The best time to measure the overall contribution of a mine to society is when it is about to close, and Chibuluma Mine on the Copperbelt is an ideal case-study.
That’s according to an article posted today on the industry website www.miningforzambia.com.
Chibuluma was one of the first Zambian mines privatised in 1997, and after more than 18 years of operation, it is nearing the end of its working life.
“Unless our ongoing exploration finds a new copper deposit worth exploiting soon, Chibuluma will probably close sometime between 2020 and 2022,” says Eustus Munsaka, Head of Finance. “All mines have a natural lifespan, and we are about to reach the end of ours.”
Has Chibuluma benefited Zambia? Was it right to privatise the mine? Or would it have been better to leave it as a nationalised entity, under the control of Zambia Consolidated Copper Mines (ZCCM)?
When Chibuluma was being considered for privatisation, the nationalised mining industry was struggling. Production had plummeted, employment was down and the technological base of the industry was depleted from lack of investment. ZCCM was losing money and government was not getting any mining tax revenue. So the decision to privatise Chibuluma, and other ZCCM Mines, is perhaps easier to understand within the social and economic context of that era.
Immediately upon privatisation, Chibuluma’ s new shareholders, Metorex of South Africa, poured money into developing the mine and renewing its technology base. This capital expenditure programme has continued unabated ever since, and has been running at more than $15 million a year since 2008.
The next element of Chibuluma’ s contribution is the money that has flowed directly to government, starting with the $17.5 million purchase price of the mine. Then adding the various taxes paid over the years (corporation tax, Mineral Royalty Tax, windfall tax, Value-Added Tax and Pay-As-You-Earn tax by employees), the total comes to $252 million – or about K2.4 billion at current exchange rates.
“Significant as these payments to government are, they overlook the larger social and economic benefit the mine has had on the community and the local economy,” says Munsaka.
Employee spending power is significant. Then there is the multiplier effect – every direct job at a Zambian mine such as Chibuluma creates up to 5 jobs indirectly in the local community and the broader economy. This is easy to understand when one considers the millions of kwacha released into the local economy every month through employees’ wages and salaries.
The community has benefited too, thanks to the company’s Corporate Social Responsibility (CSR) programme. Since 1998, Chibuluma has spent in excess of $3.7 million building schools, roads and houses; donating computers and laboratory equipment; awarding scholarships; teaching farmers how to grow crops more efficiently based on conservation farming skills; and providing medical care. In 2013, the mine handed an entire 100-bed hospital to government.
So when all the various contributions – both direct and indirect – are taken into consideration, the answer to the question “Has Zambia benefited from a privatised Chibuluma?” has to be an emphatic “yes”.
The only downside is that this substantial social and economic contribution has almost certainly created a culture of dependency, which will be sorely tested in the years ahead. All stakeholders will feel the economic effect of the loss of spending power and tax revenue from the mine.
Only one person in Zambia has benefited from Privatization. Let us not just single out one company.
Kabwa discuss issues not persons we are tired with your lies.
And who would that be, @kci?
Ukwipusha imbwa ngeifwele..! (Asking the obvious)
@KCI you are an obvious retard. You need to grow beyond your extreme hatred of other individuals!
The arithmetic in this article does not add up.
@kci ndiwe chipuba…
Only HH has benefitted from Privatisation and is now chasing innocent people from their customary land and substitute them with Cows. He now wants to bring confusion in Zambia so that he privatises the whole country and take cows to state house
So HH is so powerful that as an ordinary citizen, even Metorex listened to him and brought all this investment that created the jobs in Chibuluma and all revenues to government coffers through the many taxes that Chibuluma has paid over the years! That’s the guy we need for President. I did well to vote for him.
Strange that a Tonga would have benefited from privatization while the Northerners looked on
Privatization was bemba driven to empower themselves,chitalu was overall incharge with Kaunda francis at the mines and chief thief chiluba at the top,give us a break ba bolala.
My mbuyas the Bembas are only clever on the mouth. Copper has been taken out of the country but the money NEVER comes back to Zambia. It ends up in Switzerland, Cayman Islands & other tax havens.
What Govt should have done is copy the Chilean model & implement it here. Just google photos of Santiago & compare it with Lusaka, then you’ll understand what copper money can do if we had clever people in Govt.
Watch ActionAid video titled STEALING AFRICA on how they do it.
wwwDOTyoutubeDOTcom/watch?v=WNYemuiAOfU
Maloza you cant compare Chile to Zambia because of transportation advantages Chile has over Zambia
this is a verge report…
When Metorex bought Chibuluma they paid 17 000000 usd for a mine that had reached its life end.Infact they were the only investors who had paid a proper price as compared to other companies . From the money they made from the dying No 7 shaft they developed Chib South whose reserves would only last 15 years. The Chinese bought this mine because of its low production costs.
It sad how the mines were sold for a song. A good example is kansanshi which was sold for a cash price of $5,000,000.00