New Dawn Mining Policy: A Case of Incompetence, Inconsistencies, Confusion and Lawlessness

By Amb. Emmanuel Mwamba

The recently released monthly report by the Zambia Statistical Agency ( ZamStat), for January 2022 indicates growth in copper output for the year 2021 to slightly over 900,000 metric tonnes. As regards the contribution to the economy, mining still remains the largest industry, and in terms of export earnings, mining accounts for about three-quarters of Zambia’s foreign exchange earnings. The mining of copper is undoubtedly still the largest industry, the biggest contributor of tax to the government, the largest provider of formal employment, besides the government.

The importance of mining in Zambia cannot be overemphasized. Zambia is endowed with so much mineral wealth beneath it, and the owners of these minerals are the Zambian people. It is, therefore, important that the exploitation of these minerals is lawful, is professionally done, is transparent, is closely supervised and the returns are fully accounted for to the Zambian people. Unfortunately, the approach taken by the government appears to lack most of these ingredients and therefore, a cause for deep concern. Other than copper, Zambia is also a producer of other minerals, including emeralds in Lufwanyama, manganese in places like Luapula and gold in many places including Northwestern Province.

The total mineral output, and accordingly the taxes paid to the revenue authority, are unknown to Zambians because a number of mining activities happen in black market mode. Video evidence from mines such as Kasensele Gold and manganese in Luapula raises some obvious concerns in regard to adherence to safety laws, professionalism, and accounting for minerals extracted.

This is clearly a breach of Zambian mining laws, including Mining Regulations and Explosives Regulations. When he was appointed as Finance Minister, Dr Situmbeko Musokotwane hit the ground running and was all over the media setting his economic priorities. One of the ambitious growth pronouncements was that Zambia would push copper output to 3 million tonnes per year within 10 years. Six months down the line, there is still no policy direction nor roadmap on how this plan would be actualized.

EXPECTATIONS

His conversion of Mineral Royalty Tax payable from non-deductible to the deductible is a controversial decision and has not yielded benefits to Zambia in the past. The expectation among mining experts was that government would take advantage of the low-hanging fruits, KCM and Mopani, the two large Copperbelt-based mines that are producing far below-installed capacity. These two recently nationalized firms are facing some legal, technical, and financial challenges that have adversely affected their production.

There is disappointment that no actual policy priorities nor initiatives have been presented to the Zambian people. The two mines are the backbone of the economy of the Copperbelt, and hence their continued underperformance is affecting many stakeholders in the value chain. I hope that the two mines KCM and MCM will continue to be majority-owned by Zambians as part of the family silver.

The investors should be minority shareholders. Besides the problems requiring quick fixes at Mopani and KCM, there are also some incomplete projects that gobbled so much money and raised hope but are not operational – Mopani’s Nkana Syclinorium Project and KCM’s Konkola Deep Mining Project (KDMP). Noting the silence from the New-Dawn Government over mining policy for over six months, observers were confident that the Ministry of Mines was working behind the curtains and was being methodical. An announcement of a comprehensive direction had been expected.

BLACK MOUNTAIN, VEDANTA’S RETURN, POPULIST DECISIONS WIN AGAIN

Unfortunately, the new announcements are less-than encouraging: the government has surrendered the slag dumps (Black Mountain) to cadres or cooperatives of their preferred youths and cadres; and the two leading labour unions of mineworkers, MUZ and NUMAWU say they will lobby the government to return KCM to Vedanta and are ready to work with the Indian investor.

The announcement came from junior union officials and a basic inquiry revealed that the activity appears to be orchestrated by a named VEDANTA official.

Suspicions greeted this announcement by junior union officials as it was the labour unions that encouraged the government to repossess the mine and eject the investor for gross mismanagement, abuse, and lack of investment in the mine, just a few years ago. Whatever the motives at both Black Mountain and KCM, the worry remains that partisan interests have again taken precedence over professionalism, clear policy, transparency, and accountability. This is worrying.

As regards the Black Mountain, there is nothing wrong with Zambians owning mines. It is something I sincerely advocate. However, mining in Zambia is regulated by law in order to ensure the safety of those involved in the activities and to account for the mined minerals to the government.

The Black Mountains are man-made dumps common beside copper smelters. There is one in Kitwe near the old Rokana Smelter, one in Mufulira, and another one in Luanshya among others, and were dumping grounds of slag from the processing of copper.
These dumps have grown from the 1930s and contain residue copper and cobalt of up to 1.2% and 0.3% respectively. Modern technology can reprocess and reclaim these minerals in a profitable manner.

By law, the excavation and loading of slag into trucks for onward transportation to processing plants across the Copperbelt constitutes mining and is, therefore, subject to regulation or adherence to mining laws. Mining Regulations and other provisions guide on an array of processes, including the competencies or skills of the employees, the qualifications of supervisors/engineers, the equipment to be used, the standard methodologies for operations, the stringent requirements for safety, the obligation to file mineral returns, on whose basis tax is calculated and paid to the government.

Unfortunately, the decision of the government to transfer the Black Mountains and accordingly permit mining activities thereby cadres is inconsistent with common sense and a catalyst for lawlessness: youths without any requisite mining training will flock to the dumps, nor qualified supervisors or engineers superintend over the activities; the basic standards of safety are absent; there are no verifiable returns filed with the government to determine how much is mined or to help pay tax.

As was done in the past, populist decisions have always taken precedence. Similarly put, the Black Mountain initiative by President Hakainde Hichilema represents the same previous lawlessness, and hence another broken promise on his pledge, delivered in the inaugural address, that he would govern on the principles of professionalism, rule of law and orderliness.

Quite to the contrary, mining by youths and women at the Black Mountain is a mockery of the Mining Regulations of 1971 and 1973, important pieces of law that have helped to save people’s lives and serve the revenue authorities. This, and the lawlessness in manganese mines in Luapula or makeshift gold mines gives cause for concern and brings into doubt the claim by the government that it will strictly regulate mining in the Lower Zambezi National Park. Mining is the Zambian economy; the Zambian economy is mining. Such basic blunders on mining are too early and too worrying.