6.1 Zambia’s mining industry
6.1.2 Illegal trading
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6. ZAMBIA
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ZAMBIA’S COBALT PRODUCERS
Chambishi Metals Ltd: Chambishi Metals, which has produced cobalt in Zambia since 1, is the largest producer of refined cobalt in Africa. Between 2003 and 2006 the company produced on average 00 tonnes of pure metal cobalt and the production will increase the coming years.1 The company mainly extracts copper and cobalt from the Black Mountain, a huge slag dump located in Kitwe, the mining capital of Zambia, not far from the Congolese border. Another source of ore is the Baluba mine, which is part of Luanshya Copper Mines.
Chambishi Metals is controlled by diamond tycoon Beny Steinmetz and International Mineral Resources. The latter is part of Eurasian Natural Resources Corporation, one of the world’s largest private mining and metal companies.
Mopani Copper Mines: Mopani is Zambia’s second largest cobalt producer. The company operates two mines, the Nkana mine in Kitwe and the Mufulira mine in Mufulira and it also treats copper and cobalt, using material from different local sources. Since 001 Mopani has averaged a production rate of 1 00 tonnes per year. Mopani Copper Mines is owned by Glencore International, one of the world’s largest suppliers of commodities and raw materials.
NFC Africa Mining Plc: NFC Africa runs the Chambishi copper mine, which was the first Chinese overseas investment in non-ferrous metal mining ever. The mine is a joint venture between Chinese state-owned China’s Nonferrous Metals Mining and Construction Company (%) and the Zambian government (1%). NFC Africa has so far focused on copper
production, but will start producing cobalt in the near future.
Konkola Copper Mines Plc (KCM): KCM is the largest mining and metals company in Zambia with an annual capacity of 00,000 metric tonnes of copper. KCM extracted cobalt when the demand from the electronic industry was booming, but stopped doing so in 00. The company is a subsidiary of Vedanta Resources Plc. Vedanta also has operations in India and Australia.
1 Cobalt Development Institute, Cobalt News, April 00 and Reuters, Zambia Mine to Raise Cobalt Output to
000t/y, September 00.
Information from Steve Brown, Comit Resources, who handles marketing and sales for Chambishi Metals, 1
October 00.
Wikipedia, October 00, http://en.wikipedia.org/wiki/Alferon_Management
Email reply from David Weight, President of the Cobalt Development Institute
Cobalt Development Institute, Cobalt News, April 00.
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2007 showed that stricter border controls had an economic impact on the Zambian mining industry. Hundreds of trucks were stopped and mining companies both in Zambia and the DRC protested because they were losing money.
Illegal practices also take place within Zambia’s borders. With such high copper and cobalt prices an informal and illegal business is blooming on both sides of the border. In some cases ore is simply stolen from areas belonging to the big mines. Train wagons and trucks have disappeared from the Copperbelt and dealers have been killed.145 In other cases ore is illegally dug out from old mines in Zambia by small scale miners without permission.
The disused mines and open pits lack sufficient safety measures meaning that workers often risk their lives during mining operations. Since these mines or open pits often belong to someone else, digging in them is regarded as theft, but high rates of poverty and unemployment combined with high commodity prices draw people in to these illegal activities.
“Small scale mining worries a lot of people. With small-scale mining it is hard to know where the ore or the concentrate has come from”, says Frederick Bantubonse, Director of the Chamber of Mines in Zambia.
1 Times of Zambia, Two More Nabbed over Death of Chinese National, June 00.
Small-scale miners are often risking their lives by illegally working in hazardous old mines without any safety measures. Photo: Petter Bolme.
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According to Frederick Bantubonse, yet another problem is that the Ministry of Mines has given out a lot of licenses to mine on property that actually belongs to someone else.
”With a licence to mine it is possible to sell to large smelters. If the material is in concentrated form no one will ask where you got the concentrate from as long as you have a license,” says Frederick Bantubonse.
He says that large smelters and refineries in Zambia, like Chambishi Metals and Mopani, buy ore which contains cobalt from small-scale miners. The ore is also bought by the growing number of small scale smelters based in Kitwe and Ndola, which are often run by Chinese nationals.146
6.2 HISTORICAL BACkGROUND – FROM PRIVATE TO STATE BACk TO PRIVATE OWNERSHIP
Mining in Zambia can be roughly divided into three periods:
1923-1969: The mines were run by private corporations.
1969-1998/2000: The mines were controlled and run by parastatal companies. During the first years the profits from the mining sector were part of national revenue used to finance a wide variety of programmes ranging from education and health to infrastructure, sports and culture.
The situation then deteriorated rapidly, due to political mismanagement and corruption.
1998/2000 up to present: The mines are entirely run by international corporations, but the Zambian Government has shares in all of the companies, often around 10 to 20 percent, via the state-owned holding company ZCCM Investment Holdings Plc. Although the mining companies are making enormous profits from the record high metal prices, several studies and reports show that the Zambian people are actually benefiting very little from the mining industry.