Zambia will retain at least 20pct equity in the Konkola Copp

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Zambia will retain at least 20pct equity in the Konkola Copper Mine
Monday, 18 Oct 2010
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Zambia will retain at least 20% equity in the Konkola Copper Mine now jointly owned by Konnoco on the copperbelt region of the country when the miner starts operations in 2013.

Zambia, Africa’s leading copper producer agreed with the new owners, Vale mining and African Rainbow Minerals of South Africa that the government, through its agency, Zambia Consolidated Copper Mines Investjment Holdings has been given an option to retain a minimum of 15% shares in the copper mine under the mining rights agreement after the mine was sold to Konnoco.

Mr Alfred Lungu chairman of ZCCM IH the company retained an option to take up either 15% or 20% equity interest in the mine under the mining rights agreement. He said that we have elected to acquire 20% shareholding in Konnoco with 5% being free carried interest and the remaining 15% will be financed at a cost of about USD 50 million.

During the ground breaking ceremony of the mine in Chililabombwe in copper rich Zambia on October 14, Brazilian mining giant Vale, in a joint venture with Africa Rainbow Minerals of South Africa said they planned to invest USD 1 billion in the next 5 years in infrastructure development to fully develop the Copper Mines in Chillilabombwe abandoned about 50 years ago despite rich copper ore reserves.

Mr Patrice Motsepe executive chairman of ARM said that USD 400 million will be spent during the Phase I of the program that will result in the mine producing 45,000 tonnes annually of copper in concentrate and to be smelted in Zambia.

Mr Motsepe said that “To reach full capacity the project will require about USD 1 billion and the expected mine life is 28 years including a three year exploration program to evaluate area A, which has the potential to increase output to 100,000 tonnes per annum of copper in concentrate from 2020 onwards. Initially, the south and east limb mines will be developed, after which the deeper, higher grade and wider reef areas will be mined.”

He added that our investment in this project located in the wealthy Zambian Copperbelt will be leveraged by Vale’s extensive track record in developing successful large scale mining projects in tropical environments and the project development is consistent with our goal to become one of the largest copper producers in the world and it is expected to create significant shareholder value and immense opportunities to the local communities.

Mr Motsepe said that despite various investments currently being made by South African investors there was nothing that could equate the sacrifice Zambians made towards the attainment of freedom in that country. He stated that the complaint that the benefit from the mines by local communities is confined to employment is somehow true but as ARM the company was trying to change the perception by building on a strong historical and emotional path and that there isn’t wealth in South Africa to pay back Zambia because the sacrifice was done with love to help that country attain freedom.

He said that we have to train and transfer skills to Zambians at all levels and we also want to contribute to entrepreneurs through the goods and services that we shall buy when executing this project.

Mr Roger Agnelli CEO of Vale said that the company would take care of the environment since it helps to avoid liabilities in the future. Everything at the mine will change and that the company was looking at creating opportunities for people in Zambia like was the cases in the Amazon basin and Tete region of Mozambique where they have developed projects with full support of the communities. He said that we really care about the environment because if we don’t pay the bill today we shall still pay in future and that might be costly.

Mr Rupiah Banda president of Zambia expressed concern at the obsolete equipment in some mines that results in practicing unsafe operations citing the case of Chile where about 33 miners, trapped underground for about 69 days were rescued recently.

He said that “I am concerned about ageing operations in some mines through use of obsolete equipment hence we need further investments because we don’t need to go through what happened to our brothers in Chile. Zambia needed investors to transform the country’s resources to attain development.”

He reiterated government’s role to facilitate through good policies and ensure security of tenure to investments noting that it was one of the reasons why the government waived the 25% windfall tax for mining companies and it its place put in a system which is easier for the country to collect tax as well as attracting investments.

He said that we have the mandate for now and let them work hard to get this mandate from Zambians then they can bring back the windfall tax because mines contribute to revenue through rates and other taxes.

Mr Banda said that government would ensure stability and predictability to the mining industry and that his government’s vision was to see a well organised mining industry that will contribute 20 per cent GDP and create several jobs in the next 5 years. He urged Konnoco to engage local suppliers at construction and production stages with a call to local suppliers to meet demand of the mines, noting that he was appalled that most Zambians were being used as agents in the supply of goods and services.