Monday, February 10, 2014

Govt to take bold decisions on KCM
By Misheck Wangwe in Kitwe and Henry Sinyangwe in Lusaka
Tue 26 Nov. 2013, 14:01 CAT

COMMENT - How on earth can KCM claim their costs are $7500 per tonne? That is about the market price of copper. They are lying. - MrK

WYLBUR Simuusa says courageous decisions will be made by the government to end the mismanagement of Konkola Copper Mines and protect people's jobs.

And Simuusa says the 10-man team that has been appointed by the government would only highlight the wrongs in the operations of KCM and make recommendations on how to protect jobs, as well as make the company viable again.

Meanwhile the Economics Association of Zambia (EAZ) says there is need to come up with an optimal mineral tax system desirable to both the government and investors.

In an interview yesterday, Simuusa, who is foreign affairs minister, said there was no doubt KCM had been mismanaged by the majority shareholders, Vedanta Resources.

Simuusa, a mining engineer by profession, said it was poor management at KCM which resulted in high operational costs adding that the upper ore body at Nchanga had more reserves of copper that could increase the lifespan of the mine.

"KCM has unnecessarily attracted more costs standing at US$7,500 per tonne, but if the company can reduce the costs to about $3,500 per tonne, production will continue," he said.

Simuusa, who is also PF Nchanga member of parliament, said stakeholders in the mines, including the major shareholders in KCM, Vedanta Resources, needed to acknowledge that every decision over the running of the mine would be made in the interest of Zambians, the workers and their investments.

"I am anticipating some hard decisions to be made for this situation at KCM. We need to protect people's jobs and we have made it clear as government and President Michael Sata said it, no one should be retrenched. We need to find other solutions and we all need to be courageous, explore other means of making KCM viable and we believe that this company would be viable again," Simuusa said.

He said KCM had the most de-motivated workforce because of the announcements of retrenchments and irregularities in the payroll system that had persistently rocked the mining company.
Simuusa said there was no mine that could meet targets with a demotivated workforce.

"Mining is the industry of targets, which requires proper care of the human capital which is the most valued asset of any country," he said.
Simuusa said KCM owed contractors and suppliers huge sums of money, a situation which he said was killing local business.

Meanwhile, Simuusa said the 10-man committee appointed by the government to look at impeding job losses at KCM was expected to do a professional job.

"This committee for me will not be able to solve problems, but at least they will be able to crystallise and show where the problem is so that together, we can sit and find a lasting solution. We don't want our people to suffer and we will not allow that to happen," he said.

Earlier this month, KCM announced plans to lay off over 1,500 workers in the next three years, as it migrates towards automation and mechanisation at Nchanga Underground, a move which displeased President Sata.

And the EAZ has challenged members of the technicalcommittee appointed to help ZRA optimise policing of the mining sector, to beobjective.
EAZ president Isaac Ngoma said the current tax system needed to be relooked at and find an optimal moderate tax that would create a win -win situation, both for the investors as well as for the government.
He said going the route of the windfall tax immediately, was something that was contentious.

"Ultimately, there is need for a study to be done and look at various operational issues of the investors in the mining sector and also look at government's position with regard to the sector. With good analysis, we would be able to come up with an optimal tax which is desirable and acceptable to both parties," he said.

And Ngoma said there was need to ascertain the challenges facing the mining sector.

"We need to ascertain the challenges that the mining industry is facing as well as try and review the working relationship with KCM.It is very important that both parties have a clear understanding of the issues at hand so that there is a harmonious relationship between the government andthe investor," he said.

Ngoma said EAZ hoped that the technical committee would work diligently in a timely manner and come up with solutions to issues that had been of concern.

"If you constitute a committee that is going to do such kind of work, you have to look at people that have diverse skills depending on the nature of the undertaking. Those that have interest, it is important that they declare interest so that they don't compromise the task at hand. You cannot get someone who is maybe a supplier to the mine in question, whose contract has either been terminated or are looking up to something from the same, it will compromise the process," Ngoma said.

He said there was need for an environment where government does not feel that the investors were cheating and investors do not feel that they were being ostracised or coerced by the government.

"The investment must be rewarding to the nation. It is important that whatever is done is done in a professional manner and at the end of the day we come up with a win, win situation," said Ngoma.

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