ZAMBIA is no longer considered a safe haven for investments especially in the mining sector, says chief Mukuni.
Mukuni says the PF government does not listen to advice and they have invented their own tune over the mines.
Commenting on plans by First Quantum Minerals to reduce its workforce by 2,500 in the first three
months of this year, in addition to an unspecified number of contractors, Mukuni said PF should now dance to its music.
“So for me they have invented the tune over the mines, so let them dance to that tune. Let them just lick their wounds and forget about it,” he said.
According to a statement made available by Langmead and Baker recently, the redundancies will be achieved in a phased manner.
FQM stated that the difficult and sad decision to make lay-offs originates from the government’s 2019 national budget, which includes an additional 1.5 percentage point increase on all mineral royalty tax bands, and an additional two royalty bands of 8.5 and 10 per cent when the copper price exceeds US$7,500 and US$9,000 per tonne respectively.
But Mukuni said Zambia had considerably lost its rating in the copper mining sector which had at one time been close to Chile due to poor policies by the PF government.
“The PF has already marred the relationship between the investors and themselves. Even other investors in other sectors from Europe besides
China from Asia have lost hope on Zambia,” he said. “They consider Zambia not as a safe haven for investment. But the PF government is not dependable, it is making Zambia a risky investment destination.”
Mukuni said Zambia at one point was very close to Chile in terms of copper production.
“But I think because of our mining polices which are not dependable, Chile has surpassed us by big leaps,” he said.
“I would suggest that if government feels so strongly about the plight of the miners, it should consider taking over mines such as FQM 100 per
cent so that it can give them an opportunity to see the difficulties in the mining sector. However, this is not a good idea because the PF may not continue to be in government and so I would not want them to spoil things for Zambia. They will make it very difficult for the next government.”
Mukuni said the PF government did not listen to advise being put forward by several specialists especially in the economic sector.
“What I know of them [PF] is that normally when you tell them that there is fire here, they don’t listen at all because they would have made up their minds to touch the fire,” said Mukuni. “And more often than not they have gone ahead to touch that fire and only after they have gotten burnt that is when they wake up, that is when they back out. So for me they have invented the tune over the mines, so let them dance to that tune. Let them just leak their wounds and forget about it.”
First Quantum Minerals is poised to fire up a giant copper project in Panama, thousands of miles from its beleaguered mines in Zambia. For bondholders, that’s a welcome distance.
The Canadian copper company is ramping up production at the Cobre Panama plant this year, even as a mining tax hike forces it to shed jobs and cut production at its Zambian facilities. With Panama slated to become a more prominent place of operations, bondholders should benefit as Panama’s stronger credit rating feeds into the debt’s prices, First Quantum president Clive Newall said in an interview.
Where First Quantum does significant business matters to bondholders who closely follow risks associated with lending to companies operating in that particular country. Panama has an investment-grade rating, while Zambia is ranked more deeply into junk.