* China influence in Zambia copper grows
* Govt fails to take 25 percent in firm as stated
* Copper prices recovering
(Adds President’s quotes, China influence grows, details)
By Shapi Shacinda
LUANSHYA, Zambia, May 8 (Reuters) - Zambia, Africa’s top copper producer, on Friday picked a Chinese firm to run a major mine, widening China’s influence in the sector at a time when the metal is rising on prospects of a global economic recovery.
Zambia’s President Rupiah Banda said China’s NFC Africa will take a majority stake in the closed Luanshya Copper Mines (LCM), which will reopen later in May.
Its previous owners shut the mine in December and said its Luanshya’s Chambishi Metals Plc and Baluba copper mine units had been making losses due to lower metal prices, leading to job losses.
The metal, used in construction, has doubled in value since the start of the year on the back of hopes that falling inventories signal a recovery in demand, and the mine’s re-opening is a boost to Zambia’s economic lifeblood.
Banda, who has strongly backed China’s involvement in Zambia’s economy, said NFC Africa was chosen to run Luanshya ahead of two other bidders — Luanshya Mineral Resources and London-listed Vedanta Resources Plc.
“It is now with great pleasure that I announce the sale of the 85 percent shares to China Nonferrous Metals Mining, commonly known as NFCA,” Banda told the mine’s former workers.
“So you miners can go back to work again by the end of this month. We expect new jobs to be created when the development works are done at Mulyashi,” he said.
The LCM, which was a joint venture of the Bein Stein Resources Group (BSRG) and International Mineral Resources (IMR), also shut down the Chambishi Metals Plc, Zambia’s largest cobalt producer, and retrenched 1,700 miners.
The 85 percent stake now held by NFC Africa was previously owned by Enya Holdings, which owns BSGR and IMR.
In what is a now familiar sight across Africa, China’s drive to secure minerals, oil, and a place for its workers and industries to thrive is converging with Zambian government plans to tap the potential of its copper mines.
China’s Nonferrous Metal Mining and Yunnan Copper Industry are about to commission the $300 million Chambishi copper smelter, to produce 150,000 million tonnes a year. Other Chinese companies have promised to invest even more in the sector.
Banda did not explain why Zambia did not take a 25 percent shares in Luanshya mine, as it had said last month.
The government had said it will increase its stakes in all copper mines to between 25 percent and 35 percent from about 15 percent, in order to exercise more influence on their running, and prevent closures that could result in job cuts.
Luanshya was to have been the test case in the scheme, which analysts and companies said may scare off investors already unnerved by the global downturn, and hurt plans to boost copper output in the southern African country.
“I want you to know that the drop in metal prices has hit us all hard in Zambia,” Banda said. “While our people here in Luanshya may have gone without food, your government has also been robbed of revenues in the form of taxes.”
Copper contributes 63 percent to Zambia’s foreign exchange.
Banda said NFC Africa, a subsidiary of China Non-ferrous Metals Corporation (CNMC), would reopen the Baluba copper mine and return it to pre-closure production levels of around 30,000 tonnes copper cathode per year.
Writing by Shapi Shacinda and James Macharia