How Hichilema has given away Zambia’s crown in mining for nothing

How Hichilema has given away Zambia’s crown in mining for nothing

Yesterday, Mr Hakainde Hichilema officially gave KCM back to Vedanta, a company whose owner mocked all of us Zambians for selling him our crown jewel of the Zambian mines for nothing.

His actions were particularly painful given that KCM retrenched thousands of workers, withdrew ZCCM social benefits for workers, introduced precarious subcontracting, refused to pay taxes and irresponsibly polluted the rivers on which the poor people of Chingola depend for drinking water and agriculture.

Vedanta’s human rights and environmental record is also a matter of great concern and a subject of global protests. This is the company that Mr Hichilema has given the company back to.

We agree that the liquidation process by the PF was flawed. However, it was justified given the behaviour of the company. Vedanta had a legal right to the company, but lost the social licence. The government should have leveraged this advantage to negotiate for more shares in KCM and the departure of Vedanta. This has not happened and will not happen.

However, this is unsurprising. On August 7 at Parklands Secondary School in Kitwe, Edgar Lungu accused Mr Hichilema of receiving bribes from Vedanta to support his campaigns, and of promising to give KCM back to Vedanta. Soon after forming the government, Mr Hichilema withdrew the matter from the courts and made endless promises about how and when they would announce the way forward.

Aware of the resistance from the public, opposition leaders and experts in mining studies, Mr Hichilema delayed the handover ceremony in the name of protracted negotiations. In reality, I would argue, there were no protracted negotiations but a strategic delay, as some experts have argued, to create enough hopelessness, anxiety, and uncertainty while presenting Vedanta as the only alternative.

Realising the arrogance of Mr Hichilema, the unions that forcefully supported KCM liquidation under the PF, gave in to Vedanta’s promises and began campaigning for Vedanta’s return. The question was no longer about the bad things that KCM under Vedanta did, but when the government would hand over the company to Vedanta. Some churches and youths amplified these calls on various radio platforms, including organised protests that were warmly welcomed by Mr Hichilema and the state-owned media at the expense of the anti-Vedanta protestors.

All this culminated in what we witnessed yesterday, the handover of KCM to Vedanta. This is a reckless and highly irresponsible decision. We cannot handle a company that in 2000 had estimated reserves of 280 million MT at Konkola, with an estimated productive lifespan of over 50 years, and in excess of over 53.9 million MT reserves at Nchanga Mine. With these kinds of resources, we do not need to postpone our debt to the future generation through debt restructuring.

Today, Vedanta is promising: US$1 billion investment in KCM development, US$250 million payment to all local creditors, US$20 million investment into the local community (CSR) every year through a special purpose vehicle¬ – a community trust, 20 percent increase in salaries for employees, and a one-off K2,500 payment to all employees.

Why now, after Vedanta failed to fulfil its commitment to inject US$397 million into KCM as FDI, but instead went on to use all the funds it generated within KCM towards capital projects, depriving the company of the necessary funds for operations and maintenance? This is the same company that bragged about making an easy profit of US$500 million each year from KCM, the mine purchased for a mere US$25 million while declaring losses every year, and refusing to pay taxes.

This is the same company that concentrated on the surface plant concentrator to process seven million tons of ore per annum it did not produce but purchased from other countries, effectively changing the philosophy of the business entirely from “mining” into a “treatment facility”. This is the same company that changed the design of the mine by positioning the shaft in the wrong place.

But that’s not all. This is the same company that led KCM into high indebtedness and the threat of insolvency. The total liability of the company as of 30 September 2013, stood at US$1.567 billion, exceeding its current assets by US$123 million. It was also under the threat of receivership from Standard Bank for defaulting on its US$700 million loan. Unconcerned, in September 2011, Vedanta prematurely recalled the US$500 million loan it had given to KCM earlier, which was supposed to have been repaid in 2012.

This is the same company that frustrated the government’s Business Improvement Plan (BIP) to increase production from 132,318 tonnes of finished copper in 2013, to 178,994 tonnes by 2017, resulting in a further decline in production to 86,585 tonnes.

Today, this is the company that Mr Hichilema has given back the crown jewel of our mines to amidst an escalating high cost of living. This has happened at a time when the promised price reduction of mealie-meal from ZMK150 to ZMK50 has culminated in more than ZMK300 per 25 kg bag; fertiliser, fuel, and so on.

We are saddened by this reckless decision and we want Zambians to ask Mr Hichilema the following simple questions:

• Whose interests are you serving?

• To what extent can you argue that Mr Lungu was wrong?

• Why have the so-called negotiations been silent when you promised transparency?

Fred M’membe

President of the Socialist Party

Article by Socialist Party Zambia
The Socialist Party is a political formation whose primary mandate is to promote and entrench socialist values in the Zambian society. Anchored on the principles of Justice, Equity and Peace (JEP), the Socialist Party shall transform the Zambian society from capitalism to socialism, building socialism in three key sectors: Education, Agriculture and Health.

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