Friday, March 20, 2009

Govt to increase stake in mines

Govt to increase stake in mines
Written by Fridah Zinyama
Friday, March 20, 2009 3:39:41 PM

MINES minister Maxwell Mwale yesterday said it has been difficult for the government to exert any meaningful influence or have any say in operations of mining companies with shareholding of less than 25 per cent.

In an interview, Mwale explained that the government’s decision to increase its stake in mining companies would change the scenario, giving it an upper hand in participating in the operations of the sector.

“The first mine that government is going to increase its stake in is Luanysha Copper Mines (LCM),” he said. “We are actively looking for investors for this mine and once an acceptable one is found, government will sell about 75 per cent and remain with 25 per cent,” he said.

Already, Zhonghui Mining, a Chinese mining company, has shown interest in taking over operations of LCM which is currently under care and maintenance.

Mwale explained that at the moment, his ministry and the Ministry of Finance and National Planning were working on modalities that would help the government increase its stake in other mining companies which had also been placed under care and maintenance.

“We realised that the decision to own less than 25 per cent shares in the mining companies worked against us, as we did not have much say on investment decisions which were being made and our influence as government was equally limited,” said Mwale.

Early this week, Copperbelt University (CBU) professor in the School of Business John Lungu welcomed the government’s decision to increase its stake in mining companies from 15 per cent to 25 per cent, saying this would help the sector survive the current economic problems.

“The private sector is driven by high profit margins and it is normal for them to want to withdraw in times of economic recession,” said Prof Lungu in an interview. “On the other hand, government is more interested in providing social services to its people. This is why in such economic times, government’s decision to increase its stake is welcome as it will help the private sector to share the burden of high production costs.”

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