Chibuluma remains on lease to LC & Y with no operations of its own as the life of mine has been depleted. The company received a total of US$ 0.26 million in royalty revenue against a budget of US$ 0.23 Million. The company is currently exploring potential areas that would be deemed viable for renewed mining and has engaged Kobold Metals of the USA to apply their advanced Artificial Intelligence technology to enhance chances of discovery.
Consolidated Gold Company of Zambia Limited (CGCZ) is a joint venture partnership between ZCCM-IH (45%) and Karma Mining Services and Rural Development (55%). Incorporated in the year 2020, this Special Purpose Vehicle is focused on developing a gold processing and trading hub in Zambia.
During the year ended 31 December 2022, the Company produced 50.7kg (2021: 46.6kg) of gold majority of which was sold to Zambia Gold Company. Income for the year ended 31 December 2022 was ZMW50.81 million (2021: loss of ZMW 44.97 million). CGCZ recorded a loss for the year of ZMW8.76 million (2021: -ZMW10.22 million).
Due to persistent lack of profits as a result of the Company’s lack of control of the supply of gold feedstock, the ZCCM-IH Board approved a divestment from CGCZ. ZCCM-IH will still recover its initial investment of US$1.568 million over a period of three years.
Limestone Resources Limited (LRL) was barely operational for the most part of the year as both primary kilns (VK1 and VK2) were not functional. The collapse of refractory bricks on VK1 in 2021 had not yet been resolved while the historical fuel system challenges on VK2 were only resolved in July 2022. These works included multiple modifications to have the kiln operate using coal as the fuel, a much cheaper commodity than Heavy Fuel Oil in the original design.
ZCCM-IH provided working capital funding to ignite and commission the kiln in August 2022 and the Kiln was fired up in September 2022. Even though the kiln is operational, it takes several months to attain stability in quality and production as different operating parameters are monitored and observed, and adjustments made accordingly. Further, LRL was not adequately capitalised for a long time and therefore continued to experience underperformance of its operating plant and equipment.
ZCCM-IH continued to support the Company for its turnaround strategies.
As a result of only being productive for the last 3 months of the year, LRL’s performance was substantially impacted, recording revenue of only ZMW26.8 million (2021: ZMW 119 million). The loss for the year was ZMW90.78 million (2021: ZMW39.7 million).
There were no dividends declared during the period under review (December 2021: Nil)
For the year ended 31 December 2022, CLM recorded revenue of ZMW 7.95 billion (US$ 466.26 million), (2021: ZMW 10.17 billion (US$ 516.69 million)). The drop in year-on-year revenue was attributable to a slight reduction in copper prices and production. CLM produced a total of 55,597 tonnes of copper for the year under review compared to copper output of 57,786 tonnes produced in the 2021 financial year.
For the year ended 31 December 2022, the Company recorded a profit of ZMW1.68 billion (US$ 99.71 million) (2021: ZMW2.83 billion (US$ 143.71 million)).
Due to the positive equity position, the Company declared dividends of ZMW 1.63 million (US$ 80 million) with ZMW 0.31 million (US$16 million) paid to ZCCM-IH (2021: Nil).
KCM’s challenges continued during the year as the fundamental problems surrounding the underdevelopment of the Konkola Deep Mining Project (KDMP) remained unresolved, resulting in the Company reporting low production from own sources and therefore having to rely on third-party copper concentrates to feed its Smelter. As a result, finished copper production was also negatively impacted.
Due to the legal circumstances surrounding the mine, KCM continued to be under the control of the Provisional Liquidator.
There were no dividends declared during the year under review (2021: Nil).
For the year ended 31 December 2021, NFCA reported revenue of ZMW 12.13 billion (US$ 620.78 million), [(December 2020: ZMW4,839.00 million (US$259.74 million)] and profit after tax of ZMW 2.35 billion (US$ 120.94 million, [(December 2020: ZMW1,131.22 million (US$60.72 million).
There were no dividends paid during the year ended 31 December 2021 (2020: Nil).
Maamba Collieries Limited (MCL) reported total revenue of ZMW3.96 billion (US$201.71 million) for the year ended 31 December 2021 [(2020: ZMW4.39 billion (US$235.78 million)) and had a profit after tax of ZMW222.03 million (US$11.28 million) [(2021: ZMW11.47 billion (2021: US$78.69 million)].
Subsequent to year end, MCL continued to experience liquidity challenges because of delayed payments from ZESCO which stood at ZMW 10.97billion (US$ 606.79 million) as 31st December 2022.
