Jack Kalala fluffed on KCM

By Francis Temba
I find the statement by Former Special Assistant to the President for Policy and Project Implementation and Monitoring Jack Kalala with numerous errors.

Obviously Jack is trying to justify a serious error of judgement by those involved.

The late President, upon arrival in Zambia from his visit to India declared that,” I’ve found you a Buyer!”

There was no mention of any involvement by any Team of experts and there was no due diligence done by Vedanta.

History has been known to repeat itself if people don’t draw lessons from it. The decision to sell Konkola Copper Mines (KCM) to Vedanta was a terrible misjudgment and a huge cost to Zambia.

This must not be allowed to happen again.

At the time of taking over at Nchanga the Open Pit had on Stockpiles 2,000,000 tonnes of Copper Ore and 1,000,000 tonnes of Cobalt Ores.

The Underground had 3.5 years of caved reserve.

In the Pit we were mining on three fronts, Primary Development and Production at Cop D&F and Production at NOP and Fituola.

By any standard this was a very healthy situation for any new investor.

Only Konkola Deep Mine Project was falling behind, again because Anglo had pulled out and we didn’t have funding! There was 150,000 tonnes of Copper on Chingola Refractory Ore (CRO) dumps.

Vedanta inherited a healthy property that should’ve made it easy for the investor to handle all Primary Development at underground at Nchanga and Konkola but they didn’t.

Instead the company chose only to treat existing Ores and went ahead to build 400,000t capacity Smelter to treat already mined Ores after which the smelter was to be used for Toll Treatment of ore concentrates from other Mines including those from Congo DRC.

However, this plan backfired after the mine ran out of conversional Ores and other Zambian mines chose to build their own smelters. The giant smelter became a proverbial white elephant!

In short it’s not correct to claim that KCM performance was good in earlier days. It has never been and will never be because they are not miners and don’t want to invest in Primary Developments!

At the time of investing KCM under Russel Alley and later Jordan Soko KCM had US$60 million in its Bank Account and roughly about three months Copper metals to clients.

Production then was between 15,000t and 16500t per month and in money terms close to US $50 million. Under usual transaction this money belonged to the State.

This was the case with Anglo on taking over the mine. But in this case I’m not sure Government was handed over the money. If not it was a big Jackpot for Vedanta!

Kansanshi was another Jackpot, this time for Phelps Dodge (PD) because PD bought the property for just $3.0m. Phelps Dodge then embarked on an aggressive exploration program to delineate the Ore Body.

They brought in three Russian Drilling Crews that worked 24/7 for almost a month. The result of that program was unbelievable. High Grade Ore Body extended over 300m down dip.

In spite numerous calls to carry out exploration drilling at this property the then corporate unit of ZCCM didn’t have money for that. The results of this was that Phelps Dodge then sold the property to FQM for over a Billion USD. I was the Mine Manager for Kansanshi up to the hand over.

The first of mining FQM made just about $2.0 billion USD. I was the Mine Manager

We had almost three months of metal on way to our overseas clients. In USD this is equivalent to $90.m

We had $60m in our bank account. All the above were taken by Vedanta! (Contrary to that Anglo gave all the above to Government before taking over).

This situation is bound to repeat itself, especially in the North Western Province and even the Sale of KCM because no one knows the actual Value of these properties at time of selling them.

Bidders will do their Due Diligence and arrive at a Value which they’ll offer but in the absence of our own assessments of the properties we’re made to accept what the bidder offers.

Other countries carry out extensive drilling programs to at least have an idea of what is in the ground but our Geological Survey is no longer functioning.

Government must invite tenders for such drilling programs for North Western Province and Luapula Province purely for the purpose of knowing what we’re selling.

Already Chinese investors are flooding North Western and Luapula should begin talking to Chiefs on buying the Rights!  Zambia will have very little to gain from the New Copperbelt!

Earlier this week, Mr Kalala held a media briefing where he dispelled reports suggesting that the Mwanawasa administration had sold Konkola Copper Mines at US$25 million.

Mr Kalala who served under the Levy Mwanawansa administration regime said contrary to the reported $25 million, the total amount realized from the resale of kcm was US$65 million.

He said in terms of cash consideration, in addition to the US$25 million paid by Vendata Resources Limited in 2005, Anglo American Corporation paid US$20 million to the Zambian government for abandoning the mines while the World Bank also paid US$20 million.

The writer is former Nchanga Open Pit Manager

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