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Zambia to raise stake in foreign mining companies

Crushed material stockpile
and plant conveyor system
at Equinox’s Lumwana
copper mine
Lusaka, Zambia — MININGREVIEW.COM — 03 April 2009 – The government of Zambia – Africa’s top copper producer – is to raise its stake in foreign-owned copper mining companies operating in the country to up to 35%, and to have a bigger say in running the mines and preventing mine closures.

Zambian mines and minerals development minister Maxwell Mwale told Reuters the country did not plan to nationalise the copper mines, but would negotiate with the companies and seek to convert debt owed to government into equity.

He gave no timeline on when the government would implement the move to increase its shareholdings, but said the Zambian government would inform mining firms of the new plan soon. Unions have urged the government to take a bigger stake in mines to exert influence, prevent mine closures and save jobs.

Mwale said Zambia would target a stake of between 25 and 35% from the average of 15% it currently holds in copper firms. “We want to have a maximum 35% shareholding so that we can have influence in decision making,” Mwale said in an interview with Reuters. “Only by taking 51% would it amount to nationalising the industry."

“If existing mines have financial obligations to the government, we will liquidate the obligations through converting liability into equity,” Mwale added.

London-listed Vedanta Resources Plc, Canada’s First Quantum Minerals, Equinox Minerals Limited and Glencore International AG operate in Zambia are among the major companies operating in Zambia..

“We are first targeting those mines which are closing down. When any mine like Luanshya, is resold, we will have at least 25%.”

He said Zambia’s copper production this year would be above 600 000 tonnes. The country produced 569 887 tonnes last year, according to a Treasury report seen by Reuters.