From Africa Recovery, Vol.14#1 (April 2000), page 17 (box within special report on privatization)

Zambian copper privatization stumbles

According to the World Bank, Zambia's privatization programme has been among the most successful in Africa. By mid-1999, nearly 230 of the 280 state enterprises slated for privatization had already been sold off. However, privatization of the country's largest enterprise by far, the Zambia Consolidated Copper Mines (ZCCM), proved much more difficult. Not only is it a sensitive issue among miners who face widespread job losses, it has also run up against the uncertainties of the world market -- a problem that has plagued mining privatizations in several other African countries.

To make ZCCM more attractive to investors, the giant enterprise was "unbundled" into five major and six smaller units. Environmental protection laws were relaxed despite the fact that the company is a major polluter. These incentives were not enough, however, to overcome investor hesitancy. In 1996-97, the price for copper on the world market began to plummet and became worse during the 1997-98 Asian economic crisis. Negotiations dragged on and some deals collapsed as potential buyers pulled out, judging the investment too risky. In 1998, a consortium offered $130 mn for the three major mines. The government, expecting to get $500 mn, did not take up the offer.

The continued slide in the price of copper left only one major foreign company still interested in ZCCM -- the Anglo American Corporation, a British-South African conglomerate which already had a 20 per cent stake in the enterprise. In 1999, it offered $90 mn for the same three mines. This time the Zambian authorities agreed.

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