Oil & Gas – Zambia


Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version 

By Shapi Shacinda

LUSAKA (Reuters) – Zambia has proposed new powers to allow the president repossess land held by influential traditional leaders and award it to foreign investors to conduct oil exploration.

A proposed petroleum exploration and production law presented to parliament for adoption says government will as a first step grant exploration licences to investors in areas where analysis of soil samples suggest the presence of oil.

The government will then proceed to grant the investors petroleum development and production licences.

“The entire property (oil blocks)… and control over petroleum and accompanying substances, in whatever physical state, located in any land in Zambia is hereby vested exclusively in the president on behalf of the state,” the proposed law says.

“. . . where the president considers that any land is required to secure the development or utilization of the petroleum resources of Zambia, the president may compulsorily acquire such land.”

The move appears to curtail the influence of civic leaders, who control the bulk of Zambia’s territory and have previously been accused by some government officials of attempting to block development projects.

Energy officials say the proposed legislation would pave the way for major exploration works to commence in western and north western provinces of the country, where soil samples sent to European laboratories indicate the existence of oil.

“A holder of a petroleum exploration licence shall commence exploration within 90 days, or such further period as the minister may allow, from the grant of the license,” the proposed law states.

It said investors would be given two years to start development and production of petroleum products after authorities have granted them development and production licences in areas that would be demarcated into oil blocks.

Where oil has been discovered on a commercial basis and the firm that discovered it fails to start production, the government will invite other firms to tender for licences to produce oil, unless the delay is permitted by authorities.

The proposed law states that the government would only grant licences to firms with proven financial ability, technical and industrial competence and experience to produce oil.

The foreign firms would also be expected to train and employ Zambians and adhere to strict environmental, health and safety regulations, while a state-run national oil firm would be established. An oil exploration technical committee will also be set up to advise on the awarding of licences.

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version

ABOUT 500 workers at Chambishi Copper Smelter (CCS) have been issued with summary dismissal letters following their two-day riotous behaviour in protest against alleged poor conditions of service. And Police have apprehended seven CCS workers in relation to the riot that took place on Tuesday at the copper smelter company.Both CCS company secretary, Sun Chuanqi, and Copperbelt permanent secretary, Jennifer Musonda, confirmed the figure of the dismissed workers in separate interviews yesterday. Mr Chuanqi revealed that company property worth about US$200,000 was allegedly destroyed by the irate workers during the riot.He said management was saddened that the workers rioted before the conclusion of negotiations with union representatives.

Mr Chuanqi said the workers had been given a grace period of three days within which to exculpate themselves and show cause why disciplinary action should not be taken against them.

He complained that work had been adversely affected by the workers’ riotous behaviour.

Mr Chuanqi warned that all workers identified as ring leaders would be dismissed from employment to discourage others from behaving in a similar manner.

By press time yesterday more than 19 alleged ring leaders had been identified while more than 66 workers collected their summary dismissal letters.

Mr Chuanqi appealed to workers to exculpate themselves within the stipulated time so that the innocent ones could be reinstated.

“We’re appealing to the workers to respond quickly to the summary dismissal letters so that those that did not take part in the riotous behaviour could be reinstated because work has been grossly affected and we need local manpower,” he said.

Mr Chuanqi said CCS belonged to Zambians and wondered why the workers destroyed what belonged to them simply because of a dispute that could have been resolved amicably.

“What we are building here also belongs to Zambians, so people must desist from destroying this investment. For those who will not come to collect their letters, we will follow them until they get them so that they can exculpate themselves,” he said.

However, Mr Chuanqi paid tribute to government for its continued support to Chinese investment in Zambia.

He also said the Chinese worker only identified as a Mr Li who was injured during the riot on Tuesday was discharged from the hospital.

And Mrs Musonda also confirmed that workers were served with summary dismissal letters when they reported for work yesterday.

A check by the Zambia Daily Mail crew yesterday at the CCS premises found several riot police officers manning the company.

Some Zambian workers were found waiting to collect their summary dismissal letters while others were reluctant to collect them, claiming that they did not take part in the riot.

Those spoken to said they were ignorant about the whole thing and that they were just forced by some of their colleagues to riot.

Copperbelt Police commanding officer, Antonneil Mutentwa, revealed that six officials of the National Union of Miners and Allied Workers (NUMAW) and their member were apprehended by police in connection with the riot.

