Zambia takes first step to start trader competing with Glencore

The cabinet approved the creation of a special purpose vehicle that will invest and trade in the southern African nation’s mineral resources, Information and Media Minister Cornelius Mweetwa said in a statement Wednesday.

Bloomberg first reported the plans in February, and President Hakainde Hichilema said in an interview later that month that the government was in a hurry to set up the state-owned metal trading company. He pointed to the success that Glencore Plc and Trafigura have made in trading, saying that Zambia also wanted to create value in the same line of business.

The decision is based on the need “to move away from the dividend payment model for mineral resources and adopt a production-based sharing mechanism to ensure benefits accrue to the people of Zambia beyond statutory obligations,” according to Mweetwa’s statement.

The government — long suspicious that some mining companies under-declare production and profits — hopes the creation of a state minerals trading company will provide a window into where others are making money from Zambia’s resources.