The Company undertook semi-annual maintenance shut down and forced shut down of unit 1 of the 150 MW thermal power units between 25 May 2022 and 7 June 2022. Nevertheless, plant availability was more than 85% for each of the first nine months of FY2022-2023.The Company has a positive outlook in the medium to long term after the Arbitral Tribunal issued the Consent Award to MCL on 13 December 2022, which will see ZESCO pay US$447 million to MCL by 31 August 2023.
Arbitration Proceedings against ZESCO.
The Arbitral Tribunal issued the Consent Award on 13th December 2022. Through the settlement, MCL and ZESCO have agreed to irrevocably withdraw all their respective claims brought in the arbitration. The settlement has been recorded in the form of an enforceable final consent award signed and issued by the Arbitral Tribunal on 14th December 2022. The issuance of the final consent award ended the arbitration. The Consent Arbitral Award has since been registered in the High Court of Zambia for any further course of action that the claimants could pursue The Consent Award provides that from the total unpaid arrears under the PPA and TA as at 31st October 2022 of US$578.06 million, ZESCO will pay to MCL the Agreed Settlement Amount of US$447.56 million after MCL agreed to give ZESCO a discount of US$60 million on the interest portion of the arrears and ZESCO agreed to take on the responsibility of the VAT due on the total arrears amounting to US$70.5 million.
Details of the Settlement as per Arbitration
(i) As part of the Settlement ZESCO will pay 50 percent of the Agreed Settlement Amount being US$ 223.78 million as follows:
a. US$10 million to be paid no later than 29th December, 2022;
b. US$20 million to be paid by 31st March, 2023; and
c. the remainder by 30th April, 2023.
(ii) ZESCO shall pay the remaining balance of the Agreed Settlement Amount no later than 31st August 2023.
(iii) In addition, ZESCO shall continue to pay an additional US$ 750,000 every month towards liquidating the Agreed Settlement Amount.
(iv) Should ZESCO default on any of these payment terms, the entire amount outstanding at the time of default will become payable to MCL immediately.
(v) ZESCO will indemnify MCL on demand for any liability on the VAT and any penalties and interest that may be paid by MCL in respect of the VAT.
ZESCO has, in the meantime, discharged a few payments as per the terms of the Award, leaving a balance amount of US$414.56 Million to be paid under the Award, as of 31 March 2023.
There were no dividends declared during the year under review (2021: Nil).
Rembrandt Properties Limited (Rembrandt) is a Special Purpose Vehicle between ZCCM-IH (49%), Urban Brands Asset Management (25.5%) and Sims Capital Ltd (25.5%).
Rembrandt was specifically formed to develop the Leopards Square Hotel, an 80-room hotel. The hotel’s delivery schedule has previously been affected by several factors, among them, the Covid pandemic, a change in the project’s scope, a revised development program, delayed funding disbursement, etc.
The project is now scheduled to open to the public in the second quarter of 2022.
Kansanshi Mining reported copper production of 202,159 tonnes of ore for the year ended 31 December 2021 (2020: 221,487 tonnes). The reduction in copper produced was due to an increased, unplanned maintenance and processing competent mixed and oxide ore mainly from stockpiles. Total gold produced was 128,199 ounces, a reduction from 128,409 ounces in the previous year.
For the year ended 31 December 2021, Kansanshi recorded revenue of ZMW39.57 billion (US$2.01 billion), [(2020: ZMW28.76 billion (US$1.54 billion)], owing to higher metal prices during the period. Net profit over the period was ZMW12.09 billion (US$614.26 million) [(2020: ZMW4,274.67 million (US$229.45 million)]. The increase in profitability was driven by sustained higher copper and gold prices during the year which compensated for the reduction in production volumes.
During the year, the Board of Kansanshi approved the commissioning of the S3 expansion, which involves the setting up of an additional brand-new concentrator to address the challenge of the depleting oxides that have led to a reduction in ore grades and ultimately production volumes as the mine goes deeper and transitions into a predominantly sulphide mine, from an oxide mine. The new concentrator will ensure that the mine has sufficient capacity to process additional sulphide ore to maintain and increase current copper and gold production volumes. The S3 expansion project is expected to be completed in 2024.
Dividends declared and paid during the year ended 31 December 2021 amounted to ZMW3.62 billion (US$ 184 million) , [(2020:ZMW48.65 million (US$2.3 million)].
During the period under review, Chambishi continued to be under care and maintenance due to lack of feedstock for the plant and other Strategic reasons. There were no dividends paid during the year under review (2020: Nil).