Minister of Mines and Minerals Development Richard Musukwa has disclosed in parliament today that Konkola Copper Mines (KCM) was owing US$80 million to about 400 suppliers of goods and services as at September 2018.
The minister said that out of this number, 91 are local suppliers who were owed around US$10.4 million of which US$3 million has been paid as of October 2018.
Musukwa said that the current performance of KCM is worrisome but that the future is promising as seen from its Business Development Plan submitted to the government.
He told the house that in its 2019 Business Development Plan, KCM intends to increase its copper production from the current 90, 000 metric tonnes in 2018 to 125,300 metric tonnes in 2019.
“Mr. Speaker, this achievement will require increased investment and the company will require US$100 million will transform the company from its quagmire,” he said
Meanwhile KCM Corporate Affairs Manager Eugene Chungu had this week assured the local suppliers and contractors that the mine will resolve the matter by dismantling the debt in three phases starting October, November and December.
He said the payment to suppliers and contractors started at the end of October and is expected to be completed in December this year.
“Yes we have been engaging our colleagues to see how best we can handle the debt owed to them, but from the onset I can confirm that we reached an agreement to offset the bill by the end of December,” Chungu said.
He said the two parties agreed that KCM pays one third of what it owes every supplier within a period of three months. KCM has been under fire in the last few months for failure to pay local suppliers and contractors on time.
The ministers revelation of the USD80 million supplier bill of which only USD10 million were for local contractors also demonstrated that the mine awards over 87% of its works to foreign contractors. This level is only about 12.5% of works being awarded to local contractors, a situation that needs to be addressed urgently.
The Ministry of Mines has continued to evade setting up of a special purpose government urgency that can effectively regulate the Copper Mining Industry to ensure that maximum benefits are obtained. The country has been unable to effectively regulate the copper mining industry as it has not been able to hire the best personnel due to the nature and structure of government ministries.
If you look at Zambia were copper accounts for 70% of the export earnings, one would expect a situation were there is a special purpose regulatory agency staffed with the best and internationally experienced Zambian miners to deal and go head to head with the privately and foreign owned Copper mines that hire the best staff on a global level as their management team.
As it stands, the ministry of mines today relies on donor funded projects for its attempt at monitoring mining activities and production in Zambia with no clear local initiative and strategy on both local ownership of the mining companies, setting up of clear thresholds for awards of contracts to local suppliers and the retention of forex back into the Zambian banking system that would even solve the perpetual Kwacha depreciation and instability.