EDITORIAL PAGE — What goes around, comes around

Copper producers have enjoyed robust prices of late, and though prices may weaken with an increase in supply, the long-term outlook for demand remains bullish.

Many producers of the red metal have benefited from healthy demand and prices, Canada and Chile, for example, while the copper-rich nations of Zambia and Zaire have all but lost out, for reasons deeply rooted in the history of the regions.

Zambia’s mining heritage spans more than 1,000 years. The industry flourished during the early part this century, when the country, then known as Northern Rhodesia, was under British rule. Old mining sites were explored and developed and, by 1935, the Roan and Nykana mines were producing a total of 100,000 tonnes of copper per year. More reserves were discovered and production increased steadily, particularly during the post-war years, when the country established a reputation as one of the world’s top producers of high-grade copper.

Today, the Zambian government acknowledges that its modern copper industry, despite its shortcomings, owes much to the initiative and foresight of two of the best-known names in African mining finance: Ernest Oppenheimer of Anglo American and Chester Beatty of Selection Trust.

When Zambia gained independence in 1964, it had the foundations of a modern economy, inheriting healthy foreign exchange reserves generated entirely by the mining industry. Some will argue, however, that the price of this achievement was the injustice suffered by the country’s population.

As an independent country, Zambia evolved into a one-party nation and embarked on a policy of state participation in the economy. Many business ventures were completely nationalized, while others were “induced” to surrender a majority interest to the state. The mining industry was particularly affected by this policy.

With the original owners retaining a minority share, the two main mining groups were amalgamated to form Zambia Consolidated Copper Mines (ZCCM) which, under state management, soon spun into decline. Investment was cut back, and mine reserves slipped as a result. Corruption and impropriety were rampant as state-appointed officials lined their pockets while funding pet projects.

Zambia’s copper output fell drastically from the 720,000 tonnes reported in 1969, while the per capita foreign debt snowballed.

This economic mismanagement bred civil discontent and compelled the governing party to allow elections in 1991, which resulted in the first new government in 27 years.

The current government is attempting to privatize many economic sectors, including mining, and some of the industry’s largest companies have expressed an interest in ZCCM.

A withering mining sector is also affecting neighboring Zaire, where copper production at Gecamines, a state-owned company, fell to fewer than 50,000 tonnes in the early 1990s from 428,000 tonnes in 1989. Zaire would also like to privatize the industry, and there is no shortage of potential buyers.

It may take more than a decade for copper mining in Africa to regain its former stature and it is the citizens of Zaire and Zambia who will shoulder the burden of this missed opportunity.