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lol : Mopani Copper in Zambia asks for prudent policies to
Monday, 06 Jun 2011
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Mopani Copper Mines, a unit of leading and Swiss based commodity trader, Glencore AG International asked the mining companies operating in Zambia, Africa’s leading copper producer to provide a framework in which inequalities in the industry can be addressed for the benefit of all people.
Mr Emmanual Mutati CEO of Mopani noted that the goal of the mining companies should not be to seek an advantage for one group at the expense of others. The objective of mining companies should be to ensure they do not create prosperity for some by impoverishing others. The mining companies should instead provide a framework in which all could benefit, in which inequities could be addressed and in which all our people and industries can prosper.
Mr Mutati stated that It was imperative for mining companies to work with the government and act decisively to fully revive the country’s economy for lasting prosperity owing to the high copper prices on the international market and that although the current metal prices would not last Zambians could take advantage of them.
Mopani Copper Mines, one of the largest copper producers in Zambia with a labour force of more than 10,000 was taking advantage of the higher prices by expanding production capacity through investing in new projects that would increase not only production levels but also extend the life of the mines.
Mr Mutati noted that the year 2010 had been a happier one for Zambia as the country has witnessed the turning around of the international metal markets. The previous crisis had caught most of us ill-prepared and the remedy for repositioning ourselves was not easy medication for all to take,
He wondered whether Zambia had learnt the necessary lessons from the previous international financial disaster that culminated in various job losses especially in the mining sector, where Zambia lost about 13,000 jobs in the copper and mining industry because of the economic recession.
He said that historically these situations have been cyclic and Professor David Miles of the Bank of England predicts three financial crises in the next two decades. Have we documented the lessons of the 2008 to 2009 debacle? Have we learnt much that will enable us ride the future storms and at least insulate our country from the worst effects of yet another financial crisis?.
At the same occasion, Zambia’s mines minister Mr Maxwell Mwale urged local emerging businesses in the mining sector to take advantage of the upsurge in copper prices now and diversify to survive any recurrence of the global crisis. Local entrepreneurs must continue to run businesses beyond the life of the mine.
He cautioned against over-dependence on mining by the mining companies, suppliers and contractors. It was imperative for all players to consider diversify their businesses to survive a global crisis and continue to run the business beyond the life of a mine. It was because of this concern that Zambia is developing a multi economic facility zone here on the Copperbelt.
Mr Mwale urged investors to be sensitive to public opinion and expectations in the areas they were operating in especially in addressing safety and health issues as well as environmental protection and corporate social responsibility.
Recently the commodity trader, Glencore was under fire over its reported tax evasion and under declaration of copper production in Zambia. Among others, the European Investment Bank stated that because of the reports it was among other actions commenced investigations into reports of alleged tax evasion accusations against the company.
It further slapped a ban on all funding to the group to establish the truth behind the matter. The EIB provided Mopani with USD 50 million loan in 2005 to help fund renovation of the Mufulira copper smelter. The loan is due to be fully repaid by the end of 2016. The bank decided to undertake its independent investigations into the matter.
EIB stated that due to the serious concerns about Glencore's governance which have been brought to light recently and which go far beyond the Mopani investment, the President of the EIB has instructed the services to decline any further financing request from this company or one of its subsidiaries. Glencore has since denied any wrongdoing.
According to data, the lender stated that the USD 50 million loan is the only one given to a Glencore entity and was used to partially fund the first phase of the renovation and modernization of the copper smelter at Mufulira mine in northern Zambia to reduce the emissions of sulphur dioxide.
According to the EIB, total project costs were USD 130 million with the remaining USD 80 million financed from Glencore's own funds. The lender in slapping the financing ban and further investigations into reports of evasion which it described as serious concerns about its governance. In 2005, the European Investment Bank (EIB) signed a finance contract with Mopani Copper Mines, a subsidiary of Glencore, for the amount of USD 50 million to partially fund the first phase of the renovation and modernization of the Mufulira copper smelter with the aim of reducing the emissions of sulphur dioxide.
Total project costs were USD 130 million and the remaining USD 80 million were financed from own funds of the borrower. The EIB loan was fully disbursed in April and August 2005. The project was successfully completed by mid 2007 and was effectively eliminating half of the SO2 emissions of the smelter. A further and final reduction of SO2 and dust emissions was planned for latest 2015, when Mopani Copper Mines would have completed the construction of the second acid plant without co-financing by the lender. The efforts would render the smelter compliant with local and World Bank emission regulations.
Mopani Copper Mine's debt service to the bank has always been excellent and the loan is expected to be fully reimbursed by end 2016. Accordingly, EIB said that prior to its approval the loan received the non objection from the Zambian government, as well as from the European Commission. The loan had been correctly used, the project successfully implemented and the smelter was operational with environmental benefits demonstrated.