COMMENT - Just reducing dollar dependency is not exactly what I had in mind when using metals reserve as the basis for Local Currencies, however the idea is applicable. What it should not become, is a plaything for the same individuals who dully maintained that debt at 40% of GDP is of 'internationally acceptable standards' and other such nonsense. If you have the choice between a Windfall Tax that is free of interest, and a Europbond of very high interest... the Finance Minister chooses the high interest rate option? What is going on?
Policy analyst calls on govt to establish metals reserve bureau
By Stuart Lisulo |
Updated: 24 Oct,2015 ,10:00:00
THE government should consult the IMF and World Bank to develop a metals reserve bureau that would help reduce dollar dependency and insulate Zambia against external shocks, says
Humphrey Mulemba.
And the
Zambia Institute for Policy Analysis and Research says the government needs to act swiftly to manage the country’s public debt, which has doubled to over 40 per cent of GDP in five years.
Commenting on Zambia’s risk of falling into debt distress owing to the increasing public debt position as pointed out by the IMF, Mulemba, an independent policy analyst, stated that
the government needs to take an innovative approach in seeking external financing that would help
reduce US dollar dependency, currently hinged on copper exports, to repay the country’s mounting debt stock.
The government’s issuance of a US$1.25 billion Eurobond in July pushed the country’s external debt stock to over US$6 billion, shifting Zambia’s position closer to the suggested threshold of 40 per cent for developing countries.
“An innovative idea is to seek the Bretton Woods institutions’ help to develop a metals reserve bureau alongside the sinking fund proposed in the 2016 budget; this is to help Zambia reduce dollar dependency. The idea of the metals bureau is to ring fence the forex denominated debt only against the basket of metals as opposed to it being extended to the performance of the kwacha,” he stated in response to a press query. “The reason being that metals are dollar-based and hold more currency equivalent stability than the Zambian kwacha.”
Mulemba said the metals bureau could be developed through the IDC and ZCCM-IH, which would help in debt repayments and insulate against external shocks.
“The pool of metals chosen will be based on the comparative advantage of Zambia and can be achieved through the IDC in collaboration with ZCCM-IH. This will help cushion the current situation and further develop a rigorous system that will be able to sustain future shocks as experienced in the recent past,” he added.
And Mulemba, formerly a policy analyst for the Civil Society for Poverty Reduction (CSPR), warned that the consequences of continued external borrowing amid a devalued kwacha would make repayments more expensive.
“With a depreciating kwacha, the payment rates in forex for international loans will become more and more expensive, potentially eroding the financial base of the country to fund development projects,” said Mulemba.
And ZIPAR executive director, Dr Pamela Nakamba-Kabaso, stated in a press statement that the government needed to urgently act to manage the country’s mounting public debt stock.
“The last 5 years have seen the debt-to-GDP ratio grow from 20 per cent to 41 per cent of GDP in 2015, which is just about the sustainable threshold of 40 per cent of the GDP,” stated Dr Nakamba-Kabaso in the local think-tank’s reaction to the 2016 national budget.
Labels: INFLATION, LOCAL CURRENCIES, METALS
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Scrap metal export is killing local industry, says Mutati
By Kabanda Chulu in Kitwe
Wed 20 July 2011, 14:00 CAT
FELIX Mutati says the continued exportation of scrap metal is killing local manufacturing industries, resulting in factories being turned into warehouses. Justifying the imposition of the ban on scrap metal exports, Mutati, who is Minister of Commerce, Trade and Industry, said the government has introduced measures aimed at developing the steel and iron industry in Zambia.
“The ban of scrap metal exports is expected to help mobilise reserves for the production of steel and iron products by the existing and upcoming plants. Mind you Zambia is the only country in the region which is exporting scrap metal, so what will happen is that the industry we are creating will suffocate and it will not matter what other measures we put in place if scrap is being exported,” Mutati said.
“The only way to survive is doing what is sensible like what other countries have done; are we made of different material that we can’t see that we are exporting jobs and killing our industries. then people will complain that what is this government doing? So, as government we have moved and we are going to implement and we are serious because we think if we put these measures, we are creating opportunities in steel sector.”
He explained that it was not easy to arrive at measures aimed at developing the steel and iron industry.
“How do you deal with a reduction of jobs on one hand and creation of jobs within the same industry…so we are dealing with different perspectives of the same people in the same industry. Others are saying minister, if you do this we shall attract this kind of investments. So far US $ 400 million has been invested in the steel sector due to business reforms being implemented,” said Mutati.
“On the other side of the equation, the sun never rises with investments being low, they are booming negatively and saying government must bring solutions through participation but government will not take over the role of business. Of course we don’t have total cure but we shall create level-playing field through application of good policies and regulations.”
Labels: FELIX MUTATI, METALS, NEOLIBERALISM, REGULATION
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Luanshya police impound truck carrying scrap metal
Written by Zumani Katasefa
Thursday, December 18, 2008 9:42:48 AM
LUANSHYA police yesterday impounded a truck carrying suspected scrap metal from Luanshya Copper Mines (LCM) barely four days after President Rupiah Banda ordered the mining company to stop the trade.
