Cut from the same Kaundan cloth

BY DAVID GLEASON (Business Day)

MINING in Africa has its drawbacks, irrespective, it seems, of the country involved.

After the disaster that accompanied the partial nationalisation of the copper mines in Zambia and that country’s return to commercial sanity, however reluctantly, it would be reasonable to presume that those running the mines wouldn’t have to keep peering over their shoulders.

Now, suddenly, Gemfields, part of Brian Gilbertson’s Pallinghurst Group and 75% owner of Kagem Mining, the major emerald producer, has been told by Zambian Mines Minister Yamfwa Mukanga that auctions of Zambian emeralds abroad will no longer be permitted.

This follows a recent meeting at which Mukanga told Gemfields CEO Ian Harebottle that the Zambian government would welcome it if some of the auctions were to be conducted in the country. Harebottle says an auction has already been scheduled to take place in the capital Lusaka later this month.

According to the Zambian Sunday Mail, the latest move reflects Zambian President Michael Sata’s reported displeasure at the fact that mineral wealth in general, and from emeralds and copper in particular, has continued to elude ordinary Zambians, who still live in poverty.

“These mining industries,” Mr Sata is reported to have said, “export minerals and we don’t know what they are doing with our money.”

“Zambia’s gemstones,” added Mukanga, “have for a long time been sold on foreign markets, which has contributed to capital flight and denied Zambians their rightful benefits from the emeralds.”

As it turns out, the Zambian government itself owns 25% of Kagem. It is reasonable to presume, therefore, that it knows exactly how much it costs to run the operation, what is earned in revenue and what is paid in tax. If it doesn’t know, then those it has appointed to look after its interests clearly have no idea what they should be about.

In fact, as Gemfields has since made clear, it has “set the benchmark for transparency in this sector, publishing detailed auction information, including the revenue received for each of its auctions”.

The effect of this latest bit of governmental nonsense will extend to the Kariba amethyst mine in southern Zambia, ownership of which is shared equally by Gemfields and the Zambian government.

Where have I heard this rubbish before? Oh yes, of course, in Zambia, where else?

When it happened last time, 40 years ago, it was for an agenda that had absolutely nothing whatsoever to do with economics or mining or ownership or any of the other fantasies dreamt up by people who feel trapped by their circumstances.

Back then it was because Kenneth Kaunda was about to lose political control to his archenemy, Simon Kapwepwe. His answer was to nationalise the mining industry, change the constitution, imprison Kapwepwe and hold on to power until he had completed the job of wrecking the country’s economy.

Is it any different this time? Well, the former president, Rupiah Banda, has been arrested on charges of corruption — it’s alleged he helped himself to $11m in an oil deal with Nigeria. He has retained the services of Robert Amsterdam, founding partner of Toronto-and London-based law firm Amsterdam & Peroff.

And Amsterdam has wasted no time. He has described Sata as “enfeebled” and says the argument with Banda is about jockeying for position in Sata’s Patriotic Front. He lays the blame with Justice Minister Wynter Kabimba.

Whatever, the problem is that Gemfields and Pallinghurst are the temporary fall guys. The development of the world coloured-gemstone sector, in which Gilbertson has played a significant role through his resuscitation of the old Russian masters under the Fabergé brand, may be set back, at least for a time, while cooler heads try to prevail.

Being cynical, however, I am reminded that it took decades to restore Zambia’s copper mining industry to its former glory. The way it looks to me is that all Sata and his gang have done is to take Kaunda’s DNA and replicate the means he used to hold on to power in 1968.

Business Day

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