The Zambian government is anxiously awaiting a formal announcement by the South African-based mining giant Anglo-American that it will go ahead with the purchase of its loss-making state-owned copper mines, financial analysts told IRIN on Wednesday.
Following the collapse of a bid by the Kafue consortium last year, "this is the last chance for Zambia to sell the mines," a commodity specialist at the London-based 'Metal Bulletin' told IRIN. With donor financial support contingent on the privatisation of Zambia Consolidated Copper Mines (ZCCM), "it will be a major blow if it does not go through."
Anglo, which owns a 27 percent stake in ZCCM, signed a memorandum of understanding in January for the Nkana and Nchanga divisions as well as Konkola and the pyrite mine at Nampundwe on the Copperbelt at a purchase price of US $90 million, and US $300 million in committed investment over three years. With Anglo due to list this month on the London stock exchange, the deal is conditional on the company finding a major partner to join the project.
Talks between a number of potential partners have fallen through due to the fall in world copper prices and "the relative country risk of Zambia and its neighbours", an Anglo spokesperson told IRIN. However, the Chilean state-owned company Cadelco, the biggest copper producer in the world, has maintained an interest in joining a consortium likely to include a major Japanese firm and an international financial institution.
"If the mines are sold that would have a very big impact on the Zambian economy almost immediately," Economics Association of Zambia chairman Moses Banda told IRIN. "Other investments are on hold to see if Anglo is coming in."
However, the privatisation of ZCCM - the country's largest employer - has sparked fears of further retrenchments in an industry and region impoverished by years of under-investment. According to an Oxfam report released late last year, "it was abundantly clear that we were seeing the Copperbelt at a time of acute economic and social uncertainty, nervousness about the future, and growing and visible poverty."
It added: "Nobody in any of the community groups we met expressed a belief that the new owners of the mines would promote new development, new jobs, new economic opportunities, or indeed any positive spin-offs. Instead we found a widespread belief that privatisation will result in yet more unemployment."