Mr Mutentwa said the union officials and their member were apprehended around 17: 45 hours on Tuesday.
NUMAW national secretary Albert Mando condemned the action by the workers to riot and damage company property.

“We are not in support of what the workers did. We are also disappointed with what happened on Tuesday because the negotiations have not yet collapsed, so why strike or riot?” Mr Mando said.

Zambia Daily Mail

 —————————————————————————————————————————————–

Times of Zambia reports…

Chambishi fires 500

 ALL the 500 striking workers at Chambishi Copper Smelter (CCS) were yesterday fired while seven National Union of Miners and Allied Workers (NUMAW) branch officials were arrested and detained on Tuesday evening.

The workers were served with letters of summary dismissal by management in the morning.

The move by management was as a result of the riotous behaviour by the workers at the company premises on Tuesday morning.

Police said those arrested were detained at Kitwe Central Police Station to help with investigations.

The workers at the Chinese-owned company had been on strike since Monday, demanding improved conditions of service.

The situation worsened on Tuesday when the workers decided to become violent and damaged property worth millions of Kwacha.

Both CCS company secretary, Sun Chuanqi and NUMAW national secretary, Albert Mando, confirmed that all the 500 workers who took part in the work stoppage had been served with letters of summary dismissal and had been given three days in which to exculpate themselves.

But Mr Mando said it was unfortunate that management had decided to serve the workers with letters of summary dismissal, saying there was no reason to continue with negotiations when its members had been served with letters of dismissal.

He, however, said his union would work hard to ensure that the seven branch union officials, who had been arrested, were released so that negotiations could continue.

“Yes, I have been told that the management at the company has also served the workers with letters of summary dismissal, but it is unfortunate management has resolved to take this stance.

“This decision by management will affect our negotiations because how do we negotiate when our members have been given letters of summary dismissal,” Mr Mando said.

And speaking in an interview at CCS, Mr Chuanqi said the management at the company had decided to serve its workers with letters of summary dismissal as a way of disciplining them for their riotous behaviour, but that they were free to exculpate themselves.

He said management was eager to listen to the concerns of the workers, but was saddened that the workers quickly resolved to become riotous and damaged property at the company.

He said the Chinese investment in Zambia was there to benefit both Zambians and Chinese and there was no reason for Zambian workers to become violent and damage property.

“As management, we do not take pleasure in dismissing our employees, but we want them to know that violence does not pay and that they have to do things according to the law. Problems arise where there are people, but things must be done correctly,” Mr Chuanqi said.

And Mr Mando confirmed the detention of the seven union branch officials and that he was trying to secure their release.

Mr Mando, who was still at the Kitwe Central Police Station by Press time, said those arrested were branch chairman, Oswell Chibale Malume, vice-branch chairman, Christopher Yumba, branch secretary, Steven Kabwe, branch vice-secretary, Christopher Nkandu, treasurer, Kafwaya Ndombwani, vice-treasurer, Chanda Mhango and a shop steward, Kachinga Silungwe.

Mr Mando said the seven were picked up on Tuesday evening and had not been formally charged although they were still being interrogated.

“Yes I can confirm that seven of NUMAW branch officials at Chambishi Copper Smelter have been arrested and detained at Kitwe central police station. They were picked up around 18:00 hours on Tuesday.

“I am actually at the police station, but I have not talked to them because they are still being interrogated and have not been formally charged. As a union, we are trying to secure their release,” Mr Mando said.

The Times team which went to CCS found the place deserted with only armed police dotted all over to keep vigil.

End of report.

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version

By Shapi Shacinda

LUSAKA, Feb 29 (Reuters) – Zambia has asked foreign mining companies for alternative proposals following their criticism of planned tax changes, officials said on Friday.

“As a committee, we believe the government has done its research worldwide on which they are basing their proposal,” Godrey Beene, chairman of a Zambian parliamentary committee dealing with mining issues, told the state media.

“We have therefore given mining companies time to go and prepare a counter proposal which they should submit to us any time this week.”

He did not indicate if the proposed rates by the government would be cut.

The head of the Chamber of Mines of Zambia, Frederick Bantubonse, said foreign miners would pay more than the stated 47 percent in effective mining taxes when the new regime comes into force from April, compared to 31.7 percent now.

