Editor's Comment

Yaluma right on mines’ cost saving measures

WHAT Minister of Mines and Minerals Development Christopher Yaluma said in Cape Town on Monday on mining firms’ quickness in effecting cost-saving measures despite commodity prices being above their worst-case scenario threshold, makes too much sense to escape our notice and commendation.
At an indaba dubbed ‘Investing in African Mining’, the minister interrogated why mining firms operating in Zambia have been swift to effect cost-saving measures against their own worst-case scenario projection.
His question is important for all of us Zambians, largely because mining of copper in particular, is the mainstay of our economy accounting for more than 60 percent of our revenue as a nation.
In all that, the simple message is that the majority of our people depend on mining for their livelihood. And that dependence is either direct or indirect.
There are those of our people (Zambians) who are employed by the mining companies (Konkola Copper Mines, Mopani, First Quantum Minerals and others). And then those working for mining auxiliary businesses, contractors of all sorts.
The epitome of the cost-saving means has of course been the laying off of workers. Thousands of workers in the mines have lost their so cherished jobs since commodity prices nose-dived last year.
Thousands other contractor workers have suffered a similar fate.
Needless to say, our expectation would have been, based on Mr Yaluma’s praiseworthy question, for the mines to only discharge their workers once commodity prices hit their set threshold of US$2,500 per tonne.
We give him kudos for his display of bravery and sound wisdom contained in the question, which actually qualifies as one of the most important questions by a government leader so far, this year.
We say this because that question revolves around some of the problems nagging the majority of us Zambians, both loudly and silently depending of the levels of awareness of what is going on in our economy.
Borrowing from Mr Yaluma’s statement at the indaba, we surely find something amiss in the manner our mining firms have handled the drop in commodity prices.
This is so because, as Mr Yaluma brings to our attention and that of our readers, copper is trading at over US$4,000 per tonne on the international market. Clearly, something needs redress, as that amount is way above the worst-case scenario of US$2,500.
It means that our mining firms are trading profitably somehow, or at least, it is a business shock they can cope with. In fact, that they have been selling copper at over US$4,000, to us, means they are coping. It is also possible that they could have been coping even without retrenching their workers, who are now earnestly looking for jobs elsewhere or other means of earning income.
Not so long ago, our mining firms made huge profits, as Mr Yaluma carefully noted.
“When copper prices were above US$9,000 per tonne, these companies in Zambia made windfall profits. It is mind-boggling that they do not want to refer to these super profits when it comes to low commodity prices,” he said.
Mr Yaluma has told us that the mines should have started making savings then, which makes a lot of sense.
“One would expect that they should have made savings to cushion effects of bad times such as what we are going through today,” he said.
As a Government representative, and therefore that of the people of Zambia, the minister of mines has done his part; asking the mining firms why they are speedily effecting cost-saving measures when copper prices are at over US$4,000 per tonne and not the US$2,500 per tonne they possibly feared.
The ball is now in the court of the mining firms to provide a cogent answer to that all-important question.
We would also encourage that in hard times such as these, maybe our mining firms should consider his advice to go into joint ventures with Zambians to invest in power production.

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