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Zambia economy, luanshya mine closure, unscrupulous investors exploit zambia

Zambia economy, luanshya mine closure, unscrupulous investors exploit zambia

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THIS BRILLIANT ARTICLE BY SARAH CHILDRESS EXPLAINS THE ECONOMIC MALAISE OF ZAMBIA,THE ZAMBIAN COPPERBELT AND THE TOWN OF LUANSHYA, WHERE UNSCRUPULOUS INVESTORS HAVE JUST ABANDONED THE BALUBA MINE HAVING MADE $US450m IN PROFIT IN FOUR AND A HALF YEARS THEY OPERATED THE MINE AND GAVE VERY LITTLE BACK TO THE COMMUNITY, APART FROM A TRUCK LOAD OF GRAVEL ON THE LOCAL POLICE STATION'S FORECOURT!!!! THIS IS THE SECOND TIME THE BALUBA MINE IS SHUTTING DOWN IN A DECADE, A RESULT OF POOR MANAGEMENT. ON BOTH OCCASIONS, THE MINE WAS RUN BY UNPROFESSIONAL PEOPLE BENT ON LINING THEIR OWN POCKETS FROM DEALS WITH SUPPLIERS AND CONTRACTORS. BALUBA IS A POLYMETALLIC MINE (it has cobalt metal to produce a valuable by-product and make copper production profitable). SARAH HAS THE JOURNALISTIC SERENDIPITY WHICH PUTS HER IN THE LEAGUE WITH LITERARY GENIUSES SUCH AS NAIPAUL AND RUSHDIE. BY JUST OBSERVING A SITUATION, SHE IS ABLE TO FORMULATE AN ACCURATE PICTURE AND REPORT IT VIVIDLY. I HOPE ZAMBIAN POLITICIANS AND ACADEMICS WILL READ AND DIGEST. IT IS AN HONOUR TO BE ASSOCIATED WITH SARAH. MAY HER GOOD WORK CONTINUE TO SHINE. THIS ARTICLE WAS FIRST PUBLISHED IN THE WALL STREET JOURNAL IN MARCH 2009.....LUANSHYA IS CLOSE TO MY HEART, HAVING WORKED THERE FOR 17 YEARS, IN 3 DECADES. I DO HAVE A PLAN TO REVIVE THE RICH MINING LEGACY OF THIS TOWN. PLEASE READ MY REPORT IN ONE OF THE LINKS BELOW
THIS BRILLIANT ARTICLE BY SARAH CHILDRESS EXPLAINS THE ECONOMIC MALAISE OF ZAMBIA,THE ZAMBIAN COPPERBELT AND THE TOWN OF LUANSHYA, WHERE UNSCRUPULOUS INVESTORS HAVE JUST ABANDONED THE BALUBA MINE HAVING MADE $US450m IN PROFIT IN FOUR AND A HALF YEARS THEY OPERATED THE MINE AND GAVE VERY LITTLE BACK TO THE COMMUNITY, APART FROM A TRUCK LOAD OF GRAVEL ON THE LOCAL POLICE STATION'S FORECOURT!!!! THIS IS THE SECOND TIME THE BALUBA MINE IS SHUTTING DOWN IN A DECADE, A RESULT OF POOR MANAGEMENT. ON BOTH OCCASIONS, THE MINE WAS RUN BY UNPROFESSIONAL PEOPLE BENT ON LINING THEIR OWN POCKETS FROM DEALS WITH SUPPLIERS AND CONTRACTORS. BALUBA IS A POLYMETALLIC MINE (it has cobalt metal to produce a valuable by-product and make copper production profitable). SARAH HAS THE JOURNALISTIC SERENDIPITY WHICH PUTS HER IN THE LEAGUE WITH LITERARY GENIUSES SUCH AS NAIPAUL AND RUSHDIE. BY JUST OBSERVING A SITUATION, SHE IS ABLE TO FORMULATE AN ACCURATE PICTURE AND REPORT IT VIVIDLY. I HOPE ZAMBIAN POLITICIANS AND ACADEMICS WILL READ AND DIGEST. IT IS AN HONOUR TO BE ASSOCIATED WITH SARAH. MAY HER GOOD WORK CONTINUE TO SHINE. THIS ARTICLE WAS FIRST PUBLISHED IN THE WALL STREET JOURNAL IN MARCH 2009.....LUANSHYA IS CLOSE TO MY HEART, HAVING WORKED THERE FOR 17 YEARS, IN 3 DECADES. I DO HAVE A PLAN TO REVIVE THE RICH MINING LEGACY OF THIS TOWN. PLEASE READ MY REPORT IN ONE OF THE LINKS BELOW

