ZCCM Investments Holdings (ZCCM-IH) says the door remains open for anyone to approach ZCCM-IH for partnerships in the gold value chain.
Public relations manager Loisa Mbatha-Kakoma said in a statement that ZCCM-IH had prioritised investments in the mining sector particularly in other minerals such as gold and manganese.
Kakoma said as mandated by the government to harness the gold potential in the country, ZCCM-IH strategy was to forge partnerships with any industry player with in the gold value chain.
She said the partnership with Karma Mining Services and Rural Development was one such partnership where the joint venture (Consolidated Gold Company Zambia) is entirely focused on gold processing.
On the partnership between ZCCM-IH and Karma Mining Services and Rural Development (Karma), Kakoma said the company owned by Sudanese individuals came into Zambia in 2016 and registered the company in November 2018.
“Just like any foreign investor, they came in the country in search of investment opportunities in the gold mining sector. They first started with the Ministry of Commerce, Trade and Industry, and went through the Zambia Development Agency to apply for an investment licence. Their key interest was only in setting up gold processing lines in the gold value chain in which they possess vast experience and expertise from their country of origin – Sudan,” she explained.
“Karma first embarked on talking to existing local small scale gold mining licence holders in the country for partnerships in processing their gold ore, particularly in Eastern Province, before setting up the company in Zambia. With established potential partnerships with these local mining licence holders, they applied for a Mineral Processing Licence through the Ministry of Mines and Minerals Development to enable them set-up gold processing plants.”
Kakoma said instead of them doing it entirely on their own, and engaging commercially with the local small scale licence holders, they were advised by the Ministries of Commerce, Trade and Industry and the Ministry of Mines to partner with ZCCM-IH, which was now mandated to drive the gold national agenda, with gold being declared a strategic mineral.
“In fact, the granting of the Mineral Processing Licence to Karma was dependent on them partnering with ZCCM-IH. The two ministries should actually be applauded for their pro-activeness in seeing that any investor coming to invest in the gold sector now should partner with ZCCM-IH,” she said.
“We must also understand that the sole business of the joint venture between Karma and ZCCM-IH is only in gold processing. Karma does not own any gold exploration or mining licences, and will not own any of these, except for mineral processing licences.”
She said ZCCM-IH undertook its own due diligence on Karma who had already signed agreements with two existing local small scale gold mines to start processing gold.
She said seeing that Karma was bringing on board the machinery and vast technical expertise and know-how in good processing, ZCCM-IH entered into a partnership with Karma to form the Joint Venture – Consolidated Gold Company Zambia Ltd – and negotiated for a 45 per cent stake in the JV.
“In addition to this, it is enshrined in the agreement with Karma that ZCCM-IH will be able to increase its stake in CGCZ or own it entirely after five years. This period will ensure knowledge and skills transfer in running the operations of gold processing and ensure the business is established successfully,” she said.
“Further, not only does ZCCM-IH have this significant minority stake, ZCCM-IH has strategic management control in the company and is actively involved in the operations for direction. For instance, the chief financial officer and procurement officer are appointed by ZCCM-IH, and additionally a technical person, a metallurgist is attached to the JV.”
Kakoma said holding a significant minority or majority stake in new investments with investors coming to partner with ZCCM-IH, with some level of control and participation in strategic management positions, was part of new strategy aimed at ensuring ZCCM-IH gets value and ensures checks and balances in the running of these new entities.
She said the benefits of the partnership between Karma and ZCCM-IH in CGCZ was all about empowerment of the local small scale gold miners.
She said a lot of small scale licence holders have struggled to develop their mines due to lack of resources to conduct exploration to estimate the resources.
“Most of them have been mining alluvial gold which only involves sifting through gravel to separate the pieces of gold, and can be done by a single miner with a gold pan, by washing the ore in water. However, the process of hard rock gold mining and processing requires professional technical expertise for gold to be extracted; it is found in rocks which are supposed to be extracted from beneath the ground, crashed and milled into very fine particles, then chemically processed using leaching processes to extract the gold,” she said.
