June 30, 2002

Anglo abandons Zambian Mines

The mining giant Anglo-American has agreed a deal to pull out of Zambia's largest copper producer, the Konkola Copper Mines. The agreement came afterweeks of negotiations in London between Anglo, the Zambian government, the World Bank and CDC Capital Partners.

Anglo has offered about $30 million and a loan of $18 million to help keep the mines open until they break even, forecast to be in two years. The mines' management will stay in place for a year. Anglo has also offered a soft loan of between $6 - 11million, provided matching funds are forthcoming from another investor – most likely the World Bank.

Emmanuel Kasonde, Zambia's finance minister, said the deal would allow the mines to continue operating, safeguarding about 15.000 jobs and allowing time for the mines to find new investors and management.

Meanwhile, President Levy Mwanawasa’s new administration seems to have succeeded in shifting the IMF’s thinking on structural adjustment. The IMF has approved a $317 million credit line to Zambia, earmarked for poverty reduction, in spite of the vigorous new government acting out its election promise to reverse structural adjustment policies. The government has;

  • removed fees in primary schools,
  • re-introduced fertiliser subsidies for peasants,
  • re-assumed an active role in crop marketing and slashed fuel duty and electricity tariffs for farmers,
  • delayed privatisation on the few remaining state owned companies, most notably the National Commercial Bank.
Regional newsletter Southscan claims, "For the first time in sub-Saharan Africa, a government fully engaged with the IMF is now jettisoning in part these reforms and has apparently been rewarded for it." The World Bank and IMF are likely to plead that Zambia is facing special circumstances, but other governments labouring under adjustment policies hope that this represents a shift in thinking. (ACTSA)

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