SUMMARY INQUIRY STATEMENT INTO KONKOLA COPPER MINE AND ZAMBIA’S ANNUAL COPPER PRODUCTION.
Monday August 14, 2023
Certainly, it is worth noting and support the ambitious target of the New Dawn government of the United Party for National Development (UPND) under the able leadership of President Hakainde HICHILEMA and his administration to ramp up copper production to Three (3) Million Metric Tons per annum over a stretch of Ten (10) years in positioning Zambia on the trajectory of economic stability, national development and wealth creation.
It is therefore for the same propriety that the Inter-Africa Governance Network (AFRINET), a policy dialogue platform in the Social, Economic and Political arena of public life has with increased interest put a spotlight on the mining sector to audit and highlight the opportunities and challenges obtaining in the sector that is Zambia’s major Foreign Exchange earner and second largest formal sector employer after government.
In this regard, AFRINET would like to bring into national policy dialogue or conversation in and around pertinent matters such as the Konkola Copper Mine standoff, the status of investment in the Mopani Copper Mine and Kasenseli Gold Mine, as well as the reportage of illegal mining involving Sugilite, Manganese, Gold and other precious metals.
Nevertheless, the intentional focus for the discussion underway is Konkola Copper Mine on the Copperbelt province, the entry of Vedanta Resources Limited into the Zambian economy and the daunting reality that Zambia from around 2008 to 2013 was the largest copper producing country in Africa and second in the world to Chile and currently has slumped to the second position at 763,550.34 Million Metric Tons to the Democratic Republic of Congo at 3.2 Million Metric Tons in Africa and Seventh in the world according to the 2022 mineral
production statistics.
The chronicle of Vedanta Resources Limited at Konkola Copper Mine started in the early 2000 when a reputable International Mine Conglomerate pulled its investment out of Konkola Copper Mine (KCM), sending thousands of direct and indirect employees home on account that KCM had reached junk status, sentiments that were taken as an expert opinion by all prospective investors.
For a huge investment, its closure caused a lot of misery on the
Copperbelt. The advent of the Mwanawasa administration, decided the floatation of the mine on the market in 2004 for a suitable investor, unfortunately, only Vedanta Resources Limited declared interest.
At this point, the mine had further lost its viability and value as a result of being non-operational for some time leading to the mine flooding and its machinery becoming obsolete.
As such Vedanta extensively invested into the mine to resume production and by 2019 when
the Patriotic Front administration repossessed the mine from Vedanta, its investment portfolio in 15 years grew from US$ 25 Million to US$3 Billion , representing investment of US$ 973 Million into the Konkola Deep Mine Project( KDMP), a state of the art Smelter plant worth
US$ 700 Million, mine operation in 4 different locations, Nampundwe in the Central province, Chingola, Chililabombwe and Kitwe on the Copperbelt involving both open pit and underground mine technology, a labour force of 13,000 direct and additional indirect jobs in terms of contractors and suppliers, and remittance to the National Treasury of a total US$ 1.3 Billion in taxes and Statutory Obligations.
The subsequent process of liquidation has cut the labour force to about 3000. It is worth the record that whilst in this state of liquidation, copper production has decreased notably with some considerable disruption, for instance, the Smelter at Nchanga division this year alone has been shut down twice this far on the 17th January, 2023 for 45 days and the latest being on the 27th June, 2023 due to a leakage as communicated to the public by the liquidator Counsel Celine NAIR.
It can only be hoped that the assertions by the President of
the Mine Unions of Zambia (MUZ), Mr. Joseph CHEWE are not reflective of the general reality at Konkola Copper Mine that have attributed these shut downs and others during the tenure of Counsel Milingo LUNGU to poor mine maintenance as reported in the local tabloid (News Diggers, 29th June, 2023), because if these sentiments are true, the viability of the mine and its
value could certainly be under a potential risk and on the erosion trajectory.
In these 15 uninterrupted years of Vedanta at Konkola Copper Mine, some Mine Conglomerates have come and left in times when Zambia was in critical need of such capital circulation in the economy, notably though Vedanta has remained committed to its expansion braving several challenges.
In all fairness, regardless of the ups and downs, Vedanta can only be described as a risk taker, Zambia’s all-weather investor and a consistent partner in the mining sector.
Therefore, it can only be strongly urged that Vedanta and the current administration under the able leadership of President Hakainde HICHILEMA must expedite the unlocking of Konkola Copper Mine investment for the social good of the people of the Copperbelt and general economy of Zambia as did his predecessor President Levy MWANAWASA in 2004. As AFRINET we have constantly been in close interaction or interface with some
stakeholders and ordinary people of the Copperbelt province in various public places, on the streets, markets, as well as our organization’s grassroots membership hence having a full appreciation of the Social-Economic downside of the investment challenges at Konkola Copper Mine and Mopani Copper Mine.
For a fact, as much as the ambitious target of the United Party for National Development government of Three (3) Million Metric Tons of copper per annum over a
stretch of Ten (10) years is surely an achievable target.
However, without intentional decisions to bring underperforming copper mines like Konkola Copper Mine and Mopani Copper Mine, policy consistence and Industrial harmony in the mining sector and increased flow of capital for expansion of existing and new mine projects, this ambition may unfortunately prove to be unattainable.
It’s not surprising that due to the obtaining investment challenges at Konkola Copper Mine and Mopani Copper Mine, copper production has slumped from 803,746.52 Metric Tons in 2021 to 763,550.34 Metric Tons in 2022, representing a drop of 40,000 Metric
(5%).
We however as AFRINET remain optimistic that these underperforming mines will be
brought to full fledge production and have the national treasury benefit from the lucrative copper price currently obtaining on the London Metal Exchange of US$ 8,450 from a record low of US$ 4,754 in 2019 per Metric Ton respectively.
In conclusion, the sooner Mopani Copper Mine and Konkola Copper Mine returns to optimum
productivity levels, the better for the economy, will influence an increase in Zambia’s annual Copper production and generate positive national social and economic indicators.
The investment and financial expenditure commitment made by Vedanta Resources Limited of US$ 1 Billion in capital injection, the retention of 10,000 direct workers and additional indirect jobs in terms of contractors and suppliers will definitely have a notable impact on the mining province local and national economy.
The proposed 20 % salary increment and the K2500 one off payment across the board is good in the motivation of the labour force and sustaining industrial harmony.
The US$ 20 Million annual expenditure in the mine’s Corporate Social Responsibility under the Anil Agarwal Charity Foundation anchored on Four(4) pillars in
Education, Health, Sports and Sustainable livelihoods will certainly make a considerable
difference in the immediate communities Konkola Copper Mine is operating.
MAURICE MALAMBO
EXECUTIVE DIRECTOR
Compiled & submitted by and on behalf of the Inter-Africa Governance Network (AFRINET)
CC. Vedanta Resources Limited, Presidential Economic Advisor, Minister of Finance, Minister of
Mines, Minister of Commerce, Provincial Minister- Copperbelt, Economics Association of
Zambia, Chamber of Mines, Copperbelt Chamber of Commerce, Mines Unions of Zambia
The Media