Three Who Will Stay On

Nine years ago, when Northern Rhodesia, Southern Rhodesia and Nyasaland united to form the Central African Federation, this new Commonwealth nation looked good to foreign capital. Lured primarily by the riches of Northern Rhodesia's famed Copper Belt (current production: 600,000 tons a year), U.S. and European companies swarmed in to throw up everything from oil refineries to auto assembly plants. Before long, the federation's sprawling capital of Salisbury, a city about the size of El Paso, began to enjoy a wild building boom.

Today, 20% of the office space in Salisbury is vacant, and only by imposing rigid exchange controls has the federation government managed to avert a crippling flight of capital. On the London Stock Exchange, shares in Rhodesian Selection Trust, one of the titans of the Copper Belt, have dropped from 37 shillings to 25--despite the fact that they pay an 18% annual dividend.

The economic troubles mirror the nation's political plight. The federation is fast falling apart because of racial conflict between its 300,000 whites and 7,000,000 Africans. Nyasaland, under fervid African Nationalist Hastings Banda, is ready to secede from the federation, and secession ist pressure is steadily mounting in Northern Rhodesia, where the United National Independence Party of wiry, in tense Kenneth Kaunda is expected to win handsomely in next October's elections. With Nyasaland and Northern Rhodesia gone, white-dominated Southern Rhodesia would be left with no hinterland in which to market its manufactured goods.

The Holdouts. For most investors, Rhodesian and foreign alike, all this makes Central Africa seem a bad risk. But one important group is holding out against the tide of pessimism: the three great companies that dominate the Copper Belt and have a stake of $850 million to defend in Northern Rhodesia.

Least confident of Rhodesia's Big Three is the British South Africa Co., last of England's royal charter companies operating in Africa. B.S.A. runs no mines, instead collects handsome royalties ($28 million in 1961) from land leases. Under aging (77) Colonel the Lord Robins, a transplanted Philadelphian and onetime Rhodes scholar, B.S.A. has consistently fought rising Kenneth Kaunda and, by general rumor, still shovels money to rival--and less aggressive--African leaders. As a result, according to Rhodesians, "Kaunda has declared war on B.S.A." Although Lord Robins earlier this month announced his retirement as B.S.A.'s president, the war seems certain to continue, and B.S.A. now reinvests only about $2,500,000 a year in Rhodesia, is diversifying as rapidly as possible into Australia and Canada.

More hopeful is Harry Oppenheimer, 53, the South African diamond king whose Anglo American Corp. mines 60% of Rhodesia's annual copper output. Oppenheimer strongly argues that the federation must be held together under a white-dominated government. But unlike B.S.A., Anglo American has not been openly hostile to African leaders. Moreover, along with Rhodesian Selection Trust, it has contributed $4,500,000 to construction of primary schools for Africans and has advanced the Northern Rhodesian government another $20 million in rural development loans. Reported Oppenheimer to Anglo American stockholders recently: "We are not afraid of change, and we believe we will be able to work successfully with governments of the future."

Safety in Boldness. Most optimistic of all is Rhodesian Selection Trust, which is 43.5% owned by New York's American Metal Climax, Inc. R.S.T.'s hardheaded directors do not deceive themselves about the immediate future. Copper prices--which in booming 1956 stood at $1,204 a ton--have now dropped to about $655 a ton and are held there only by a voluntary 10% production cut on the part of R.S.T. and Anglo American. Labor unrest looms; Rhodesia's 40,000 African miners (who average $750 a year) have struck once for wage parity with the country's 8,000 white miners (who average $6,600), and after Kaunda takes over in Northern Rhodesia, the Africans are sure to press their claims even harder.

But in the long run, Sir Ronald Prain, R.S.T.'s chairman in Central Africa, is confident that Northern Rhodesia can keep its place as the world's second largest copper producer after the U.S. Bracing for the future, R.S.T. has taken no hand in federation politics for the past three years, and argues that even if Kenneth Kaunda does lead Northern Rhodesia into secession, he will need the mining companies' tax money and technical knowledge to keep the country going. On that assumption, R.S.T. is about to spend another $29 million to develop a new open-pit mine in the Copper Belt. Says Prain: "A sense of urgency leading to bold decisions may well be the course that contains the least risk."

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