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Categories:Types, Business/Law
Published by: Ramoutar (Ken) Seecharran on Mar 26, 2009
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07/07/2010

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Zambia's Economy Falls With Price of Copper
By SARAH CHILDRESS
LUANSHYA, Zambia -- Here in the heart of Africa's copper belt, last year's highcommodities prices meant regular chicken dinners for the family of HurrytonMwanza.But the 39-year-old miner lost his job when the town's foreign-owned copper
 
mine shut down in January. Mr. Mwanza pulled his eight-year-old daughter out ofprivate school, and is expecting an eviction notice from the landlord of his two-room apartment. He gets by selling cooking oil from a wooden market stall.These days, dinners for the family are only nshima, a cheap staple made of cornflour."We've got no other solution," he says. "No other source of income."Over the past decade, as a commodities boom boosted growth across poverty-stricken sub-Saharan Africa, governments, donors and aid groups watched andhoped it meant the start of a more prosperous era. But now the commoditiesdownturn is walloping big swaths of the continent, ending an unprecedentedperiod of optimism in resource-rich countries across Africa.In the good times, Zambia's Copperbelt province flourished. Rural townsblossomed and prospered, sustained by foreign-owned mining companies andthe handsome salaries they provided.
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Since the Januaryclosing of the coppermine in Luanshya,Zambia, brick makerswho had struggled tokeep up with boomingconstruction demand have lost most of their customers.
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The Zambiangovernmentdidn't takeadvantage ofthe boom todiversify its economy or save for a rainy day. It lost out on a large share ofcopper revenue by offering lucrative concessions to mining companies. When themines began to pull out, Zambia's foreign-exchange flows dwindled, depreciatingits currency, the kwacha. The International Monetary Fund is considering a $200million loan to boost the country's foreign-exchange reserves, on top of a $79million loan approved in June."The copper industry is dominant," says David Punabantu, a Lusaka-basedeconomist. "So when the price of copper went down, the economy was literallydead."Zambia is working to find new investors to take over the closed Luanshya mine.Maxwell Mwale, minister of mines and minerals development, says that severalcompanies are interested and that he hopes to have the mine back in businessby May.The government also said it will boost its stake in mines across the country'scopper-producing region so it will have more control over Zambia's economicmainstay in future crises."Mining cannot be left to commodities traders," Mr. Mwale says. "It's not forspeculators, but for those who understand the mining business. That's the lessonthe government has learned."The carnage isn't uniform across sub-Saharan Africa. The price of gold, aplentiful commodity in many of Africa's mining-dependent economies, has soared
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as global investors rush to safety. And some of the continent's economies -- eventhose most exposed to commodities -- are better off than they were in theaftermath of an earlier boom in the 1980s because of measures they took duringthe good years.In Botswana, DeBeers Group SA has suspended operations at a handful ofdiamond mines. But the country has socked away considerable foreign-exchangereserves, cushioning the blow. The boom lured energy companies to Ghana, inthe past seen as too risky for oil exploration. Production will begin there nextyear, opening a big new revenue stream, even at today's lower prices. Other sub-Saharan governments -- including Liberia, once seen as a desperate case --have tried to diversify their economies away from a single-commodity play.Zambia didn't. The country relies on copper sales for an estimated 70% ofgovernment revenue. Only last April, as copper prices were nearing their peak,did officials restructure antiquated tax laws to take better advantage of the boom.Copper prices have fallen to just under $4,000 a ton from their peak of just under$9,000 a ton last summer. With demand in the industrialized world falling not justfor copper, but also for other minerals and metals plentiful in Africa, miningcompanies across the continent have shut down operations.Canada-based Anvil Mining Ltd. suspended operations at its big copper mine,Dikulushi, in the Democratic Republic of Congo in December. Two months later,platinum producerLonminPLC suspended operations at its mine in Limpopo, innorthern South Africa.In the copper town of Luanshya, the mine, a Swiss-Israeli joint venture, fired all ofits 1,740 workers in January. While that's just a small slice of the town'spopulation of 120,000, mining money trickled down and fed most facets of theeconomy.Farmers sold produce to feed miners' families. Bars and restaurants popped up.
 
Brick makers couldn't bake bricks fast enough to keep up with the constructionboom. Minibuses motored shoppers around town.Miners in Luanshya -- some of whom had been making more than civil servants -- bought land and started building larger homes for their families. They took outloans to start up side businesses and sent their children to private schools. Theybought televisions and DVD players, and sent money across Zambia to familymembers in rural areas, who depended on the monthly assistance."People were in a jovial mood," says Chishimba Kambwili, a provincialrepresentative in the national parliament. "They had money. They could doanything."
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