Mines privatisation poser for government

The pullout from a purchase deal for Zambia's copper mines last month by one of the major bidders has left the government searching frantically for a survival plan for the beleaguered Zambia Consolidated Copper Mines (ZCCM). Codelco, a Chilean copper parastatal, announced its withdrawal from the deal to jointly acquire the ZCCM together with South African-based Anglo American, arguing that the purchase did not meet its investment criteria. The decision has thrown into disarray Zambia's hope of privatising its debt-riddled copper mines. An economic analyst told IRIN on Tuesday that one option open to the Zambian government was to let Anglo American manage the mines under contract. "However, the government will have to mobilise resources to keep the mines running," the analyst said, adding that it costs the Zambian governmment about US $2 million per month to keep them open. "The government cannot allow ZCCM, which generates 90 percent of Zambia's foreign exchange, to close down," said the analyst. An Anglo American spokesperson confirmed to IRIN that a high-powered delegation from the Zambian government and ZCCM officials met company representatives in Johannesburg on Monday as part of what she called "ongoing discussions regarding the privatisation of ZCCM". She declined to comment on the nature of the discussions. However, news reports said the Zambian delegation would meet Anglo American, a 27.3 percent shareholder in ZCCM, to consider, among other options, the possibility of unbundling the units and selling them off as separate entities. Another option being considered by the government, added the reports, was joint ventures with foreign and local firms that could save ZCCM from closure. The Zambian government earlier this year, in a letter to the International Monetary Fund (IMF) outlining its privatisation plans, said it aimed to complete the sales agreement on ZCCM's largest asset packages by the end of March this year. ZCCM's short-term debt then was estimated at US $124 million, which included payment arrears to the country's electricity supplier, while the net financing gap to be covered by the government was projected at US $51 million.