The government has proposed a windfall profit tax at a minimum of 25 percent and an increase in mineral royalty to 3.0 percent from 0.6 percent.

It also plans a variable profit tax at 15 percent on taxable income above eight percent and to raise corporate tax to 30 percent from 25 percent.

Bantubonse said the mining firms had studied the proposed tax increases and found they would be higher than 47 percent and detrimental to their operations and future investments.

“(Mining) companies have scrutinized … new mining tax proposals for their own operations and in every case have found that the effective tax rate will be higher than (the) calculated 47 percent,” he said in a statement.

The government had not called mining firms for a meeting to discuss the tax rates, despite numerous promises.

“To date, no such discussions or consultations have taken place. All (mining firms) with development agreements are willing to discuss and renegotiate the terms and conditions of their agreements,” Bantubonse said.

Zambia’s biggest copper producer is Konkola Copper Mines (KCM), a unit of London-listed Vedanta Resources (VED.L: Quote, Profile, Research).

Others are Mopani Copper Mines, a venture of Swiss firm Glencore International AG [GLEN.UL], First Quantum Minerals (FM.TO: Quote, Profile, Research) and Chibuluma Mine, a unit of Metorex (MTXJ.J: Quote, Profile, Research). Australia’s Equinox Minerals (EQN.AX: Quote, Profile, Research) owns Lumwana Mining Plc. (Reporting By Shapi Shacinda; editing by Michael Roddy)

© Reuters 2008 All rights reserved

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version 

By Shapi Shacinda

LUSAKA, Jan 11 (Reuters)

Zambia said on Friday it had discovered more oil and gas reserves and had set up a petroleum committee to outline regulations for foreign investors.

President Levy Mwanawasa said the government would also award a 30 percent stake to a foreign equity partner Zambia’s only refinery, Indeni.

Mwanawasa said soil samples from eastern Zambia had shown the existence of oil and that other samples from the western parts also showed encouraging results for oil and gas.

Zambia first announced oil in its northwestern province in early 2007.

“Further investigations were extended to the eastern province in 2007 where 153 soil samples were collected (and) whose laboratory results are very encouraging,” Mwanawasa said in an address to parliament.

Mwanawasa said the government will create a separate regulatory framework for oil exploration and production for foreign investors who would have to obtain different licences for the two undertakings.

“As a result, the government has suspended the process of invitation to tender until the Act (legislation) is repealed and replaced. A new Bill is expected to be tabled in (parliament) within the first quarter of this year,” Mwanawasa said.

The government had planned to call for bids early this year for foreign companies to start major exploration work.

He said the current law had weak provisions for the exploration and production of oil and also on environmental protection and that these would be strengthened in the revised legislation.

Mwanawasa said he had already appointed a petroleum committee to oversee the development of the oil sector.

“The committee is already spearheading formulation of policies and guidelines relating to petroleum and its development in Zambia,” Mwanawasa said.

Mwanawasa said Zambia will invite a third equity partner in the Indeni Oil Refinery, which it jointly owns with French oil major, Total (TOTF.PA: Quote, Profile, Research), on a 50-50 basis.

“The government and the oil company, Total, who are the two shareholders in Indeni have agreed to invite a third shareholder to take up 30 percent of the shares. The process will commence in the first quarter of this year,” he said but gave no further details.

The move was aimed at attracting fresh capital investment in Indeni Oil Refinery and revamp its operations, Mwanawsa said. (Reporting By Shapi Shacinda)

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version 

By JAMES MUYANWA

levy.jpgPRESIDENT Levy Mwanawasa has told Zambians to prepare themselves to participate in global economy as Government increases citizens’ access to investments through the programmes of the Citizens’ Economic Empowerment Commission that kick off this year.

Addressing the nation on ZNBC radio and television on the even of the New Year, President Mwanawasa said that Government would increase the Zambians’ access to investment through the CEEC, which would enable all citizens, including women and the youth to have an opportunity to fully exploit their entrepreneurial abilities.

Dr Mwanawasa said the creation of multi-facility economic zone in Copperbelt and Lusaka provinces was another way of empowering the local people and uplift their standards of living through job creations.

He said Government on its part would continue implementing prudent macro-economic policies to safeguard gains made so far while ensuring the economic activities benefited the people. The focus for this year would, therefore, to grow the economy by at least seven per cent, he said.

