Bantubonse implores legal means to raise govt shareholding in mines

Monday, April 20, 2009

Bantubonse implores legal means to raise govt shareholding in mines

Bantubonse implores legal means to raise govt shareholding in mines
Written by Chiwoyu Sinyangwe
Monday, April 20, 2009 4:31:56 AM

INCREASING government shareholding in foreign mining companies in the country can only be done through a normal business transaction, Chamber of Mines of Zambia (CMZ) general manager Frederick Bantubonse has said.

Commenting on recent indications by mines minister Maxwell Mwale that the government would raise its stake in foreign-owned copper mining firms up to 35 per cent to have a bigger say in their running and prevent mine closures, Bantubonse said there was nothing wrong with the intention provided it was done through legal and commercially accepted procedures.

Bantubonse, however, advised that it was important for the country to critically weigh the benefits and pitfalls of the country increasing its equity in mining companies.

He also wondered the method the government was going to use to achieve its intention of increasing shareholding in mining companies.

"Anybody can acquire shares in any mining company but that should be done commercially...it should be trader-seller relationship. In fact, Equinox is now selling shares in Lumwana and the government is free to buy," Bantubonse said. "Probably the only question that should be asked is: to whose benefit? It is not always every year that shareholders draw dividends and sometimes the same shareholders have to inject in more capital to expand in the activities of the mine if the mine is not making profits...so, should the government get money from schools and hospitals and put it into running the mines? It is not up to the Chamber to answer those questions but all Zambians."

When reminded that the government had indicated that it did not plan to nationalise the copper mines, but would negotiate with the companies and seek to convert debt owed to government into equity, Bantubonse responded: "What obligations? I really don't know how the government is going to achieve that...when the mine is placed under care and maintenance, it is not the same as saying the mines has been abandoned where the government can push to get the assets for free but it means we are not able to produce due to the market conditions and as soon the environment improves, the mine would be re-opened, even next week."

Bantubonse also said foreign mining companies have over the last two to three years poured over US $4 billion of investment in the local mining sector compared to less that US $100 million which was injected in the country's lifeblood two years preceding the privatisation process.

Mwale recently said the government would target a stake of between 25 to 35 per cent from the average of 15 per cent and that mining firms would soon be informed of the new plan. The new plan cheered mine unions who had been urging the government to take a bigger stake in the mines to exert influence, prevent mine closures and save jobs.

Labels: CHAMBER OF MINES, FREDERICK BANTUBONSE, NATIONALISATION