Govt questions genuineness of the mines

Government has questioned why mining companies are quick to effect what they termed as cost saving measures even when commodity prices were still above worst case scenarios which they had indicated in their business cases.

Meanwhile, government has pressed on mining companies to diversify their operations by investing in power production in order to stabilise production in the industry.

hristopher Yaluma

Mines Minister, Christopher Yaluma, who is leading a Zambian delegation to the 2016 Investing in African Mining Indaba in Cape Town, South Africa, told the 4th Annual Ministerial Symposium yesterday, that with the low electricity tariffs in the country, mining companies could not expect Government alone to sustain their operations.

Mr. Yaluma said mining companies should consider going into joint ventures with Zambians and invest in a mix of power sources.

The Minister pointed out that it could have been a lighter burden on Government had the mining sector shown willingness to support the proposal to take electricity tariffs to cost reflective levels.

Zambia currently ranks among countries charging the lowest electricity tariffs on the continent, a situation Mr. Yaluma said had made it difficult to attract private sector investment.

On measures taken by mining companies in times of low commodity prices, Mr. Yaluma said there was inconsistency in the way mining companies behaved when they decided to shed off their workforce on account of low prices and that they were not able to sustain their businesses.

Mr. Yaluma said most mining companies in Zambia had indicated in their business plans that the only times when operations would become unprofitable in Zambia would be when prices for commodities such as copper started trading at US$2, 500 and below.

He questioned why companies in Zambia have rushed to retrenching workers even when copper prices were currently going for US$4, 000 per tonne, which was way above the US$2, 500 which the mining companies had put up as the worst case scenario which could trigger such measures.