A reliable source from LCM and police sources confirmed the matter and said the truck registration number ADB 6891 and trailer number AAL 9606 was carrying vital mine components.
The source said it was believed that the items were cut into pieces before being disposed of as scrap metal as the company had pending supply contracts with some companies.
“Roan member of parliament Chishimba Kambwili and Steven Chungu (former MMD Copperbelt provincial secretary) are some of the buyers of scrap metal from the company and whose contracts are pending,” said the source.
Kambwilii however denied being involved in the scrap metal business with the company.
“That fact that I am found with Chungu whose company deals in scrap does not mean that I buy scrap from LCM. You can go there and check the records; you will never find my signature. Yes, I can admit that LCM donated three trucks of scrap metal to my office as member of parliament for Roan Constituency,” he said.
Kambwili explained that the scrap metal worth US $15,000 was meant to raise funds to pay for a fleet of ambulances from the United Kingdom which he had sourced for his constituency.
And Chungu said there was nothing illegal about his deals with LCM, adding that his company was registered.
President Banda last Saturday directed LCM to stop selling scrap metal from the mine.
Labels: LCM, METALS
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From Progress.org:
Chips need rare metals, economies need precise prices
Dwindling of Rare Metals Imperils Innovation
Scientists keep finding better ways to make the gizmos we like, but more and more of us like them, buy them, and deplete the reserves of the rare metals that go into them. Are we between a rock and a hard place? It might not be so bleak as some prognosticators think - if we start recycling now. But how could recycling compete with mining?
by Jeffery J. Smith
June, 2007
We’re using up the ingredients for our favorite hi-tech devices. Without these key components, we could not make anything from cell phones to solar panels. The stuff we put into liquid-crystal displays – indium – and plan to turn into next-generation semiconductors – hafnium – might no longer be found in nature by 2017 (InformationWeek, 29 May 2007).
David Cohen writes in his audit of "Earth's natural wealth" that reserves of elements from:
* platinum (used in cars’ catalytic converter and in fuel cells) to
* indium (used in flat-screen TVs and computer monitors) and
* tantalum (used in mobile phones)
are "being used up at an alarming rate." These are elements; unless Merlin figures out how, we can not synthetize any substitute substance.
As India and China and other rapidly developing economies consume more common metals like zinc and copper, even those once plentiful supplies dwindle. Over the last year as the price of copper soared, so have thefts of copper from power lines and electrical substations. Some predict the world's zinc will be gone by 2037.
These shortages could hinder the development of more efficient solar panels. At a time when our world is getting low on oil and hot from burning fossil fuels like coal, better solar panels could come in handy. Without them, China would resort to burning its millions of tons coal; already on America’s Pacific coast, 10% of the air pollution is from Chinese factories and powerplants.
People who estimate these reserves disagree widely. Yet whoever’s right, some day we must deplete them. As we do, we provide yet another reason why Moore's Second Law – the cost of developing new and more complex chips increases geometrically – is true. (via reader Stewart Goldwater).
However, while it’s good for worriers to have another problem to worry about, the alarm was not raised by a recycler. Each year, America throws away as much metal as it consumes. Logically, for at least one year, America need not mine one new ton of ore – if we recycle.
Why don’t we recycle now? The expense. Why is it cheaper to dig up ores – and pile up broken and worn out electronic devices in landfills – than to leave land alone and recycle valuable parts and ingredients? The answer is not mere convenience. Mining is not easier than recycling. And it’s not consumer preference. Buyers don’t know if the metal in their laptop used to be in an ancient desktop or recently under tons of cubic earth.
The answer is politics. Modern, efficient recycling costs more than wasteful mining as a byproduct of entrenched policy. As a hangover from the century before last, we favor mining corporations, specifically with taxes and subsidies.
Who wouldn't want to be a prospector given these breaks?
* To claim the public land which harbors precious ore, they get to pay the same number of pennies per acre that they paid back in 1872.
* What do we charge them for despoiling the land and leaving behind waste (called “tailings”)? Anything from little to nothing.
* What size of tax write-off do we offer for using heavy equipment? Heavy ones. What size for hiring workers to do things like take apart old TVs? None.
Get the picture? When you pay taxes that become subsidies, you buy the most effective way to run out of rare metals. So, if you want to reuse the ingredients in old computer monitors, what should you do? Reverse public policy. Make people pay taxes for what they take, not for what they make.
And let people get a share of the value of nature. Spreading the natural wealth around, more people could invest their money where their heart tells them – for “greens”, into recycling. And getting an income supplement, more people could afford to take off time to advance their own ideas, like a better way to recycle or an alternative to a basic ingredient.
Sure, feel alarmed that our appetite for rare metals roars undiminished. But realize there is something we can do. Correct prices by correcting taxes and subsidies – a new policy called geonomics.
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Jeffery J. Smith runs the Forum on Geonomics.
Labels: METALS
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