Finance Minister Situmbeko Musokotwane has indicated that a large amount of capital is required to revive operations at Konkola Copper Mines (KCM) and Mopani Mines but that the government is working to bring the facilities back up to speed as a matter of urgency.
Speaking at a post-budget symposium in Lusaka on Monday, Dr Musokotwane said that discussions were already underway to bring about a lasting solution and that the public would be informed of the results in due course.
Both KCM and Mopani Mines were brought under effective government control by the previous Patriotic Front administration. In May 2019, the government’s investment arm ZCCM-IH seized control of KCM and appointed a liquidator, Milingo Lungu, to oversee the breakup and sale of the mine’s assets.
Since then the mine has been haemorrhaging money, with productivity falling some 70% since coming under government control. Private owners Vedanta have also challenged the liquidation process at an arbitral tribunal in London and in September, Mr Lungu was arrested for allegedly stealing and laundering more than $2 million during the liquidation process.
Likewise, at Mopani Mines, the government took over operations in January 2021, accruing a further $1.5 billion in debt to purchase the mine from majority owners Glencore. Since then the government has been unable to find a private investor to help run the mine at full capacity.
On Monday, Dr Musokotwane revealed that the government is also subsidising fuel for the mines to the tune of $21 million per month. The finance minister admitted that this was a major predicament.
It follows on from Fridays budget, at which the minister announced a tax break for mining companies by allowing them to deduct their royalties payments from income taxes.
The UPND government has previously indicated that it would be willing to bring private investors back to the mining sector, with Mines Minister Paul Kabuswe telling a meeting at KCM last month, “part of the mess that we are in is because of that liquidation process”.
“We must never ever bring politics in[to] the private sector,” he emphasised.
Vedanta, for their part, have promised a further $1.5 billion of investment into KCM if the facility is restored to their private ownership. This is estimated to be enough to restore productivity at the mine back to pre-pandemic levels.