She said CGCZ was partnering with existing small scale licence holders to set-up gold processing lines for all types of gold ore materials and they were also being helped with technical expertise to open up gold veins by providing access to earth moving machinery as well.
Kakoma said all this would see a boost in their gold production.
“Again, knowledge and skills transfer in gold processing to these local licence holders will be another benefit. As such, any current licence holder is free to partner with any investor to mine and process the gold in their licence area. There are currently small scale licence holders who are already doing so with other foreign partners other than CGCZ or Karma or ZCCM-IH,” she said.
She said the industry traditionally had remained unformalised and a lot of illegal mining had been taking place since time immemorial.
“And there are sections of society, particularly foreigners, that have been massively benefiting from this illegality. There are no formal records of how much gold is siphoned and smuggled out of the country. There are over 60 spotted gold mining areas around the country, and the locals are currently mining. CGCZ is only present in Rufunsa and Mumbwa; and in Mwinilunga ZCCM Gold Company will entirely be responsible for mining and processing operations. CGCZ is not participating in the Kasenseli gold mine as alleged in social media commentary,” she said.
On the CGCZ and Array Metals Joint Venture, Kakoma said the partnership between CGCZ with Array Metals was another JV where Array Metals hold the exploration licence in Mumbwa and have invested millions of dollars in geological exploration to estimate the gold resources.
“Again, they could have started processing gold on their own with any investor, considering it is their licence. But they approached CGCZ for a JV in gold processing seeing what CGCZ is already doing with other small scale licence holders in Eastern Province. They saw it fit to have CGCZ come on board to invest in processing their ore materials and negotiated a revenue split of 65 per cent for CGCZ and 35 per cent as licence owners,” she said.
Kakoma said early this year, ZCCM-IH formed ZCCM Gold Company to oversee and undertake investments in the gold sector’s value chain.
“ZCCM Gold is owned 51 per cent by ZCCM-IH and 49 per cent by the Ministry of Finance, and was formed after CGCZ was established and already operational. ZCCM Gold will invest in the entire value chain starting from gold exploration, mining, processing, refining, trading and beneficiation. It will hold its own licences in mining in other gold occurrence areas,” she said.
She said the first project was the Kasenseli gold mine which will be a large scale mining and processing operation. ZCCM Gold is in charge of all the operations of the project.
Kakoma said a special purpose vehicle was being formed which is comprised of ZCCM Gold as majority shareholder, alongside the previous licence holders who are Zambians and the Chiefdom Trust as equity partners.
She said CGCZ or Karma were not party to the Kasenseli project.
Kakoma said the mandate given to ZCCM-IH to harness the gold sector was being implemented by ZCCM Gold.
“ZCCM Gold started buying gold mined by artisanal gold miners in February this year, by providing an open market and competitive pricing as the first step towards formalising the industry.
Gold mining activities have been taking place for years albeit illegally. And now there is a pro-active attempt to formalise the small scale and artisanal gold mining sector. So far, Government has given artisanal miners gold panning certificates to legalise their alluvial or riverbed gold mining activities,” she said.
“ZCCM Gold is working with these licenced artisanal gold miners by providing them with gold equipment, access to earth moving machinery, and offering technical expertise among others. Again, this is another avenue in which citizen participation in the gold sector is being encouraged and promoted.”
She said ZCCM Gold will set-up a gold refinery in future to start producing gold bullions.
“At Kansanshi Mine for example, gold is a by-product of a huge mining operation, and only produce an annual average of 5 tonnes of gold. ZCCM-IH is open to any local Zambians with this technical expertise in gold processing, to forge partnerships in developing the sector, or they can also apply and obtain licences or partner with existing small scale licence holders to develop the gold mines,” she said.
“As a country, we are still at a very early stage in formalising and establishing the industry, and this will require hard work and investment over time to attain high production levels. We will obviously need any technical expertise throughout the gold value chain considering the vastness of gold occurrence areas in the country.”
Source: https://www.themastonline.com/2020/05/29/door-remains-open-for-anyone-to-approach-zccm-ih-for-partnerships-in-gold-value-chain/