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Why are Zambia’s mining achievements greeted with silence?
06 October 2014, 10:03:11

An administrator with more than 20 years of experience dealing with all levels of management leading corporate officers of global companies. She has worked in different fields successfully providing strategy and business development expertise. She gained valuable technical and practical skills working in the insurance and banking sectors before joining the Johannesburg Stock Exchange as executive head of Corporate Affairs.

Her appointment as chief executive of the Chamber should bring renewed vigour in the staid, male world of mining. She is now offering a gutsy unified voice for the Zambian mining industry giving the mines the opportunity to dialogue and clarify their next steps. As CEO of the Chamber, Dlaminin will lead the policy and lobbying activities of the mines, coordinating the missions of its working groups, and ensuring progress in raising awareness of the sector and its benefits to the Zambian people and economy.

Commerce Gazette: Do you have any prior experience working in the mining sector? What motivated you to seek this appointment?
Dlamini:  No. No experience what so ever. I was head hunted. Thought it would be great to try something really different and so far I am glad I was given the opportunity.

Commerce Gazette: As the first woman to head the Chamber of Mines what do you hope to do differently from previous CEOs?
Dlamini:    I believe my predecessor did an excellent job in running the Chamber. I can only build on the foundation he left. The mining sector is dynamic (so I have discovered). To be an effective Chamber you have to be in tune with what’s happening, socially, economically, politically, technologically etc. So whether you like it or not you will be forced to do things differently because of the ever changing circumstances you find yourself in.

One way of achieving this is increasing our interaction with various stakeholders, i.e. government, media, civil society, academia etc. so that we are in tune with what is happening around us. But most importantly we would like to be recognized as the ‘voice’ of the industry.

Commerce Gazette:  The role of the Chambers of Mines is to promote the interest of its membership how successful has it been in this regard and which areas would you want to improve on?
Dlamini:    Firstly I believe we need to improve our communication with our various stakeholders. We have developed a communications strategy that will see us holding seminars, workshops, meetings etc. throughout the year to ensure that we are in touch with our various constituents.

The Chamber is now taking the lead in policy discussions that affect the industry as a whole. Where necessary we are facilitating meetings between our members and government. We are glad to note that we are communicating more with the government and we are looking to further improving on this.

Secondly we would like to see more companies in the sector join the Chamber. Not only mining companies but other companies such as suppliers of mining equipment. The more companies we have in the Chamber the better the industry will be represented.

Commerce Gazette: Given the success of the mining sector since privatization in increasing copper production and its huge reinvesting in operations; why is the general perception of the mines negative? Complaints against the mines have included;
a.   Pollution of the environment in the communities they operate in.
b.   Lack of synergies within the communities they operate in despite claims by the mines of huge            investment in CSR projects.
c.    Poor worker relationships and conditions of service.
d.   Lack of real wealth creation opportunities between small and medium entrepreneurs.
Dlamini:   The mining industry has been the main stay of the Zambian economy for many years. To date, the industry has continued to play this pivotal role and contributes over 75% to the country’s export earnings. The direct contribution includes employment creation, tax contributions to central government and local authorities, and corporate social investment.

Most mining companies work closely with local communities through relevant authorities to identify community projects to ensure that these interventions are addressing issues that the communities themselves consider to be important, and not imposed.

In addition the mining industry has a huge multi-plier effect in the economy. Recall what happened to towns along the line of rail during the time mining industry slumped prior to the privatization era. Most turned into near ‘ghost towns.’

Looking back, one cannot help but acknowledge just how much life the revival of the mining industry has breathed into our economy. With increased activities in mining, almost all sectors of the economy have come alive, including the service industry. Most mining companies have outsourced procurement of some products and services giving opportunities to contactors to fill the gap. This is obviously aiding income distribution in the economy depending on the entrepreneurial spirit of the citizens.

Further, mining companies, particularly members of the Chamber, have demonstrated good corporate citizenship, in the interaction with the communities where they operate, including issues of environmental management. In fact it is safe to say that even old mine sites are now more environmentally friendly than they were before, because of adopting improved methods and best practices. KCM for instance has established a new and modern smelter at Nchanga, while Mopani is upgrading its Mufulira smelter to enable the plant capture about 97% of the notorious sulphur dioxide (SO2) or ‘SENTA’ as it is known in the local mining communities, from pre-colonial days when 100% of the irritating gas was discharged into the air every day.

The new mines have been in a better position to design the plants such that they are environmentally friendly, as they are subjected to stringent Social and Environmental Impact Assessment, in accordance with the Zambia Environmental management Agency (ZEMA) and international standards.

So you can see that, truly mining companies are doing a lot and are committed not only to achieving financial objectives but also those pertaining to the social license.

However, the Chamber and the industry in general is aware that some sections of the society and social partners want the mining companies to do more. Of course, there is always room for improvement in everything we do as individuals and corporates. But we also realize that in some case these calls are influenced by legacy factors. Communities in mining areas, in particular, want the mining companies to inherit benefactor programmes which characterised the ZCCM era. But then circumstances have changed. Hence, there is need for all stakeholders and social partners to exercise caution and patience to allow the industry to grow sustainably.

The Industry is concerned about these negative perceptions. To this effect, the Chamber has commissioned an independent study by the International Council of Mining and Metals (ICMM) to establish the total contribution of the mining industry to the Zambian economy. The report of this study will among other things help the industry identify areas requiring improvement, for better stakeholder perception.    

