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Friday, 27 July 2007

Zambia is about to make it big....

Not my words, James Robertson's, Head of Global Markets at Standard Chartered Bank in Johannesburg. Actually his exact words were:

On a broader basis, the Copperbelt in northern Zambia and the southern Democratic Republic of Congo, has the potential to produce two million tons of copper a year within the next 10 to 15 years. This would require investment in infrastructure, communications, and mine construction, in excess of $20-billion. This means the Zambian economy will be triple its current size in 20 years time.....the expansion is not only in mining, there are also deals in construction and agriculture, totalling investment of over $30-million, which would be completed by the end of 2007.
It certainly seems Zambia is the place to be for foreign investors. Reuters this week gave a snap shot of what is going through the minds of some mining investors :
In Zambia, African Energy Resources Ltd is bullish on finding uranium and says any deposit could be developed much more quickly than back home in Australia, where there is political opposition to new uranium mines.

"Zambia is one of the best places around in our view for making projects happen," Executive Chairman Alasdair Cooke told the conference. The country has good infrastructure, stable politics and experienced mining labour, he added. Zambia also hosts the Karoo basin geology and African Energy has identified a rich area of prospects for uranium in joint ventures with Albidon Ltd

"We're looking at nearly 1,000 km of strike length through this area, with occurrences all the way through it and we've only started to scratch the surface of it," Cooke said. The firm's most advanced project is Njame North, where an inferred mineral resource of 5.5 million tonnes at 400 parts per million of U3O8 has been identified.

6 comments:

  1. This would require investment in infrastructure, communications, and mine construction, in excess of $20-billion. This means the Zambian economy will be triple its current size in 20 years time.....

    Well let's make sure that most of the profits are going to go to Zambia, and that most of the costs are spent in Zambia.

    Have you ever heard the 'mines are inherently valueless' argument? Which I was having with a Zimbabwean neoliberal a few months back.

    Anyway, with all these natural reserves, Zambia must be calling the shots on how much they benefit from their own resources.

    This government has never given an account on how or why the mining development agreements came about, or why the terms they agreed on were so terrible.

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  2. "Well let's make sure that most of the profits are going to go to Zambia, and that most of the costs are spent in Zambia."

    If the infrastructure spend is roads, railway and power and other things the benefits will more or less go to Zambia.

    "Have you ever heard the 'mines are inherently valueless' argument? Which I was having with a Zimbabwean neoliberal a few months back"

    No I have not heard it - please expound!!

    "This government has never given an account on how or why the mining development agreements came about, or why the terms they agreed on were so terrible."

    Well let us hope the Government has done that for strategic reasons. Let us hope its strategy is to go to the mining companies with amnesia!! Not remembering what the contracts are and who signed them..."what agreements?" Levy will ask... he'll then gather them around the table say....here you go chaps let us do a deal: give me large hospitals in each district, 1 university for each province, and the best rail system we can afford, and by the way make sure we can also have nice airports...and then keep all you get from the mines except the standard taxes and the 3% royalty, and 1% of your profits go to a fund for villagers where you are located...these agreements will then be reviewed 10 years from now.....deal? deal...

    May that is LPM's strategy....
    He could surprise us...

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  3. https://www.blogger.com/comment.g?blogID=2705183461541363969&postID=6929522222423072330



    I was having this argument with 'Tiragee' over at the ZOL forums, where he wrote:

    Therefore, land, minerals, water, national parks, etc. are utterly useless in themselves and of no value until you demonstrate a clear ability to produce QUANTIFIED value from them for someone who needs them.

    To which I replied that he should give me a goldmine, if they are 'utterly useless in themselves'.

    I thought it was a peculiar argument, except that it seems to be a version of the 'we had to give away the mines, because we didn't have the money to develop them' argument. If you have tens of billions of dollars worth of natural resources, it shouldn't be difficult to borrow a few hundred million dollars and develop them ourselves. Even if it went slower, the money would go to the Zambian state.

    Well let us hope the Government has done that for strategic reasons.

    I seriously doubt it, and I don't trust secrecy on issues that are so crucial to the nation. If it can't be discussed in parliament, I don't trust them to have a good reason for it, expecially when you look at the terms they agreed on.

    Also, all we need to do is to get fully paid and have a government that just monitors where all the money goes. No need for social investment by the mines themselves at all.

    For once, the World Bank can be useful on this issue.

    http://maravi.blogspot.com/2007/07/nyanin-urges-govt-to-act-on-auditor.html

    If they get on board, it will be very hard for the government to refuse starting to get it's house in order and monitor it's expenditures.

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  4. "Also, all we need to do is to get fully paid and have a government that just monitors where all the money goes. No need for social investment by the mines themselves at all."

    No just where the money goes - but how it is distributed.

    I think whatever model we come up with we need to recognise that those who live near the mines should benefit first before anyone else. The local's are not getting the fair share of the investment in my opinion.

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  5. There could be a model where a certain percentage of the shares of a company go to the local council.

    That could easily help redistribute wealty locally.

    Also, there are ways to make sure people are paid, no matter how few official systems are in place. For instance, people could be paid out of turnover, instead of profits. It is much harder to hide turnover than profits.

    For instance, if a company produces ten truckloads of ore per day, it would be easy to pay someone 1 of those truckloads (10% of turnover) - either in money or in the material itself. Payments could be observed by inspectors, instead of accountants.

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  6. http://www.daily-mail.co.zm/media/news/viewnews.cgi?category=17&id=1260522051

    ReplyDelete

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