By Nicholas Bariyo
Special to DOW JONES NEWSWIRES
KAMPALA, Uganda--The Zambian government has backtracked from its
demand for increased shares in existing and new mine projects in an
apparent policy shift aimed at attracting more investment in the
sector, officials said Thursday.
The Mines Ministry said that the government had shelved plans to
increase its stakes in existing mine projects, to as high as 35%
from the current 10%-15%, in order not to antagonize investors in
Africa's largest copper producer.
"Government will now only consider getting minority stakes of
around 25% in new projects," an official with the Mines Ministry
told Dow Jones Newswires.
Copper mining is the main stay of the Zambian economy and
exports account for at least 75% of the country's annual foreign
revenue earnings.
The move underscores a change of heart of President Michael
Sata's government, which earlier this year announced a range of
policies aimed at tightening the state's grip on the country's
booming mining sector.
Soon after Sata won the presidency last year, his government
indicated that it would break the dominance of foreign companies in
the mining sector and give a greater role to the state mining
company, Zambia Consolidated Copper Mines Investments Holdings.
Although demands for higher stakes have been dropped, the state has
maintained tighter controls on mineral exports as well as higher
taxes and royalties.
Rayford Mbulu, Zambia's deputy labor minister, told Dow Jones
Newswires Thursday that it isn't policy to be on a collision course
with mine investors. Analysts said that some investors--already
rattled by a broader trend toward resource nationalization in
Africa--felt threatened, potentially putting at risk a number of
mine projects currently being implemented in Zambia. These include
expansions at the huge Konkola and Mopani copper projects, a $400
million Konkola North copper project being implemented by Brazil's
Vale SA (VALE) and a $590 million Ichimpe copper mine project by
Hong Kong-based Zhonghui Mining Group.
Sata's election victory ended 20 years of dominance by the
Movement For Multiparty Democracy, which has been credited for
attracting more than $4 billion of investments in the mining sector
since 2004, enabling the southern African nation to attain a
historic record copper output of 820,000 metric tons in 2010.
Zambia's mining operations are concentrated in the Copperbelt,
an area some 300 kilometers north of the capital Lusaka near the
border with Congo.
ZCCM-IH has minority stakes in mines such as Glencore
International's (GLEN.LN) Mopani Copper Mines, Vedanta Resources's
(VED.LN) Kansanshi Copper Mines and Maamba Collieries Ltd.
Write to Nicholas Bariyo at Nicholas.Bariyo@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires