By Patson Chilemba
Former Finance minister Ng’andu Magande has questioned why concessions should be given to investors when the copper prices are at their highest, with further upward projections and when the value of mining is at its best in the country.
And Magande said late president Levy Mwanawasa told Anglo-American when they approached him for a comeback in 2005, having abandoned the country three years earlier, that if they ever came back he would give them conditions of somebody whose behavior “I know” and told them that “they knew now that they were people who abandoned 60,000 workers on the Copperbelt.”
Magande also said conditions at the time necessitated the sale of KCM at $25 to Vedanta as Anglo-American had just left the country, with no more investors wishing to come in, which he said was now different as everybody is clamoring to stay and come back in, such as Glencore and Anglo-American.
Speaking with the Daily Revelation, Magande said those advising President Hakainde Hichilema should take into consideration the difference in the conditions which were obtaining during his and Mwanawasa’s time and the conditions prevailing now.
“When late Mwanawasa came in place, copper prices had gone down, so the mines were running away because they said we cannot continue operating in an environment where the price of copper are so poor. So they were going away. This time HH has come in, the copper prices are at their highest. So there is a difference. With us perhaps one would say it was around $2000 per tone, now they are $10,000 per tone,” Magande said. “So that should be taken into consideration. If you are going to offer these concessions why are you offering these concessions when copper prices are at their highest?”
Magande said during Mwanawasa’s time, Vedanta and Glencore bought old mines in KCM and Mopani, and that the problems of those old mines were different from the new ones, such as those opened in North Western Province. He said the kind of difficulties the old mines encountered as compared to the new ones were different and therefore a distinction had to be made in terms of how to treat the two sets.
He said the people who bought Nchanga for instance argued that the mine was old in that people had been mining there for more than 40 years, and therefore had exhausted the good copper, but those who were investing into Lumwana for instance were starting afresh with copper deposits still on the surface.
He said after the government had finished that discretionary treatment, the new mines also approached them that for them to make money quickly they should also be given concessions like the old mines, but that the concessions given to them were lesser than those given to the ones who had invested in the old mines.
“So the other people got 20 years, the new people got perhaps 12-15 years because they were dealing with new mines and new assets which were easier to mine. The others were already pumping millions of water (out). Mufulira was even about to close because of Kansanshi being the wettest mine,” he said
He said now when the new mines are coming in like in lower Zambezi, he wondered what bad equipment they would be inheriting, as those who bought the old mines even bought the old equipment and even took on old staff, some who were already retiring and had to be paid retirement benefits.
“But starting in lower Zambezi, all the staff are new people. There is nobody who will get gratuity after one year. So it means they won’t have to pay any kind of terminal benefits to anybody. So that already is an advantage for this person who is starting now,” Magande said. “So that is why anybody who says but you did this, he must tell the other people and say but these people did this. And then from there there are new people now who want to come and start prospecting. Now in mining, prospecting means you have to dig in the ground to find out how far your copper is, or your cobalt. During the time you are digging, you are not earning any income, you are spending. So if it is you spending the money you will be spending the little savings you made in Brazil.”
He said those doing the prospecting would also have to be dealt with differently as they were using their own resources, but the degree should vary between those who easily find find the resource on the surface and those who find the resource deeper into the ground.
Magande said even those intending to buy Mopani and KCM, considerations must be put in place due to the extensive mining that has already taken place at those mines over the years.
“So really one has to say, what is the concession I will give for Zambezi Lower? What is the concession I will give for Mopani mines? And when Mwanawasa was selling it was more less the mines were all in one block they belonged to ZCCM. So it was easy at that time even to form one negotiating team,” Magande said. “But now if there will be so much business then each one will have to be looked at differently.”
He said there can never be a blanket consideration in terms of giving out concessions as everything has to be determined by specific considerations peculiar to the mining firm.
“But one of those circumstances already I have told you, the major one is that the copper prices is going up. During 2002 the copper price was going down. So if someone is buying an item whose price is losing value and another person is buying an item whose value is going up, surely you can’t give the same concession,” Magande said, insisting that the Mwanawasa-Magande concessions of the early 2000s cannot apply under the current scenario because the factors are different. “Yah! That is the whole thing.”
He said even when people argued that KCM was song at a song of $25 million, they should also be alive to the fact that Anglo-American corporation had abandoned the mine with 60,000 workers, saying they just went to president Mwanawasa and said “we are leaving your people, do what is possible within your means. But we are giving you a little bit of money which we were going to use so that you can start from there.”
“Now it’s a different scenario now. This time there is no mine which is leaving now. As you can see now. Even Glencore I understand they have been coming in the Copperbelt, they want to come back. Because when they were leaving that time, they were leaving because there was a problem with the understanding with the government. Now they see the price is going up they want to come back,” Magande said. “Vedanta are saying no, we don’t want to leave now this is the best time to invest our money because copper prices are going up. During our time there was nobody, Vedanta itself when it decided to come here that is why we said when you come here we will give you these concessions, but they will be premised on the fact that you will develop Konkola deep…otherwise they would have even just said we are not going to do any mining, we are going to deal with black mountain.”
On Anglo American which abandoned the country during a very difficult period under Mwanawasa but were now coming back to explore cobalt mining which will play a significant in the 21st century technology, and asked if they were investors the county could trust again, Magande said: “I don’t know those who are listening to them now. I will not tell them don’t listen to them or listen to them. They came back even during Mwanawasa. They left in 2002 and came back in 2005. When they came in 2005 Mwanawasa said ‘you can come I don’t mind because now I know who you are. So when you come now I am going to have to give you conditions of somebody whose behavior I know.’ That’s how he put it.”
Magande described the meeting between Mwanawasa and Anglo American as a nice breakfast meeting, saying he told them that they could come as he had not actually chased them in the first place.
He said he told them that it was up to them to come back “except you know now that you are people who can abandon 60,000 of my people because the prices are not good. And yet you have been here for 100 years you know copper prices are cyclical.”
“So he said you come back. But (they asked) are there any mines we can perhaps buy? He says that is private business. Go and look on the Copperbelt, you know the Copperbelt,” Magande said. “So if these people want to come and they are coming under a new regime, if they understand them, if they say their behavior that time was because of Mwanawasa and now with us they will behave differently, that’s up to them.”
He insisted that during Mwanawasa’s time copper prices were going down, but now the price is $10,000 and that the projection was that the prices would go up further, but during that time, “poor Nawakwi’s time in 1998”, the World Bank said the price at that time would never rise until after 10 years, saying true to that the price was more or less static during the projected period.
“So we had to deal with that situation. There is no way like I say somebody is selling to you something he is throwing away, you are going to buy it at K1. But somebody who is selling his best equipment you are going to buy it at K1million,” said Magande.
