The South African-based industrial conglomerate Anglo American has finally agreed with the Zambian government to buy the country’s ailing state-owned Zambia Consolidated Copper Mines (ZCCM) for US $90 million, the World Bank confirmed to IRIN this week.
Anglo’s subsidiary Zambia Copper Investments (ZCI) and the government have ratified an agreement that will see a new company buy an 80 percent stake in ZCCM’s Konkola and Nchanga copper divisions as well as the Nampundwe pyrite mine for US $30 million in cash. In addition there is a deferred consideration of US $60 million and the benefits of copper and cobalt price participation schemes with a cap of US $125 million over the life of the company.
A World Bank official told IRIN on Thursday: “The Zambian government is now in the driving seat of the ZCCM privatisation process, and will have to maintain the momentum in order to move the process forward.” The World Bank, added the official, is facilitating donor funding for the process, which, he said, is at a very delicate stage.
In a parallel deal, ZCI will sell its 27.3 percent stake in ZCCM to the government on a deferred payment basis. The new company, however, will have to spend more than US $700 million in capital expenditure to rehabilitate and develop the mines. This will be made up of an initial investment of US $200 million on the mines over the next three years, and a further US $523 million that will be set aside to develop the Konkola Deep mine.
ZCCM, which has been reportedly losing the government at least US $1 million a day over the past two years, also intends selling the Nkana mines, concentrator and cobalt plant as a separate package, according to news reports. However, should a sale not be concluded within the timetable of the main transaction, Anglo would also assume the management of these assets.
Despite the nationalisation policies of the Zambian government soon after independence in 1964, Anglo American retained a minority stake in ZCCM through its 60 percent ownership of ZCI. But a change of government in Zambia in 1991 ushered in a new freemarket programme under President Frederick Chiluba’s Movement for Multiparty Democracy (MMD). Zambia has privatised some 280 firms or units since 1992 through the Zambia Privatisation Agency (ZPA).
However, ZCCM proved more difficult to dispose of. At least three previous negotiations on the sale of the mines broke down.
The first attempt to buy the mines was made by Kafue Consortium, a grouping of international mining houses, which collapsed after failure to agree on the price. Then Anglo made a joint bid with Chile’s parastatal Codelco, but the latter pulled out, arguing ZCCM did not meet its investment criteria.
Anglo then entered the talks on its own with the Zambian government. About a month ago, the two sides announced an indefinite suspension of negotiations, apparently because of the low price that Anglo was offering, the same price the Zambian government has now accepted.
This article was produced by IRIN News while it was part of the United Nations Office for the Coordination of Humanitarian Affairs. Please send queries on copyright or liability to the UN. For more information: https://shop.un.org/rights-permissions
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