ZAMBIA BUYS A COPPER MINE
Thursday, January 21st, 2021
Zambia is buying the Mopani copper mine from Glencore. Glencore is lending the bankrupt – well, it’s in default, anyway – country the money to buy the mine. This is going to be a fascinating experiment.
We can’t help but think that the timing’s a little wrong. Zambia sold the mine, or at least Glencore took it over, back in 2000, when the copper price was 65 cents per lb US. Today it’s $3.50. Selling at the bottom and buying at the top doesn’t look that great a deal for Zambia it has to be said.
So, why do this? Well, it’s as we pointed out back here. Various of the NGOs have been really insisting, really most insistent, that Zambia is being ripped off by the price it gets for its copper. There was all that nonsense from Alex Cobham when he was at CGD about how prices varied by hundreds of percent from what they ought to be. Gobbledegook as it turned out.
But the underlying insistence still burns bright in many. The poor country is ripped off by the ugly foreign capitalists.
But now we’ll see, won’t we? Will the mine be better managed? Will the price received for the copper improve? Will Zambia actually gain from not being exploited by the Big Bad Capitalists?
Our point here being a simple one. The experiment to work this out is now being undertaken. We will in fact find out, in a few years, whether the rip off was happening or not. And the evidence will be simple too – is Zambia going to gain from not having Glencore owning the mine and thus controlling – recall the claim – both the export price and the import one?
Ourselves we think it’s going to go horribly wrong because there was a reason that Zambia privatised those mines at the bottom of the market. They couldn’t make any money running them directly. But leave that aside. Here we’ve now got a direct test of those claims of exploitation. Let’s not take our eye off this ball until we see the results.
You know, hold the NGO types to the proof of their claims.https://www.adamsmith.org/blog/zambia-buys-a-copper-mine-the-most-lively-experiment-is-about-to-happen