By CHILA NAMAIKO –
GOVERNMENT has questioned the motive by mining companies to always effect cost-saving measures even when commodity prices were still low.
Mines and Minerals Development Minister Christopher Yaluma has since urged companies to diversify their operations by investing in the energy sector to increase Zambia’s power generation capacity.
Mr Yaluma, who is leading a Zambian delegation to the 2016 Investing in African Mining Indaba in South Africa, told the fourth annual ministerial symposium yesterday that, with the low electricity tariffs
in Zambia, mining firms should not expect Government alone to sustain their operations.
“We need some serious energy mix and mining companies must play a clear role. It is regrettable that we allowed investors to do away with power plants when they took over the mines, because they saw a cheap source of power in Zesco. We should go back to the ZCCM days when all divisions had their own power sources,” he said.
This was according to a statement issued yesterday by first secretary for press at the Zambian High Commission in South Africa, Nicky Shabolyo.
Mr Yaluma challenged mining firms to consider going into joint ventures with Zambians to invest in power generation.
Zambia ranked among countries charging the lowest electricity tariffs on the continent, a situation Mr Yaluma said had made it difficult to attract private sector investment.
Zesco, currently, pays about 11 cents per kilowatt for electricity generated locally and about 19 cents per kilowatt for imported power and it sold at about five cents to the mines.
Government was normalising the situation as mandated in the 2015 meeting of SADC Ministers of Energy, which resolved that member states should attain cost reflective tariffs by 2019.
He said there was inconsistency in the way mining firms acted, when they decided to shed off their workforce on account of low copper prices and were unable to sustain their businesses.
Some mining firms 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.
But Mr Yaluma questioned why companies in Zambia rushed to retrench workers when copper prices were currently trading at US$4,000 per tonne, way above the US$2,500 mark, which the mining firms had put up as the worst case scenario, that could trigger such measures.
“When copper prices were above US$9, 000 per tonne, these companies made windfall profits. It is mind boggling that they do not want to refer to these supper profits when it comes to low commodity prices,” he said.
Zambia’s challenges stemmed from factors over which Government had no control such as low water levels that had reduced the country’s energy generation capacity.
Mines deputy Minister Richard Musukwa, his Finance counterpart Christopher Mvunga and Zambia’s High Commissioner to South Africa, Emmanuel Mwamba were among those in the Zambian delegation.