Dr Mwanawasa said Government was keen to ensure that Zambians fully participated in the economic affairs at all levels including the international one, and urged the Zambian private sector to actively participate in the procurement and exploration of petroleum.

Dr Mwanawasa said Government had worked hard to overcome the challenges, which had been causing the intermittent disruptions in the supply of petroleum. Government had now introduced a long-term supply system, he said.

“As regards petroleum exploration, I am pleased to note that in the past year, Government has engaged stakeholders in order to finalise proposed amendments to the Petroleum Exploration Act of 1985,” he said.

Dr Mwanawasa said as soon as amendments to the Act were effected the nation would witness exploration activities in some provinces particularly North-Western Province where selected blocks had already been demarcated.

On mining, he said, the sector had made tremendous achievements and attracted huge investments but the onus was now on the Government to ensure that full benefits were derived from the ventures.

He said it was for that reason that this Government had engaged mining companies to re-negotiate the mining development agreements, which he said, would be concluded soon.

“Fair-minded and objective people will agree that so far, our economic, political and social programmes are on the right track. This is evidenced by the positive economic developments. “At the macro-economic level, the economy has continued to perform very well,” he said.

Source: Times Of Zambia

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version 

LUSAKA, November (28) – A unit of South Africa’s Standard Bank has tendered to finance a $1.07 billion crude oil feedstock purchase deal for mineral-rich Zambia, a senior government official said on Wednesday.

Energy and Water Development acting permanent secretary, Oscar Kalumiana, said Stanbic Bank Zambia Plc and Finance Bank Ltd., another local bank were competing for a two-year financing contract for Zambia’s 1.4 million tonnes crude oil requirements.

Zambia, which has faced intermittent fuel shortages due to problems in procuring crude oil for its vast copper and cobalt mines and other sectors of the economy will announce the successful bank by mid-December, Kalumiana said.

“The two banks submitted technical financial proposals through the Zambia National Tender Board (ZNTB). We are evaluating the proposals and will select one of them before mid-December,” Kalumiana told journalists from state media.

Officials say the government is currently scrutinizing tender documents for five foreign oil trading firms which want to start procuring oil for the country.

Kalumiana said the government had requested local banks to participate in the financing to pay for the feedstock supplied in order to access funds quicker, especially for upfront costs.

“It (oil deal financing) will be a revolving facility with each shipment to last one and a half months at $67 million per oil shipment at current prices and we need eight shipments in a year. The banks have other charges and their bids will be graded depending on who has the best structure,” Kalumiana added.

He said Zambia and French oil major Total, which are equal shareholders of the country’s sole Indeni Oil Refinery, had agreed to get a local bank to finance the purchase of oil.

“We agreed with Total that instead of the two shareholders providing the money, we should let the money come from the private sector because the business is profitable. The local banks will be getting their money (after) the fuel is sold,” Kalumiana said.

In October, Zambia — which uses huge amounts of diesel to run its vast copper mines, the country’s economic lifeblood, and other industries — faced severe fuel shortages after Total stopped crude oil imports for the country over a pricing dispute.

Commoditex International of the United Kingdom, Russia’s Lukoil International Trading and Supply Company, Trafigura of Italy, Addax and Oryx Group of France and Independent Petroleum Group of Kuwait are the firms that tendered to procure oil for Zambia.

According to ZNTB data, the oil traders have submitted bids with prices ranging from $65.69 per tonne for crude oil from Iran to $76.15 per tonne of Oman.

Officials say the government turned to local banks for financing after Citi Bank of the United States in October declined to provide financing for crude oil Zambia wanted to purchase from Iran due to an embargo for U.S firms against dealing with Iran.

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version 

Seattle Times business reporter

GREG GILBERT / THE SEATTLE TIMES

Zambian President Levy Mwanawasa battles stereotype of Africa in chaos.

Even for a country with a relatively stable democracy and growing economy, Zambia hasn’t had much luck finding Americans willing to invest there.

Zambian President Levy Mwanawasa said he hopes to change that by introducing more Americans to his country and fighting the stereotype of Africa as a place defined by war and chaos.

Speaking to local business leaders Monday, Mwanawasa said Zambia has become a center of peace and prosperity in the region. The country has emerged from a long period of economic decline to achieve an average annual 5 percent growth in gross domestic product for the last five years.

