VZCZCXRO7623
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLS #0338/01 1390727
ZNR UUUUU ZZH
R 190727Z MAY 09
FM AMEMBASSY LUSAKA
TO RUEHC/SECSTATE WASHDC 6980
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RHMFISS/HQ USAFRICOM STUTTGART GE

UNCLAS SECTION 01 OF 02 LUSAKA 000338 
 
DEPARTMENT FOR AF/S AND EEB/CBA - DENNIS WINSTEAD 
COMMERCE FOR 4510/ITA/IEP/ANESA/OA 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG ETRD EMIN EINV ELAB ECON ZA
SUBJECT: ECONOMIC ROUNDUP 
 
REF: A) LUSAKA 73 
B) 08 LUSAKA 302 
 
¶1. SUMMARY 
-- Zambia's Inflation Rate Rises 
-- Chinese Mining Firm Takes Over Operations At Luanshya 
-- Zambian Airways Debt Position Before It Went Insolvent 
-- Counterfeit U.S. Dollars Hit the Zambian Market 
-- Mines Retrench More workers 
-- GRZ To Issue Oil Exploration Licenses 
-- Zambia Celebrates World Intellectual Property Day In Style 
 
Zambia's Inflation Rate Rises 
 
¶2.    Zambia's year-on-year inflation rate increased in April to 
14.3 percent, marking a 1.2 percent increase from March.  The 
Central Statistical Office attributed the rise to increases in food 
and transportation costs.  Despite this increase, the year-on-year 
inflation rate is still below the 16.6 percent high that it reached 
in January. 
 
Chinese Mining Firm Takes Over Operations At Luanshya 
 
¶3.  The Government of Zambia (GRZ) awarded a tender to take over the 
Luanshya Copper Mine to China's Non-Ferrous Corporation Africa 
(NFC), a subsidiary of China Non-Ferrous Metals Corporation (CNMC), 
over bids from Luanshya Mineral Resources and the London-listed 
Vedanta Resources.  The GRZ did not increase its 15 percent share of 
the mine, despite previous indications that it would do so at 
Luanshya and other mining operations.  Luanshya Copper Mine's 
previous operators, Bein Stein Resources Group (BSG) and 
International Mineral Resources (IMR), put the mine under care and 
maintenance and walked away from their concession agreement in 
January, following declines in world metals prices.  LCM produced 
24,000 tons of copper and 2,100 tons of cobalt in 2007.  NFC will 
also re-open the Baluba copper mine and return it to its pre-closure 
production levels.  According to President Banda, who made the 
announcement of the award, NFC will start production at Luanshya by 
the close of May.  Local suppliers expressed disappointment that a 
Chinese firm won the bid, as Chinese firms are less likely than 
other mining companies to contract local suppliers. 
 
Zambian Airways Debt Position Before It Went Insolvent 
 
¶4.  According to recent press reports, Zambian Airways (ZA) had been 
making progress toward resolving its outstanding liabilities prior 
to becoming insolvent earlier this year.  Investrust Bank executive 
chairman Friday Ndhlovu told shareholders at an annual meeting that 
the bank had made a loan to ZA with numerous conditions.  He noted 
that ZA had begun complying with these requirements, which included 
the resignation of chairman Mutembo Nchito, and had begun making 
repayments on schedule.  Nchito confirmed this report to Emboff, 
noting that ZA's bankruptcy was due to the GRZ's unwillingness -- 
for political reasons -- to show flexibility regarding the repayment 
period of outstanding airport fees and taxes.  Zambian authorities 
have begun seizing ZA assets, but have deregistered two leased 
Raytheon aircraft and are expected to deregister and release a third 
leased plane, a Boeing 737, in the immediate future. 
 
Counterfeit U.S. Dollars Hit the Zambian Market 
 
¶5.    Zambia Police raided a home in a Lusaka township and 
confiscated over USD 2.4 million in poor quality counterfeit 100 
Dollar bills.  A Zambian Army officer and his co-accused have since 
appeared in the Lusaka Magistrates Court on a charge of unlawful 
possession of counterfeit currency.  A law enforcement advisor who 
participated in the raid told Emboffs that the accused had been 
using the counterfeit currency as bait in a series of scams against 
affluent Zambians. 
 
Mines Retrench More workers 
 
¶6.  Mineworkers Union of Zambia secretary general Mr. Oswell 
Munyenyembe confirmed to journalists that Mopani Copper Mines had 
retrenched 368 workers at Mufulira mine and another 568 workers at 
Nkana mine.  He said Mopani did not expect to lay off additional 
workers and would maintain its current workforce of 7,500 permanent 
employees at its current level.  Konkola Copper Mine (KCM) 
retrenched 1,300 employees out of a 12,200 person labor force.  KCM 
stated that the move was in-line with management's effort to 
streamline the operations and increase productivity and production. 
 
 
GRZ To Issue Oil Exploration Licenses 
 
¶7.  The GRZ plans to invite international oil firms to submit bids 
for exploration along the borders of Angola.  Under the new 
 
LUSAKA 00000338  002 OF 002 
 
 
Petroleum Exploration and Production law, the GRZ will grant 
exploration licenses to international oil firms if their findings 
revealed large enough resources to sustain commercial production. 
The new law requires investors to begin production within two years 
of receiving production licenses. 
 
¶8.  The GRZ announced in October 2006 that laboratory tests 
confirmed a presence of oil and gas reserves in Chavuma and Zambezi 
districts of Northwestern province.  A special cabinet committee 
headed by the minister of mines and mineral development was set up 
to draw up policies and guidelines to facilitate oil and gas 
exploration by private companies.  Following the enactment of the 
Petroleum Exploration and Production Law in October 2008, government 
feels ready to invite the private sector through tender to explore 
and develop these resources.  The Ministry of Mines confirms to have 
received inquiries from the USA, Russia, china and South Africa.  A 
local petroleum engineer told Emboff, however, he doubted that 
Zambian reserves would prove to be commercially viable. 
 
Zambia Celebrates World Intellectual Property Day In Style 
 
¶9.  The GRZ and other stakeholders destroyed pirated and counterfeit 
goods worth K52 billion (approx. USD 9.1 million) in celebrations to 
mark World Intellectual Property Day on April 26.  Minister of 
Information and Broadcasting Services Ronnie Shikapwasha destroyed 
the pirated goods using a steamroller.  The minister announced that 
government was working on modalities for introducing holograms on 
audio and video products sold in Zambia to help law enforcement 
officers and consumers more easily distinguish between original and 
pirated media products. 
 
BOOTH