Peter Sedgwick

Financiers untroubled by mines ‘takeover’

(13 November 1969)


From Socialist Worker, 13 November 1969, p.5.
Transcribed by Ted Crawford.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.


ON 19 OCTOBER, President Kaunda of Zambia announced that ‘full agreement’ had been reached on the nationalisation of the copperbelt producers between his government and the two gigantic holding firms, Anglo American and Roan Selection Trust.

The original announcement of the nationalisation move in August had been greeted with jubilation on certain sections of the British Left.

‘Every ... copper-mine nationalised in Zambia,’ wrote Fergus Nicholson, the communist Party’s student theorist, ‘... is a nail in the coffin of capitalism’ (Marxism Today, October 1969).

The Stock Exchange and the financial press, however, remained strangely untroubled. The shares of Anglo American continued to rise in the market. The introduction of African majority control over the fabulous wealth of the copperbelt appears to worry not even the most hidebound reactionary.

On the surface, this attitude appears extraordinary. Zambia’s copper resources are no mean asset.

It was understandable when the capitalists of Britain peacefully relinquished their ailing mines and railways after the war, but Zambia is the world’s third largest copper producer, with Britain dependent on her for 40 per cent of all copper used.

The demand for copper is (so far) steady, indeed urgent. World prices are now at an all-time high. while some slackening-off is possible in the 1970s no adequate substitute for the metal is available. There has been talk of developing plastics and aluminium as a substitute, but it is hard to see what could replace copper’s properties of bendability, weldability and electrical conduction.
 

Titan

For the investors of Anglo and RST, copper has been synonymous with gold. In the last 10 years they have taken 250 million out of Zambia in dividends, even after the hefty company taxation taken by the state.

Mufilira, for instance, the RST subsidiary, paid a 55 per cent gross return on shares in 1964. This went up to 110 per cent in 1968.

The foreign financial interests involved in the copperbelt are considerable. Anglo American is a titan, whose interests, in manufacturing and finance as well as minerals, extend not only across Africa but into Canada and Britain (with a 12 per cent stake an Ferranti and an equal share with ICI in the Cleveland Potash project in North-East England). Its total world-wide value has been estimated at something like 2,000 million.

The largest investor in RST (with 43 per cent of the shares) is the American Metal Climax Company (AMAX). Interlocking share ownership in the copper-producing subsidiaries binds Anglo and RST together in a complex pyramid of control. Their assets in Zambia are valued between 300 to 500 million.

What a prize this would be for a Black African Commonwealth! State ownership of such a base would halt the drain on Zambia’s wealth and provide the means for balanced industrial development, for the building of a strong Black power to challenge and ultimately evict the racist dictatorships of Rhodesia and the Portuguese colonies.

Yet despite the talk of ‘nationalisation’, Kaunda has not taken over the copperbelt. Far from it.

The Zambian move came, not as the expression of a determined strategy of socialism (Kaunda does not propagate even the vaguest form of ‘African Socialism’ but merely a diluted and vacuous rhetoric of – ‘Humanism’), but as part of an improvised manoeuvre to restore the president’s position, threatened in party and government by a challenge from his militant deputy, Simon Kapepwe.
 

Revamping

Accompanied by an ‘action stations’ alert for Zambia’s armed forces to stand guard over the copper installations (against heaven knows what enemy), Kaunda’s announcement this summer represented only a revamping of existing or publicly announced commitments for the sharing of control with the foreign mining interests.

The only real ‘nationalisation’ is of the mining rights (not the mines),whose title reverts to the Zambian state – a commercially useful measure, in that it enables the government to negotiate with foreign firms outside the Anglo-RST nexus and possibly drive up its price for leases.

As to the mining companies themselves, these will continue to function, perhaps with some rationalisation of the complicated holding structure. The Zambian state industrial corporation, Indeco, will take up shares in the companies to the value of 51 per cent of the total. The other 49 per cent will remain with Anglo and RST and be quoted on the stock market as at present.

Indeco’s purchase of its shares will take place over six years and be paid for over this period by foregoing the dividends due to it. With the relaxation of exchange and other state restrictions announced simultaneously by Kaunda, the British financial press has been forecasting that, in the years of the purchasing period, shareholders in Zambian copper might be doing even better than they are now.

Certainly the brevity of the bargaining between Zambia and the companies does not suggest that the latter felt they were losing a great deal.

In the longer term, the business monthly African Development commented (September 1969): ‘it may be less thrilling in the future, but the state participation gives a new sense of security as long as efficiency is ensured.’ Zambia is now officially committed to the prosperity of the foreign firms: what is good for Anglo and RST is good for Zambia.
 

Parade

Kaunda’s existing record of securing industrial peace (commented on in the last Anglo report before ‘nationalisation’) is capped by his announcement, concurrently with the ‘new deal’, of a wage freeze for the workers and his taking into the central committee of the governing UNIP of Wilson Chakulya, secretary-general of Zambia’s Congress of Trade Unions.

What the whole parade amounts to is a new way of taxing the copper combines (and they are used to being taxed, to the tune of 80 per cent of basic profits), with the state as taskmaster over the miners – the biggest and best ‘Zambian personnel manager’ that Anglo and RST could ever find to ensure their accumulation and dividends.

The pattern of industrial control that is emerging in the exploited ‘Third World’ is not in general dissimilar to the Zambian case. In the Congo(Kinshasa), America’s protege General Mhobutu has ‘nationalised’ the foreign mining interests of Katanga, through the state mining corporation Gecomin.

African Development (September) commented that ‘the Belgians have done remarkably well out of being nationalised. The old regime handles the whole operation as always, from mining in Katanga to refining in Antwerp. It nets around 12 million a year.’
 

Exorbitant

The Economist reported on 18 October that the profits of Tanganyika Concessions (‘Tanks’) , which has an 18 per cent stake in the old Katanga combine Union Minière, were up 26 per cent last year to 2.6 million. Equally in Chile , President Frei, another American favourite, has ‘nationalised’ copper at exorbitant compensation and leaving a large measure of the old company structure.

The Financial Times reported a meeting between Frei and Kaunda at a copper producers’ conference in Lusaka just before the Zambian ‘takeover’ was announced.

Percentage-wise there must be a considerably larger proportion of state, ownership in many ‘third world’ countries than existed in Bolshevik Russia in November 1917. Those for whom `socialism’ or a ‘workers’ state’ is defined by nationalisation should really start celebrating the international revolution.
 

Cover

The 51 per cent – 49 per cent carve-up between national state and foreign firm is ideally suited to the interests of both international capitalism and the local bureaucracy. (Kaunda has now announced that ‘the Shell-BP marketing organisation in Zambia had offered [my emphasis – PS] 51 per cent of its shares to the government and that these had been accepted’: Guardian, 20 October)

It provides a watertight cover for the firm’s operations – for ‘the nation’ now has majority control over its own resources. It yields substantial revenues to the local government and these (as in Zambia’s case) can be used to finance a programme of industrial diversification which, however, can never get out of hand.

It forestalls any radical demand for outright expropriation, because the local state retains not only profits but the good-will and `know-how’ – vital commodities in a technical enterprise in a backward country – provided by the expatriate firm.

In an age of declining overseas aid from government quarters, it represents – short of revolution and expropriation of foreign assets – the only means of development for many a backward nation. Companies and governments become fused in the great international rings and associations that determine policy for the world commodity market.

The spuriousness of the whole technique may yet inspire more radical oppositions, in Zambia, in Chile and elsewhere, to demand the real thing: the loaf, not the slice. Meanwhile it is essential that we refuse to be deceived.

 


Last updated on 5.12.2004