Announcement of Zambia to Rehabilitate Copper Industry with World Bank Assistance on March 22, 1984

FOR IMMEDIATE RELEASE ,,WorId Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 84/51 Contact: Dunstan Wai March 22, 1984 (202) 477-3294 ZAMBIA TO REHABILITATE COPPER INDUSTRY WITH WORLD BANK ASSISTANCE The World Bank this week approved a loan of $75 million to support a rehabilitation project designed to raise the efficiency of Zambia's copper industry. The project will help establish capacity and production levels which can be justified from an economic, financial, and market point of view. The project will assist the Zambia Consolidated Copper Mines Limited (ZCCM), the majority state-owned mining company, in adopting a management and investment strategy in line with such levels. A review of the mining and metallurgical operations will be made, aimed at strengthening the company's efficiency. Copper mining is the dominant economic activity in Zambia, generating up to 30 percent of the gross domestic product. It contributes over 90 percent of the country's foreign exchange earnings, and provides employment of thousands of workers. Through the payment of taxes, the copper industry has also contributed susbtantial resources for investments in other economic sectors. However, the industry's efficiency has declined substantially in recent years primarily because of foreign exchange shortages which have prevented regular maintenance and replacement of worn- out equipment. This project therefore includes the replacement or rehabilitation of high priority mining equipment and spare parts. Training will be given to upgrade the skills of mining engineers, technicians, and technologists. Technical and economic studies will be provided to establish the bases for the new production and investment strategies. The re-establishment of Zambia's competitiveness in the world copper market will help support the country's balance of payments. It will also generate resources for investment in other projects aimed at diversifying the economy. The project is expected to be finished in 1987, at an estimated cost of $300 million. Besides the World Bank loan, the African Development Bank and the Minerals System Facility of the European Economic Community are expected to provide cofinancing totalling over $70 million. ZCCM will contribute about $152 million. The World Bank loan is for 20 years including five years' grace, with a variable interest rate linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on undisbursed balances and a front-end fee of 0.25 percent on the amount of the loan. NOTE: Money figures are expressed in U.S. dollar equivalents.