THE decision by Government to liquidate KCM will not be without consequences. Zambians must brace themselves for negative reactions.
The most immediate is likely to be a further depreciation of the Kwacha which is already under severe strain.
However, if well managed, this dip will be more than compensated by the predictable increase in global copper prices, which will experience a jolt as a result of the market uncertainty created by the KCM saga.
Steady nerves of steel will be required to ride through the tumultuous global reaction that will arise from investors, foes and wolves alike who may wish to profit from the crisis.
Clearly, every nation confronts occasions and circumstances when parochial cleavages must give way to a collective national ethos. This is one of them.
From the very inception, Vedanta was taking over the lifeline of Zambia mining future, given the promise and potential of the Konkola deep which held the future of the country’s mining industry.
A lot was expected from Vedanta. This was exemplified by the paltry US$25 million paid for the asset in anticipation of the tremendous investment that was expected.
Somehow from the faltering steps prior to the consummation of the agreement, serious doubts were expressed by the level of consultants involved in the evaluation and subsequent sell of the mine. At the time of sale, some analysts’ assessments suggested foul play.
Names were mentioned and suggestions made that Zambia was not getting full value of the asset. These assertions were dismissed as the rantings of disgruntled elements against the leadership of then corruption crusader President Levy Mwanawasa.
However over time, evidence has emerged that the company was not fully committed to the aspirations and wishes of the Zambian people. The failure to pay dividends was one just building block in the edifice of failure.
Serious doubts were also raised about the company’s concern with the lives of ordinary Zambians when it was discovered and substantiated by the environmental council that huge amounts of toxic waste was discharged into the tributary that provided domestic drinking and utility water to local villagers.
The level of pollution was so enormous that it ended into international arbitration. The breach of mining targets as one of the minimum conditions of the mining licences was perhaps a tell-tale sign that Vedanta was not really committed to the dictates and wishes of the Zambian people.
Tax evasion through transfer pricing was always a complaint that the Zambia Revenue Authority hinted on but could not fully express considering customer confidentiality.
Sadly, the chickens have rudely and sadly come to roost with the shocking revelation that in the 15 years of operation, KCM has declared a paltry dividend of US$58m of which US$10m remains unpaid in spite of being recognised in the financial records of the company.
The next few days will be very difficult. Pressure will mount for the government to reverse the decision to liquidate KCM.
This should be resisted and all Zambians, regardless of party affiliation, should stand by this decision, because posterity will judge us harshly if we succumb to blackmail and arm twisting.
Copper like other mineral resources are wasting assets. The best value should be invested in the future than in immediate gratification, hence difficult decision must be taken now to protect the future.