Zambia suspends exports of metals

ZAMBIA’s new government has temporarily suspended metal export permits ahead of the release of new guidelines, the mining ministry said in the latest move to increase transparency in Africa’s top copper producer. Newly elected President Michael Sata has been concerned — analysts say with good reason — about copper exporters misreporting the amount of ore leaving the country, and last week said all export payments would in future be routed via the central bank. The suspension of permits is another sign that Mr Sata’s administration would act quickly on his populist campaign promises. "All current permits issued by my ministry are immediately suspended pending issuance of new guidelines by the government," permanent secretary Godwin Beene told miners this week.

He told the Post newspaper "this is just a (temporary) ban which would be lifted next week. So there is no need to panic." The new procedures are to be in place by October 16, according to his missive to the heads of miners operating in the country. These include Canada’s First Quantum Minerals, London-listed Vedanta Resources, Glencore International, and SA’s Metorex . Zambia’s copper sales came to 819000 tons last year. A 10-day ban would prevent companies from exporting 22500 tons. "We are aware of the suspension. For now, I have no comment," said Frederick Bantubonse , GM of the chamber of mines of Zambia. There have been concerns that under the previous administration of Rupiah Banda there had been little oversight over the destination of metal exports , among other allegations of corruption that are emerging.

Copper accounts for three- quarters of Zambia’s export earnings, but the mining industry contributes only about 10% of its tax revenue. According to Zambian figures much of the copper exports are destined for Switzerland but little show up in Swiss customs data, raising questions about transparency. Glencore said it would co-operate with the government but declined to comment further. Analysts said a period of uncertainty was likely to follow the announcement , although they expected Mr Sata to tread carefully around the vital industry. Others said the recent changes might hurt Zambia’s image. "Each time another one of these little edicts comes out it chips away at the confidence of the mining companies in the country and (creates) the awareness that it is going to get more expensive, more regulated," Nic Brown, an analyst at Natixis said. "Mining in Zambia is not going to be nearly as easy as it has been." Mr Sata swept to power last week as voters look ed for change in a country that has seen its economy grow but the riches from its mines not reach ing the people or creat ing enough jobs.

Zambia’s mining industry aims to double annual copper output to 1,5- million tons by 2016 and Mr Sata is expected to try to wring more revenue from it. While investors understand the need for change, the pace is worrisome. "A government can’t just stop exports while it puts a new policy in place. It’s ill-informed, counterproductive and discourages investment," said the CE of an Africa-based miner who declined to be named. Only in his job for little more than a week, Mr Sata has moved quickly against the policies of the previous administration under Mr Banda, whose Movement for Multi-party Democracy had ruled for 20 years. Mr Sata has fired one of the central bank’s deputy governors, a source said yesterday. Last week he removed its governor, Caleb Fundanga, appointed a new head for the anticorruption agency and disbanded the Energy Regulation Board. He also scrapped the $5,4m sale of Finance Bank to FirstRand and launched a probe into last year’s sale of telecoms operator Zamtel. Reuters, Sapa