Sata's clean-up in Zambia
Jan de Lange
Johannesburg - The steps taken by
Zambia's President Michael Sata in that country's mining industry is aimed at
bringing partnerships and inclusivity into the industry, said Arshad Dudhia,
one of the Zambia's leading lawyers.
Dudhia was in South
Africa last week, where he took part in a debate on resource nationalism.
Sata, who took over
the reins in Zambia a month ago – and has since been giving mining investors
the jitters by announcing that government wants a 35% interest in all Zambian
mining projects, and by last Thursday’s suspension of all new mining licences –
announced an audit of all existing mineral rights.
Shortly after coming
into office, Sata dismissed the head of the central bank and two weeks ago
suspended all mining export licences.
In the same debate Peter
Leon, one of the country's foremost mining law attorneys, warned that these
steps were much the same as those announced by President Laurent Kabila of the
Democratic Republic of Congo three years ago, which had led to great disruption
and uncertainty in that country's mining industry.
But Dudhia took
serious issue with Leon. He pointed out that Sata was determined to stamp out
corruption in Zambia.
He said it was part
of the process to determine where the country's money and resources were going.
Why, he asked, was Switzerland Zambia's largest export partner?
Sata had wanted to
know why all Zambia's money went to Switzerland, Dudhia said.
world's biggest resource broker, which listed in London and Hong Kong earlier
this year and which operates several copper mines in Zambia, is based in
Other large mining
companies operating in Zambia include Canada’s copper producer First Quantum
Minerals, Brazil’s Vale, India’s Vedanta Resources, Canada’s Barrick Gold, South
Africa’s AngloGold Ashanti and Patrice Motsepe’s African Rainbow Minerals
that foreign mining companies could invest up to $6bn in Zambia over the next two years if the investment climate is safe.
First Quantum lost
its mineral rights in the DRC when Kabila initiated similar processes there.
The company's share price dropped 35% in the weeks after Sata became president.
First Quantum chief
executive Philip Pascal however met Sata on October 13, following which he
declared himself satisfied with the security of his Zambian investments. First
Quantum’s share price has since recovered somewhat.
At the Johannesburg
legal debate, mineral rights practitioners said they believed that resource
nationalism in most African countries would mirror that adopted in South Africa
and that fears of nationalisation were unfounded.
“This year some 70
elections will be held across the continent and this is a trend among almost
all governments: they reexamine mining legislation and review mining contracts.
“There is therefore
a shift in emphasis, because governments begin to realise that mineral reserves
are a finite resource and they have to answer for how these reserves have been
turned to account.
“It's not an
African phenomenon alone.” It can be seen in Australia and even in Britain, with
ongoing arbitration regarding increased oil reserve royalties. Pressure is also
being exerted for transparency and resistance to corruption, said Bruce
Dickenson, mining transaction partner at legal firm Webber Wentzel.
Leon, head of Webber
Wentzel’s mining and energy division – who has written a number of legal studies
on resource nationalisation and mineral rights in Africa – said Botswana, whose
government provides a stable environment with mining legislation that does not
allow for state discretion, continuously heads surveys such as that of the Fraser
Institute on countries' investor friendliness towards mining companies.
But Dudhia drew Leon’s
attention to the different economic realities of Botswana and other African
countries such as Zambia and Zimbabwe.
“Empowerment will take
place in Zambia, much as in South Africa, but it will be broad-based
empowerment – not the first version of BEE (black economic empowerment) seen in South Africa,” he said.