of the sector. When all words fail, other forms of expression become necessary – Jerabos seem to be living up to this adage.

They have morphed into a criminal enterprise specialising in stealing Copper laden trucks destined for the export market and later selling their loot to smelting companies spread across the Copperbelt. This is a brutal and risky business. In June 2018, about 10 youths digging for Copper residue, earmarked for sale to Jerabos at the infamous Black Mountain in Kitwe died when a portion of the slug curved in burying them alive. In December last year, over 30 illegal miners were buried alive while digging tunnels at Senseli open pit mine in Chingola – 15 of them remain unaccounted for.
Last month, 2 youths, Lucky Mutale and Joseph Musonda perished after rocks rained on them while conducting illegal mining activities at Luano open pit, not far from Senseli. It’s this depressing terrain, poverty, rising unemployment, derelict infrastructure characteristic of mining towns and the general angst that Chirwa, who ironically exemplifies Zambia’s intelligentsia is seeking to elevate in his write-up. Steeped in the nuance that government though ZCCM-IH is better placed to run MCM than the Emirati group, Chirwa’s arguments are devoid of economic merit. Isn’t this asset already in the custody of ZCCM-IH?

At last check, MCM changed hands from Glencore to government following a dubious debt financed transaction enabled by the previous political dispensation. If this is the case, how can government buy an asset it already owns? For the record, ZCCM-IH lacks the capital required to boost production capacity and this is the reason for the flailing state of MCM. Case in point, the Mufulira mine alone, needs US$300m worth of capital to start running optimally. Where is this money going to come from? Based on evidence and historic context, we have proved poor at running our mining assets.

Is Zambia short of entrepreneurial magnets?

Which brings us to this question. Why is it that there isn’t a single Zambian businessperson that owns or runs their own mining company – 60 years after independence? Let’s be clear from the onset, the notion that Zambia lacks astute entrepreneurs is refutable. This country is awash with talented entrepreneurs. Among these, the Lishomwa brothers spring to mind. They built a conglomerate from a number of entities including Sundat Motors. Today, Spectra Energy rates as one of their flagship companies in their stable.
Lawrence Sukutwa, a doyen of Zambia’s insurance industry is astute enough to withstand the rigors of mining. He has built a reputable business whose footprint extends to East Africa. Valentine Chitalu, David Nama, Muna Hantuba and Chance Kabhage, among others, are all prolific businessmen yet none of these industrialists has exposure to mining. For easy of understanding, let’s simplify this argument. Nigerians have Aliko Dangote, Mike Adenuga, and Ade Tinubu among others to parade for its oil, so where is our own Dangote to show for our Copper? Is this situation attributable to failure by successive governments including the incumbent to create coherent policies that can spur mining ownership among locals?

These are fair questions granted that 30 years into a new democratic dispensation, South Africa – not far from Zambia can easily parade an array of dollar millionaires whose source of wealth is intricately enmeshed within the context of a transformational mining policy environment. Yet Patrice Motsepe, Saki Mocozoma and Mike Teke among other mining moguls would argue in the same breath that it takes more than a conducive policy environment to create sustainable mining businesses. This sector is not a get rich quick scheme, it requires both resilience and tenacity.

In neighbouring Zimbabwe, Mutumwa Mawere was at some point the country’s poster child of mining excellence – he owned Shabani Asbestos mine in Zvishavane. Whatever happened to this entity, at its peak of operations, Shabani used to manufacture some of the best asbestos products in Southern Africa. Today, the likes of tycoon Kudakwashe Tagwirei, businessman Nick van Hoogstraten including politician Tinotenda Machakaire are among a growing number of Zimbabweans who own or at least have equity in mining companies.

Across the Luapula river, Moise Katumbi has done very well to earn himself a place among tycoons worth of mention in the DRC’s mining sector. Never mind her controversies, Isabel Dos Santos’s name easily pops up as one of Angola’s top businesspersons to have benefited from that country’s mineral resources. The lingering question is, why is it that there isn’t a single Zambian businessperson to own or run a mining operation – 60 years after independence? Your guess is as good as mine. This hair-splitting question can best be answered by politicians or local Zambian businessmen.

