The global recession has arrived in Zambia’s Copper Belt.
And the town of Luanshya has been hardest hit with the complete shutdown of the huge copper mine that dominates the landscape.

Over 3000 miners, directly employed and on contracts, lost their jobs at the end of January after the owners announced that the mine was no longer economically viable.

The shutdown has had a devastating effect on the 60,000 residents of the town, who nearly all depend on the mine for their livelihood.

Shock

And it has hit William Banda, who has worked as a loader in the mine for 22 years, particularly hard. He says the mine closure came as a complete shock. With the loss of all his income, he has had to send two of his four daughters away to relatives to be looked after.

At 46 years old, he does not think he can get another unskilled mining job, as other copper mines are also laying off workers.

He would like to start his own small business, but says he has no way a getting a small loan of several thousand dollars that he would need as working capital.

The head of the local mining union, Stanislas Mwimbe, says the closure will have a devastating effect on the community and will leave many people in deep poverty - some of whom may be forced to turn to crime.

Copper-bottomed economy

Copper mining is the most important industry in Zambia, accounting for 90% of Zambia’s exports and directly employing 50,000 workers.

But the price of copper has slumped on global markets, falling from a high of nearly $9,000 per ton last year to just over $3000 per ton now.

The International Monetary Fund (IMF) says that, because of its dependence on copper, Zambia is one of the poor countries that ‘highly vulnerable to the adverse effects associated with the global recession.”

After talks with the government, the IMF said that "the mining sector has been hard-hit by the sharp fall in copper prices” and warned of further pressure on Zambia’s currency, the kwacha, which has fallen sharply against the dollar.

The IMF said that it "stands ready to provide additional balance of payments support” to maintain ‘orderly foreign exchange market conditions.”

Political row

The closure of Luanshya copper mine has become a major political issue in Zambia, with the opposition and the miners union accusing the company of bad faith, and criticising the privatisation of the mines in the l990s.

Rayford Mbulu, the president of the Mineworkers Union of Zambia, says the government must take a majority stake in the mining industry if necessary to ensure that mines stay open.

And he accuses the companies of being faithless to the country by taking out their profits in the good times and not putting aside funds for the hard times.

In a BBC interview, Zambia’s Minister of Mines, Maxwell Mwale said that he was hopeful that other global mining companies would come in to replace those investors who had left the industry

"When some see a disaster, others see an opportunity,” he says.

"We see inquires from Russian companies, Chinese companies, Canadian companies, and South African companies. Despite what may obtain elsewhere, there are other people who are looking for investment opportunities and they are very welcome,” he adds.

He said that the government would consider taking a larger stake in the mining industry in order to have a stronger voice in the running of the mines, but will not take a majority stake. And he added that Zambia, unlike America, could not afford to bail out the industry: "We don’t have that kind of money.”

Zambia has already been forced to abandon its windfall tax on copper mining, which was set to add $450m per year to its anti-poverty budget, and is likely to further budgetary pressures.

BBC