KABANDA CHULU, Lusaka
WITH the global economic state of affairs improving, the forecast for Africa’s mineral reserves seem to be heading in a positive direction.
While the demand for commodities is booming, and the mining industry is ramping up production, there are still key determinants that need to be addressed.
These include improving shareholder confidence and how positive performance must come with greater transparency, communication and patience from both parties (Governments and the mines) coupled with policy consistency and strong support from financial institutions (banks).
Indeed, mineral and commodity prospects are looking bright, considering the current high demand for many commodities mined in Africa.
When mining investors, banks, Government officials, academia, energy and legal experts and many key stakeholders converged recently in Cape Town, South Africa, during the Investing in African Mining Indaba, both risks of volatility and off-shoots of optimism came to the fore, with discussions revolving around the theme ‘Partnership: A new narrative for Africa’s mining industry’.
In line with this perspective, Zambia is looking forward with much optimism as the country is implementing policies aimed at unlocking its mineral potential.
“Despite mining for many years, the country is still languishing in poverty, yet the industry should have helped drive other economic sectors, hence the need to change approach on how to run the mines.
“This is why we are pursuing conducive policies to enable investors get attracted. The private sector is essential for development of the mines but participation of local ownership is very low. We all know that mining has the capacity to drive other economic sectors since it provides materials for manufacturing as well as market for finished products,” says immediate past Minister of Mines and Minerals Development Christopher Yaluma.
During a panel discussion on ‘How can we close the trust deficit between Government, industry and communities’, Mr Yaluma said increased levels of mistrust and lack of adequate engagement among the parties are affecting the industry’s contribution to economic development.
He said there is need to strengthen public-private sector cooperation through trust and transparency if the mining industry is to make meaningful contribution to countries’ development.
“The deficit of trust is too high and lack of engagement affects our capability to operate optimally. There are problems between labour, chambers of mines and Governments due to lack of interaction, confidence and communication.
“But we need to raise the levels of trust and speak the truth to all and work like a team coherently. Back home [in Zambia], trust is perceived not to be there by employees and the community, since people think mining companies are doing something contrary to what they agreed during [labour] negotiations,” he said.
Mr Yaluma said Government is developing and implementing policies aimed at empowering people through local content and procurement and any other small services that can uplift their living standards and surrounding communities.
“This is why we are urging the mines to open up about their business operations. We have the extractive industry transparency initiative process to promote transparency because… what is happening should not be swept under the carpet.
“People should know how much the mines are paying Government, and we shall also declare what is received, in the absence of this… conflicts do arise. But more is needed to be known, for example, beneficial owners, who really owns the mines, we need to know that,” he said.
And Deloitte Energy and Resources team leader Andrew Lane said the symposium provided a platform to reverse the lack of engagements.
To ensure that the mining industry remains a key economic growth sector, Stanbic Bank Zambia says the institution stands ready to support Government in developing the industry.
Stanbic head of corporate and investment banking Helen Lubamba says Zambia’s economy is still banking on the mining industry because the sector plays a crucial role in driving the country’s economic growth.
“Despite most African countries moving towards diversified economies, Stanbic believes mining remains a significant sector to Zambia’s economy as the largest revenue generator for Government, through taxes.
“Mining has always been an important part of the African picture and in that context, an important part of the Zambian economy. As the second largest copper producer in Africa, we are poised to further develop the mining sector and that is why Stanbic Zambia, which is part of the Stanbic Group, took part in the Investing in African Mining Indaba in Cape Town,” she said.
She said Stanbic Zambia is very conscious on how to support sectors that drive the country’s growth.
“And that is why the bank has invested more than US$3 billion in mining in Zambia over the past decade. We truly see mining as an economic growth sector,” Ms Lubamba said.
She said the mining industry has always gone through peaks and troughs, and how it is important for the players in the sector to ensure that they are prepared for whatever phase it is in at any point in time.
“That is why the mining indaba remains relevant regardless of whether we are experiencing the peak as we are now, or the lows as we did three to five years ago. Even as we move to be a more diversified economy, mining plays a big role in this development of diversification.
“With diversification, you get job creation, and you get development in the various sectors of the economy on the social framework of the country, which is why mining still remains significant, even as we move on the journey of fully diversifying our economy,” Ms Lubamba said.
And newly appointed Stanbic Bank Zambia chief executive Leina Gabaraane says the country is poised to attract huge investments in mining and other key economic sectors due to the continued favourable policies being implemented.
Mr Gabaraane said there is a huge potential in the Zambian economy, in which the bank is ready to partner with Government and support the development of key growth sectors.
“As Stanbic, we are seeing a huge rebound in the Zambian economy with a positive outlook in all key growth sectors such as mining, agriculture, manufacturing, construction and tourism.
“All countries are competing for the same capital, hence the need to have a conducive environment supported by favourable policies to remain competitive and attract investments and we are seeing this happening in the country,” he said.
Mr Gabaraane said Stanbic is ready to bring investors and Government together.
“We are not only looking at attracting capital flows but also provision of advisory services to ensure that Zambia gets best industry practices. For instance, we do recognise the importance of mining as main driver of GDP.
“But we also understand that mining is risky, requires huge capital and it is highly volatile with commodity prices fluctuating between high and low cycles, and this is where we come in as a bank that has full knowledge to help move capital where it is needed,” Mr Gabaraane said.
This year’s indaba attracted 36 minister of mines from across Africa, including former heads of state from across the continent and about 7,500 of delegates from the mining, resources, transport and financial sectors.
THE Zambian delegation at the African Mining Indaba in Cape Town recently.
KABANDA CHULU, Lusaka