GLENCORE HAS ROBBED ZAMBIA RIGHT BEFORE OUR VERY EYES.
By Thabo Kawana
As an ordinary Kitwe resident, news about what transpired today over Mopani is one I want to take cautiously and not prematurely dwelve into celebration. Many questions ring in my mind…is this a sale, is it a take over, is it a win win situation or a good reedance on the part of the investor? Is this a good deal or a bad scandal in the making or already made?
From the onset, I must declare that I am no expert in these matters and no authority at all as I am neither an Economist nor Expert in Mining, therefore my views are pedestrian void of professional input and stand corrected by authorities in this field.
The idea of retaining 100% stake and control in our mines is not only good but, patriotic too. I therefore support such moves if well thought out and implemented. But with what has happened today over MCM, we have retained 100% stake and control of MCM…..or have we? At least thats what we have been told.
Glencore is a known business that chases profits therefore can it dump a performing asset? The answer is NO. We are told Mopani has been making loses in the last 3 years going into 4 this year.
This prompted Glencore to place the mine on care and maintenance with a threat to close it. Knowing Govt wud not allow closure that wud result in wholesale job losses for those working directly and indirectly for the mine, they (Glencore) gave Govt some concessional requests if only to keep the mine going.
They asked Govt to pay them all their VAT refund (impossible) so as to inject the same in re energizing operations and expansion at the mine.
They proposed Human capital optimization to shed off a good percentage of their staff (makes Govt panic) and they succeeded in laying off a good number of employees anyway, a move that has literally turned Mufurila into a ghost town.
After this, Govt engaged with Glencore to buy off their stake in MCM, result of which was announced today as having happened. ZCCM IH now owns Glencore stake in Mopani bringing it’s stake to 100%.
What I now understand as having transpired is that from the look of things, Glencore has pulled a fast one on us and our negotiating team was sleeping (as usual).
Glencore has sold us a loss making asset, dumped their debt on us and this has been done via a book entry transaction (no cash involved).
Not only have they given us an unfair off-taker agreement wr all the copper to be mined by MCM will be sold to them only, essentially making them the actual owners of our copper, they have also included a 3% Gross revenue to be paid to them before tax. Meaning even if we make losses owing to say, low copper prices, zabo zi ngena zo kwana.
In essence, Glencore has employed us to do the donkey work whilst they sit pretty for the next 17 to 20 years.
This is not a good deal, it’s actually no deal at all. It’s a reepoff if u ask me. Clearly Govt has opted for a political social solution that is aimed at keeping jobs for atleast upto election time but after that, this deal can’t hold and all hell will break loose as this is not a sustainable transaction.
Why do I say so? MCM will require a working capital or operational expenses (OPEX) of $300m. Ziza Choka kuti? Minister says they will find another investor, but who will invest without benefit?
I ask so because one invests in order to produce and sell to the best market to retain profit, but that off-taker agreement with Glencore entails you invest to produce and sell to Glencore only and Glencore sells wherever they want at a profit. Meaning you work for Glencore. Who wud pump money into such an arrangement when it’s more profitable to produce elsewhere even in DRC and sale to China for example?
So from the look of things, Glencore has returned control over revenue and we (ZCCM IH) have returned control over cost.
Basically, what has happened here is that, GRZ has borrowed money from Glencore to pay Glencore which will retain the off-taker agreement until the contract sum and debt are liquidated.
It’s like You who is buying a car from me, borrows money to pay for it from my Wife, pays me and I give my Wife the same money to bank in our family account.
But then you now owe my Wife and continue to pay her back at an exorbitant interest rate as high as 90% for years to come.
Given that, I don’t think we have anything to celebrate here on the Copperbelt over this Mopani deal, it’s a fufuveve, teti mfilondolole bwino bwino.
What we have basically achieved as a Nation is increase our debt portfolio by another $1.5bn to almost$2bn if u add interest. At this rate, we must forget about any future IMF bailout because instead of reducing on our debt to attract assistance, we are increasing our debt portfolio.
Mopani was bought from us by Glencore for less than $50m on April 1, 2000. Now I truly believe April 1 is Fool’s day. I feel we have been fooled.
Cry my beloved country, kanshi mwe Lesa these pipo who go to negotiate on behalf of our country, mwaba fumya kwii???? (In Kambwili voice).
Anyway, fili uko tuleya.
Thabo Kawana
Kitwe Resident