Maravi

Prof Lungu welcomes plans to nationalise copper mines

COMMENT - I guess the foreign mining companies have no lack of 'representation' in parliament.

Prof Lungu welcomes plans to nationalise copper mines
Written by Kabanda Chulu, Fridah Zinyama and Chiwoyu Sinyangwe
Friday, January 09, 2009 5:42:58 AM

COPPERBELT University Professor John Lungu yesterday said the government has a duty to take over copper mines if the private sector has failed to operate effectively.

However, former Mineworkers Union of Zambia (MUZ) national treasurer Davies Mwila has said the government should find more meaningful ways of revamping the mines than nationalisation as the mining companies were likely to become loss-making entities under state ownership.

Meanwhile, Economic Association of Zambia (EAZ) executive member Bob Liebenthal has said nationalising the mines at a time when copper prices are down will not help alleviate the problems the economy is currently experiencing.

Reacting to President Rupiah Banda’s statement that the government was considering nationalising copper mining companies that were experiencing operational difficulties, Prof Lungu said there was need to increase the participation and broaden the shareholding of Zambians in the mining industry.

“Government should not just restrict itself to those companies facing operational difficulties but even those which are performing well because this is the time to increase and broaden the participation of Zambians in the copper mining sector,” Prof Lungu said.

“There is a change in the paradigm of how businesses were operating worldwide and due to many factors which the private sector are involved in that results in some operational difficulties, government has a duty to take over and it is not nationalisation per se but this is a purpose of avoiding job losses and it is cardinal.”

He said Zambia could run its copper mines effectively if only the government could be disciplined and applied corporate governance principles when operating the mines.

“It is true ZCCM Investment Holdings holds some stake but that is just a basket for government, which needs to be opened up for these shares to start trading at the stock exchange, then we can have a say in the mines since the idea is to increase local shareholding,” said Prof Lungu.

“I don’t think we can fail to run the mines since the mines currently are run by Zambians and the capacity is there but what is needed is to be disciplined and to apply corporate governance principles so that the profits are not consumed.”

And Mwila, who is also Patriotic Front (PF) Chipili member of parliament, said the ruling MMD’s policy is that of liberalization of the economy and nationalisation of industries.

“This government has got only a temporal capacity to run the mines while waiting for investors since government does not have the money, for example, if government can take over Luanshya Copper Mines, losses of over US $ 4 million will be recorded every month,” said Mwila.

“Hence I am not in agreement that the mines should be nationalised because this will be like going back to one party governance system and also the MMD will be going back against their policies of liberalisation.”

And Liebenthal said it was understandable that everyone was concerned about the situation on the Copperbelt.

“But the fact is that copper prices have gone down on the international market and this has made it difficult for the mines to operate viably. Operating costs are very high when prices are down and it does not make economic sense to continue running a company without any changes,” he said. “It does not matter who is running a company; it can be a foreign investor or government but when a company is not making profits, some changes will have to be effected.”

Liebenthal said even if a company made use of some of its reserves [of funds] from the time when things were good, this could only be done for a short while and other drastic measures would have to be effected.

“On the other hand, nationalization is not going to do any good and will not change anything,” said Liebenthal.

And KONKOLA Copper Mines (KCM) has disclosed that it plans to start importing copper concentrate from the Frontier Mine in the DR Congo, which had banned the export of copper ores.

KCM stated in its latest edition of the Konkola News that it was talking to owners of the Frontier Mine in the Democratic Republic of Congo, (DRC) and the Chibuluma and Kansanshi Mines in Zambia to procure copper ore to be processed at the newly commissioned 300,000 tonnage capacity, Nchanga copper smelter.

Labels: BOB LIEBENTHAL, DAVIES MWILA, EAZ, JOHN LUNGU, KCM, MUZ, NATIONALISATION, NEOLIBERALISM

posted by MrK @ 5:44 AM