Here is an important piece of data though for aspiring Zambian mining entrepreneurs, the global mining beast that has become First Quantum Minerals (FQM) traces its origins to Zambia. Its founder the late Philip Pascal a native of Australia – who once worked as a middle manager for one of the mining operations in Zimbabwe and later moving to Zambia acquired a distressed mining asset called Bwana Mkubwa based in Ndola. Philip and his brother Matt later turned this mine into a cash spinning asset which they have successfully used as springboard to fund their expansion plans. So, what did the Pascal brothers see in Bwana Mkubwa that local Zambian businessmen couldn’t see?

Back to Chirwa, though couched in irrationality, his arguments aren’t after all outlandish. It might just well be that that he is indirectly questioning the commitment of foreign-owned mining companies to Zambia’s economic trajectory hence his preference for government to keep control of these assets via ZCCM-IH. Perhaps, there is a tacit message in here to the mining investment community. They should start investing significantly in local mining communities otherwise the resource nationalism mantra as exemplified by Chirwa won’t be fading anytime soon.

Mwanza enjoys reading history and philosophy. For feedback, contact [email protected]

10 COMMENTS

  1. These people coming together can easily raise an $300 million just from their personal money, not even a Loan and purchase the MCM:;
    Andrew Sardinia, Carl Irwin, Charles Milupi, H. HICHILEMA, Godfrey Mwamba, Dhanwant Singh, Noble Findlay, Robin Miller, Hanson Sindowe, Rajani Matani, Elias Kambole,

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    • Just HH and his finance Minister would have enough to buy and run a mine. But they are busy shepherding cows

  2. Sixtus Mulenga has a mine and he’s doing well. We’ve been begging government to grant us mining licenses since 2021. They’re busy globetrotting looking for foreigners to come and takeover our projects. We haven’t failed, it’s those in charge that are failing us.

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  3. It would be good to have our own mining magnates in Zambia. Problem is that those with passion for mining is the lack of capital. Those with capital deem it to be to risky and the long gestation period is discouraging. The other is toxic politics. Every Tom, Dick & Harry has a say on our mineral resources. This a highly specialised and capital intensive. It should not be treated like the chipolopolo national team where every soccer fan turns into a coach. A little knowledge is dangerous.

  4. Over exposure to media and labour unions appears to be an immediate problem. Former minister Richard Musukwa at the agitation of labour unions and ordinary miners imposed a hefty tax on DRC concentrates.That action alone completely buried Chambishi metals, reduced the utilisation of Mopani, KCM and CSS smelters. Mopani and KCM failed to weather the storm. Meanwhile DRC with the help of Chinese were quick to complete a much larger Lualaba smelter in Kolwezi and don’t needour smelters anymore. We/zambia lost jobs and forex earrings. The effects of hostile/chaotic takeover over KCM are still being felt today. All this of because of engaging groups of people with little knowledge on mining going wild on the media and stirring up emotions.

  5. Our own mining magnates in Zambia would a great achievement. Those with passion for mining is the lack of capital. Those with capital deem it to be to risky and the long gestation period is discouraging. The other is toxic politics and petty jealousy. See what happened to Kansenseli. Every Tom, Dick & Harry has a say on our mineral resources. This a highly specialised and capital intensive. It should not be treated like the chipolopolo national team where every soccer fan turns into a coach. A little knowledge is dangerous.

  6. Because of poor constitution which says that all minerals found on land including private land belongs to the state. All land in Zambia belongs to the state and therefore cannot be freehold. This was done by the imperialists to claim any part of our country that discovered minerals.

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  7. “Wonder Why” ???
    This question is only for the brainless
    The question should be what business What business Has been run by us succesfully,
    apart from street vending and small businesses which fall under the Zmw800,000 threshold

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