Nationalization And Mining: Lessons From Zambia

Industrial mining in Zambia started in the 1930s when the world class copper deposits near the border with Katanga were developed. The discovery of these deposits began at the turn of the century when the first claims in the Copperbelt were pegged at Chambishi, north of what became the town of Kitwe1. World War I and the difficulties of raising sufficient capital for such large scale undertakings delayed the exploitation of these deposits. Following this hesitant start, a large copper mining complex was built, resulting in the development of five major towns, all highly dependent on the mining and beneficiation of copper and cobalt. Copper became so important to the country that, on independence, the only non-mining town to make it onto a list of the top six was the capital, Lusaka. From commissioning of the mines to the end of the colonial period in 1964, copper production increased to just over 640 000 t annually2 (see Figure 1). After the establishment of the new Zambian state, production continued to increase, supported by a benign legislative environment and strong international copper prices. The government of Kenneth Kaunda was intent on improving the conditions of the rural poor and reducing unemployment in urban areas. To this end, the government embarked on an ambitious project of refocusing Zambia's economy away from the colonial role of commodity supply to one of decentralized mass employment. The Copperbelt industrial complex was key to the success of this approach, and in 1969 the Zambian State acquired a 51 per cent stake in Zambia's two main copper producing companies: Roan Selection Trust and Rhodesian Anglo American Corporation. The former became Roan Consolidated Mines Ltd (RCM) and the latter became Nchanga Consolidated Copper Mines Ltd (NCCM). In the year they were nationalized, the mines produced at least 720 000 t of copper? and employed approximately 48,000 workers (see Figure 2)2-4. The subsequent economic policies of the Zambian Government depended heavily on the state's ability to monopolize the proceeds of copper mining.