With regard to employee relationships and conditions of service, I wish to state that our members do comply with existing employment and labour laws, respect workers’ rights and fully support the principle of collective bargaining. Remuneration levels may vary from company depending on the capacity to pay, even then the levels are way above the minimum wage.

On the issue of wealth and business opportunities creation, the mining industry plays a pivotal role. It is the wish of the Chamber and mining companies to have a strong and efficient local supply chain, as this will not only assist in the empowering of SMEs but is key to lowering the cost of doing business. In this regard, most mining companies have deliberate policies to procure supplies and services locally where this is practical.  In fact the Chamber is working with the government and other stakeholders to promote the participation of citizens in the economy through an initiative called ‘Zambia local Content Initiative’. Some of the challenges stifling efforts of SMEs to adequately exploit business opportunities in the mining industry include lack of capacity and issues of quality of products and services. Our manufacturing sector is not adequately developed, so most of the suppliers of products to the mines are actually ‘middlemen’, they import these products which they then sell to the mines. This obviously increases transaction costs. However, mining companies have created business linkages with some of the suppliers to give them an opportunity to improve the quality of their products. Scaw Limited is one case in point which some of the mining companies are collaborating with to improve the quality of mill balls, to meet demands of new ore processing.  

Commerce Gazette:  Why are some mines not interested in value addition and what role can the Chamber play to assist them in this regard, if any?
Dlamini:   Mining is a capital intensive industry involving a number of activities along the value chain, say from extraction to refining. While in the ZCCM days, the conglomerate carried out nearly all activities within its units, now companies tend to identify what activities will make business sense to engage in, depending on their resource base and mandate from shareholders as well as level of strategic competitiveness.

It is therefore not surprising that some companies can extract ore and sell it in its raw form to the next player in the value chain because that is what their capacity can allow them, while others go all the way to refining and export of finished copper. Currently most of them are only able to process the ore up to concentrate stage, which they sell to smelter operators locally or abroad. The smelting of concentrates into cathodes is in itself value – addition.  The biggest challenge for Zambia is to increase its smelting capacity. In this way it can create a market for our neighbors like DRC.

The manufacturing base for Zambia and most countries in the region (aside from South Africa, which produces its own requirements) is very low so the demand for finished products like wires, pipes etc. is low at the moment. Meaning we would have to transport our products long distances to other markets – they become less competitive.

Skilled labour and low productivity levels are also a problem and would lead to increased costs of production – again our product becomes less competitive. But this is not to say we do not go for beneficiation – it is a process that has to be well thought out and carefully planned.

Commerce Gazette:  Numerous stakeholders including cooperating partners and NGOs have documented tax evasive, tax avoidance, transfer pricing and other practices aimed at shifting profits outside Zambia by the mines; How can the Chamber of Mines work with the sector to ensure transparency and better export earnings and revenue collection?
Dlamini:   We would like to believe that our members are responsible corporate citizens operating within the laws of Zambia and accepted international practices. Mining companies operating in Zambia have a reputation to protect and will not risk the ramifications and fallout from engaging in illegal practices. Zambia has one of the most rigorous metal export procedures and tax regimes. This has now been reinforced with our subscription to the EITI. Metal exports and the revenue collection are very transparent.

Commerce Gazette: Are all the Chamber of Mines members committed to the Extractive Industries Transparency Initiative (EITI)?
Dlamini:   Yes they are very committed, in fact some of them have even incorporated the EITI procedures in their internal reporting systems. Further, they contribute financially to the EITI operational budget. At our recent Mining Gala Awards the ZEITI awarded two of the mining companies who have shown consistency in reporting standards. This goes to show how committed we are as an industry to compliance to EITI standards. We are also in support of the EITI Bill which we believe will increase transparency in the industry.

Commerce Gazette: Why are some mining companies failing to provide importer documentation?
Dlamini:   This is an issue that the Chamber together with its members and ZRA are trying to resolve. Our companies are trying their best to comply with the necessary legal requirements. Copper is a very complex product to sell sometimes. It changes hands so many times before it reaches its final destination. Transactions involving intermediaries are particularly challenging, because the exporting company has no control over subsequent actions. We are hoping however with continued discussions with the relevant authorities we may find a win win solution for all parties involved.

Commerce Gazette:  Recently, government mandated that gemstones be auctioned locally. Since this pronouncement the largest gemstone mining company - Kagem - in Zambia has recorded record breaking sales revenue. Yet it had resisted this initiative; Would the Chamber of Mines advocate the local auctioning of copper?
Dlamini:   The move to localize the auctioning of gemstones is commended, going by the positive reports we are getting from government. However, it is doubtful that copper industry could record similar successes. The two industries are miles apart.

The gemstone industry is largely, a producer/sellers -market. The sellers have considerable market power/clout.  That’s why buyers can travel round the globe in search of quality gemstones. Zambia being a source of one of the world’s best emeralds, could easily establish itself as an international trade centre.

On the contrary, copper sales depend very much on what is happening on the London Metal Exchange (LME) and international demand. In this regard, the copper industry, is a buyers’ market. The international buyers call the shots, while producers/seller are plentiful. Chile, Congo name them, Zambia is just one of them; some of them are more efficient and command superior productivity ratings than ourselves. So, for a long time to come we may have to continue taking our copper to international markets where it can sell, other than compel buyers to follow us.
 
Commerce Gazette:   To change the discussion besides work, what other interests do you have?
Dlamini:    I listen to a whole range of music and I enjoy action movies.

Commerce Gazette:  Thank you for according us this interview.

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