China-Africa: Zambia picks Chinese firm to run Luanshya copper mine
Zambia, Africa’s top copper producer, has picked a Chinese firm to run a major mine, widening China’s influence in the sector at a time when the metal is rising on prospects of a global economic recovery.
LUANSHYA, ZAMBIA REUTERS -
Zambia, Africa’s top copper producer, has picked a Chinese firm to
run a major mine, widening China’s influence in the sector at a time when the
metal is rising on prospects of a global economic recovery.
Zambia’s President Rupiah Banda said China’s NFC Africa will take a
majority stake in the closed Luanshya Copper Mines (LCM), which will reopen
later in May.
The LCM, which was a joint venture of the Bein Stein Resources Group
(BSRG) and International Mineral Resources (IMR), shut the mine in December,
citing lower metal prices.
“The major concern of most of the people in the country is how
much capital will they inject into that mine, we know that they understand
cost implications, but it’s one thing to believe you can put it as part of the
other mines that you own and another to inject the 500 million plus capital
required to inject into that mine and revive it, and there are huge
liabilities which will of course be taken up by the government I am sure, and
whether government will really pay off the miners retrenched and who won’t be
absorbed, is another question because this becomes a hazard as well,”
said Chibamba Kanyama, an economic analyst, in Lusaka.
The metal, used in construction, has doubled in value since the start
of the year on the back of hopes that falling inventories signal a recovery in
demand, and the mine’s re-opening is a boost to Zambia’s economic
lifeblood.
“Most of these other people who come on board here, come because
of the activities in the mining sector, so when the signal has been sent again
that there has been a new buyer into the Luanshya Copper Mines, it sends a
positive signal that Zambia is not as risky an economy as has been perceived.
There is still potential in this country and we believe that other potential
investors in other sectors including the resource investment sector, or the
extraction industry will begin to see that after all it is not as bad as we
thought,” Kanyama said.
In what is a now familiar sight across Africa, China’s drive to secure
minerals, oil and a place for its workers and industries to thrive is
converging with Zambian government’s plans to tap the potential of its copper
mines.
China’s Nonferrous Metal Mining and Yunnan Copper Industry are about to
commission the 300 million US dollar Chambishi copper smelter, to produce
150,000 million tonnes a year.
Other Chinese companies have promised to invest even more in the
sector.
The government had said it will increase its stakes in all copper mines
to between 25 percent and 35 percent from about 15 percent, in order to
exercise more influence on their running, and prevent closures that could
result in job cuts.
Luanshya was to have been the test case in the scheme, which analysts
and companies said may scare off investors already unnerved by the global
downturn, hurt plans to boost copper output and further demoralise
workers.
“The social discomfort of the people of Luanshya has worsened over
the years and they have lost faith in any new owner or in any new ventures or
initiatives to do with Luanshya mine and as a result you find most of the
miners may go into the mine but for temporally gains only, may not fully not
fully commit themselves but on the plus side and I think it’s a big plus we
have saved the mine from collapse just the maintenance costs at the time when
the previous owners left have been huge, extremely huge such that the benefit
of closing off the mine outweighed the benefit of maintaining it,” added
Kanyama.
Copper contributes 63 percent to Zambia’s foreign exchange.
(mpelembe.blogware.com)
Tags: Zambia