Government denies undervaluing cobalt

Zambia has denied international media reports that the government undervalued its proceeds from cobalt sales between 1998 and 1999, 'The Times of Zambia' reported on Monday. Chief government spokesman Newstead Zimba said at a press briefing in Lusaka on Sunday that the audit report being quoted was inconclusive.

"The disclosure of this matter in its current form can only be construed to seriously undermine Zambia's integrity which it has been solidifying through good governance and transparency," Zimba said. The London 'Financial Times' quoted a confidential EU-funded report by Mauritius-based auditors and accountants, investigating the discrepancies between the international market price for cobalt in 1998-99 and the much lower price realised by Zambian Consolidated Copper Mines (ZCCM).

"Over 40 percent of sales were undertaken in an imprudent and irregular manner. It appears that sales with an authorised sales value of about US $95 million were sold well below the market value, resulting in discrepancies of over US $60 million," the report alleged. A further US $10 million was paid out over the same period in commissions to buyers.

A ZCCM internal investigation indicated forward transactions and sales of lower grade cobalt concentrate explained the discrepancy in the national accounts. But after consultations last June with the IMF, Finance Minister Katembe Kalumba commissioned the report. Auditors said they were "not in a position to comment on whether there has been financial impropriety" because of a lack of co-operation in Zambia, the 'Financial Times' said.