ZAMBIA: Economy under threat after Anglo American considers pull-out

While the political situation is still in turmoil, the country is faced with a severe threat which could dramatically affect the whole economy.
Zambia's major mining company, Konkola Copper Mines (KCM), could face closure if its main shareholders, Anglo American Corporation (AAC) of South Africa, withdraw from the venture, the companies said on Jan 24.
Anglo American, which bought off Zambia's major mining assets in March 2000, said in a statement that it was considering pulling out of the investment due to losses and the drastic fall of copper and cobalt prices on the international market. "The shareholders of KCM are currently considering all available options, including sale, transfer of the assets on a going concern basis, or closure in a socially and environmentally responsible manner," the statement by Anglo-American said .
Mines in Zambia are the second-biggest employer after the public service, with about 10 000 full-time staff and 4 000 constructors.
Anglo American chief executive Tony Trahar said the action by his company "has been a difficult and deeply regrettable decision for all involved... ACC will play its part energetically in working with all parties including the Zambian government to find a way forward," said Trahar in a statement.
A KCM steering committee, which includes Zambian government officials, has been formed to study the impact of ACC's decision and to explore all options available. "KCM wishes to inform the general public, its suppliers, its employees and other stakeholders that KCM will be making every endeavour, in the meantime, to continue its operations with minimum disruption," a statement from KCM said.
The Zambian mines, whose majority shareholders since nationalisation under the then President Kenneth Kaunda in the 1960s was the Zambian government, were sold in a controversial manner to ACC in March 2000. Most Zambian economists, including lawmakers had objected to the sale, saying it was not carried out in a regular manner.
Zambia's mines contribute more than 30% to the country's gross domestic product. The southern African country is a major producer of copper.
Meanwhile the country looked headed for a constitutional crisis on friday, Jan 25, after its new parliament closed unceremoniously only hours after it started sitting following sharp differences over the election process for a Speaker, political analysts said. Opposition parties have repeatedly announced tough resistance inside as well as outside parliament against activities by the new government sworn into power early January after severe manipulations of the elections. In Lusaka, hunderts of male youths have violently forced dozens of women wearing mini-rocks or trousers to strip naked in public, claiming to carry out orders given by the new President, Levy Mwanawasa, to combat "inciting and provocative lifestyle". Mwanawasa has distanced himself from the incident saying he had not issued "new dressing regulations". 20 young members of the ruling Movement for Multiparty Democracy (MMD) were arrested by police.