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Zambia’s new president worries miners

September 26, 2011

“Mining companies are waiting anxiously as Michael Sata, Zambia’s new president, settles into office, wary that the former opposition leader may put past threats against foreign investors into practice now that he has been elected. Rupiah Banda, the incumbent president’s gracious acceptance of defeat in last week’s vote paves the way for a democratic transition, still something of a rarity in Africa.

But it has also triggered unease among investors in Africa’s biggest copper producer. Any mining policy changes would affect a host of international companies – including Glencore, First Quantum, Barrick Gold and Vale – which were expected to invest billions of dollars in the sector over the next five years. The jitters are caused partly because Mr Sata, 74, and his Patriotic Front are relatively unknown quantities. Mr Sata has gained a reputation for populist attacks against investors and complaints that Zambia’s resource wealth has not been adequately distributed.”

Source: Financial Times, September 25 2011

Observations:

  • Some of the largest mining operations and prospects in Zambia are Barrick/Equinox’ Lumwana copper projects; Metorex Chibulama copper mine; Vale’s Konkola north copper project; CNMM Muliashi copper mine; and Collum coal mine.
  • Tensions against foreign, and especially Chinese, ownership of mines rose after two Chinese mine managers allegedly shot a group of protesting miners at Collum coal mine last year.

Implications:

  • It is likely that the new government will try to increase taxes to make the state benefit more from high copper prices. Additionally regulation of working conditions might be strengthened, as much of the unrest in the country’s sector was driven by dissatisfaction about labor rights.

©2011 | Wilfred Visser | thebusinessofmining.com

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