Last week there were media reports that Barrick Gold, the world’s second largest bullion miner, is preparing its Zambian copper mine Lumwana for sale in the second half of 2019, looking to target Chinese buyers.
Fresh from two major deals in recent months, Barrick plans to shed $1.5-billion of less productive mines, which have little expansion potential.
According to media reports, this included Lumwana among the possible sales, as a relatively low-grade copper mine whose margins could be materially affected by Zambia’s new mining code and import duty. Analysts value the mine at up to $500-million.
Barrick is reported to be holding discussions with investment banks about appointing advisers to the sale. According to media reports, a bank with links to Chinese companies was likely to get the advising role for Lumwana.
The group is looking to enter talks with Chinese state-owned companies including Aluminum Corp of China, known as Chinalco, and China Minmetals Corporation, which have been seeking growth abroad and a foothold in Africa, lured by its vast resources.
Edgar Lungu’s government is determined to enforce a new 5 per cent copper import duty and also plans to replace value-added tax with a non-refundable sales tax as part of a plan to keep a greater share of mineral resource profits for the country and tackle its debt.
The new taxes also include a royalty on copper production that increases as commodity prices rise.
The sale of Lumwana doesn’t signal a complete exit from copper assets for Barrick. The company is interested in acquiring assets that include both copper and gold, and pure copper projects if it has a competitive advantage over traditional copper miners, CEO Mark Bristow told Reuters last week.
Over the past six months, Barrick closed a $6.1-billion acquisition of African miner Randgold Resources and formed a joint venture with rival Newmont Goldcorp to combine operations in US Nevada to create the world’s biggest gold complex.
Of major countries in copper mine production worldwide Zambia ranks eighth after Chile, Peru, China, United States, DR Congo, Australia.
We certainly have complicated problems with the mines. But it is not only in the mines, it is in all key sectors of the economy where transnational corporations are in full control. There global business strategies are impacting negatively on our economy. Whereas each mining investment matters so much to us, to them it’s just one investment which has to be rationalised with their other global mining interests. So, our economy is directed by the global business strategies of these transnational corporations.
What is our response to this challenge: emotional outbursts!
Edgar is saying Konkola Copper Mines are liars, cheats and want to take Zambians as fools.
“… my coming here is for one reason, one reason, the people of the Copperbelt want a divorce between themselves and a copper mine namely KCM and Mopani. I want to hear it from the unions and the reason is simple, people have cried! I saw some women, some of them half naked crying that they feel cheated by the mining company KCM and Mopani to some extreme. I have come here that if it’s the will of the people to divorce, I will do so. The message being made is clear. I want to consult the Chamber of Mines. I will be meeting them. The Mine Workers Union and other unions to find out what they think and I also have my position, and my position is that enough is enough. Zambians have been taken for a ride by the mining companies. KCM was bought for (US$) 25 million and we paid it all, our copper paid for the mines. They have done nothing since then, just promises, we can’t continue…I am aware that there is a law in this country which should be followed, the Attorney General is here, the lawyers are here and will guide us on how we proceed with the divorce. So we will talk without any fear. I want to say this frankly because I know the opposition, those detractors who don’t see any good in what we do, will be saying he is scaring investors. We are not going to scare any investor. Their investment is safe and those who want to come and invest should do so. I know there are other investors who are willing to come and invest in the mines. Immediately we kick them out, others will come and invest. There is engagement and disengagement even in marriage if things go bad…I am saying this without fear or favour. They have made money and taken money. We will ask the lawyer to tell us how we will share the assets and I know we will get married very soon. These are our mines. Why should they tell us they are making losses from the time they came? If they were making losses, they could have gone. They are liars, cheats and take us for fools. I will not allow that. Those that want to work with us will follow our laws. It’s a sovereign state and if we say the way we want to manage our tax regime we decide we will not be blackmailed by investors. Those that don’t want to stay can go. Sales tax is here to stay, VAT is gone. We decide,” declared Edgar on arrival at Ndola’s Simon Mwansa Kapwepwe International Airport.
Is this the most rational way of dealing with such complex problems?