“It’s the first time the country is experiencing such strong positive results,” the Zambian leader said, adding that sustaining the success could bring about an economic transformation to improve the lives of ordinary people.

The landlocked country of 12 million people in southern Africa still suffers from high unemployment and crippling poverty, with about 68 percent of the population falling below the poverty line of $1 per day.

Zambia has taken a strong stance against corruption and created a foundation based on the rule of law and respect for private property, Mwanawasa said.

The country’s main industries are copper mining, agriculture, manufacturing and tourism.

A former British protectorate that gained independence in 1964, Zambia is encouraging more foreign direct investment and growth of the private sector to help reduce poverty.

“When you invest in Zambia, you’re putting GDP in the pockets of Zambian people,” Mwanawasa said.

Mwanawasa, 59, was in the United States for a meeting of the U.N. General Assembly. He traveled here at the invitation of the Seattle-based Initiative for Global Development, a national network of business leaders promoting policies to end global poverty.

He and a delegation of senior government officials and business leaders were scheduled to visit the Bill & Melinda Gates Foundation, PATH, Microsoft, Boeing and Starbucks on Monday.

Mwanawasa said he had dinner Sunday at the house of former Microsoft executive Paul Maritz, a Zimbabwe native who lives on Mercer Island.

While Zambia has had a rush of investment from China recently, attracting U.S. business has been an uphill battle.

On previous visits to the U.S., “the response hasn’t been encouraging,” Mwanawasa said.

“So far Africa has been known only for the bad news,” said Felix Mutati, Zambia’s minister of commerce. “In Africa, we’ve got problems with HIV/AIDS, malaria and other diseases,” he said, “but we’re not a diseased country.”

In Zambia, the Gates Foundation funds a malaria-control program run by PATH that aims to cut malaria cases by 75 percent and become a model for the rest of Africa.

Zambia has introduced incentives to encourage foreign enterprises, such as tax-free profits for the first five years and duty-free imports of capital equipment, said Mutati.

Energy, IT infrastructure, agriculture and eco-tourism are promising areas for development, he added.

“We don’t want help,” Mutati said. “We want investment. We want partnership.”

Zambia’s slide into poverty began after world copper prices fell in the 1970s. Since then, the economy has become somewhat more diversified, even as the price of copper has climbed.

The government began privatizing the copper industry in the 1990s. Copper contributed 75 percent of the GDP in 2002 but only about 45 percent last year, said Mutati.

Asked about the political and economic crisis in neighboring Zimbabwe, Mwanawasa called the situation “extremely worrying” but added that economic sanctions will not help.

He threatened to boycott a European-African summit meeting in December if Zimbabwe President Robert Mugabe was excluded, saying Western leaders must be willing to talk to the leader widely considered an international pariah.

The chaos in Zimbabwe has choked off tourism, diverting more visitors to Zambia to see Victoria Falls, the spectacular milewide waterfall on the border between the two countries.

With room for only about 1,500 visitors, hotels in nearby Livingstone can’t cope with the influx, Mutati said. Its tiny airport, which had just a few flights a week three years ago, has 28 flights a week now. Several new hotels are under construction.

While Chinese companies have been criticized for labor practices in Africa, overall the influx of investment from China has been a good thing, Mutati said.

Cautious Western companies have hesitated too long. “They would go on their computers and do spreadsheets about risk,” he said, while “the Chinese make a decision first.”

Chinese have invested $900 million in Zambia for two economic zones focused on copper and agricultural processing, creating 60,000 jobs.

“Now we can see the West is saying we must run to Africa because if China dominates Africa, that sphere of influence can become critical as we go forward,” Mutati said.

Zambia also needs American-style business, said Wamulume Kalabo, chairman of the Zambia Association of Chambers of Commerce and Industry.

U.S. companies tend to hire and train local people, with English as a common language. Chinese companies tend to hire their own citizens to work in Zambia’s mines and manufacturing sites because of the difficulty of communicating.

“The local people are not seeing the benefit initially,” Kalabo said, “because very few of them are being absorbed into the system, and the main reason is the lack of communication.”

Kristi Heim: 206-464-2718 or kheim@seattletimes.com

Copyright © 2007 The Seattle Times Company

Next Page »