The sale of Zambia's two major mines to Anglo American recently could be the start of a new era of growth this economically ailing country.
Although Zambia's economy has been largely copper-dependent, never before has the country's future relied so heavily on the fate of its copper mines. The Zambia Consolidated Copper Mines (ZCCM), in a manner of speaking, is the Zambian economy, and the Zambian economy is ZCCM.
The issue of privatising ZCCM has been a long and painful affair but after protracted negotiations, it was announced on 18 December, 1998 - just two weeks before the deadline for the sale of the mines - that the Nkana, Nchanga and Konkola mines had been sold. Finance Minister Edith Nawakwi announced that the mines had been bought by Anglo American Corporation.
Nawakwi said the three mines would attract an up-front cash payment of $72m and that the mines would be legally and formally transferred to Anglo American Corporation in March this year. Nawakwi also disclosed that Anglo American had pledged to invest $300m into the rehabilitation and expansion of Nkana, Nchanga and Konkola mines over the next three years.
Anglo American is also understood to have a firm undertaking to purchase the much vaunted Konkola Deep Mining Project, a year after it acquires ownership of the three mines. The corporation has pledged to invest $800m in the project, which is said to hold the key to the development of the country's copper industry.
Nawakwi said that although the $72m cash price seemed significant, most important was the long-term benefit of privatised mines to the Zambian economy as a whole.
The ZCCM mining conglomerate has been up for privatisation for more than two years. Other mines have been successfully sold to foreign investors from South Africa, Canada, Britain, India and China but the sale of Nkana and Nchanga was pivotal to the government as they produce more than half of the country's 350,000 tonnes of copper per annum.
Nkana and Nchanga are so important to the copper industry and the economy as a whole that investors in many sectors of the economy were holding on to new investment until they saw how and which way the big two went. Before the sale, trading on the Lusaka Stock Exchange (LuSE) had slumped, mining-related manufacturing industries were scaling or closing down, donors were reluctant to release balance of payment support, foreign exchange was in short supply and inflation and interest rates were rising.