All Posts

Investee Company News

SEC happy with government stance on ZCCM-IH

CYNTHIA MWALE, Lusaka
THE Securities and Exchange Commission (SEC) has hailed Government for fulfilling its commitment to start the process of scaling down its shareholding in ZCCM-Investment Holdings (ZCCM-IH) which currently stands at 87 percent.

One of the Lusaka Stock Exchange (LuSE), listing requirements stipulates that an issuer (listed company) must have a minimum of 25 percent of each class of equity securities held by the public. Therefore no single shareholder should control more than 75 percent of the equity in any company .

SEC director for market supervision and development Mutumboi Mundia said compliance to the minimum free float levels of 25 percent is an important one which must be enforced fully to have more shares available for trading on the local bourse.

“As regulator of capital markets, we are delighted that government has commenced the process of reducing its shareholding in ZCCM-IH,” Ms Mudia said.

Last week, ZCCM-IH announced that Government has sold 15.8 million shares in the holding company worth K579 million to NAPSA.

“Increasing the number of shares available for trading is one of the things we need to address to improve liquidity [that is, the ease to buy and sell shares] on the stock market.

“We need more companies to list and offer shares the stock market and as you may be aware SEC is currently, spearheading a capital markets awareness campaign aimed at sensitising Zambians about saving and investment opportunities in the capital markets,” she said.

Ms Mundia said the regulator of the capital market is encouraging ordinary Zambians to empower themselves and secure their futures through buying shares, unit trusts, bonds and other capital market products.

“It is, therefore, in our interest to ensure these products are made available on the market. Government’s step to sell down its holding in ZCCM-IH is plausible for many reason, including that of demonstrating good governance by upholding regulatory compliance and also creating the much needed investment opportunities ,”she said.

Ms Mundia said the development to sell more ZCCM-IH shares to ordinary members of the public through the LuSE is commendable.

She urged Zambians to visit LuSE or SEC licensed stock broker for advice on the development noting that the commission’s mandate is protecting investors in the capital markets will remain a priority and it is determined to see a better savings and investment culture emerge among Zambians.
ZCCM-IH News

Sale of ZCCM-IH shares

THE announcement that more than 15 million government’s shares in ZCCM Investment Holding (IH) were offered to National Pension Scheme Authority (NAPSA) through the Lusaka Stock Exchange (LuSE) has reignited public interest.

The public interest in last week’s announcement is justifiable considering that almost 28 million more shares are yet to be offloaded on the same bourse for the local individuals and companies to buy.

This move marked the beginning of government’s process of reducing its shareholding in ZCCM IH by selling down 27.5 per cent of its shares in the company, to empower Zambians and Zambian firms economically.

According to the 2015 national budget, the Government will sell 27.5 per cent out of its 87.5 per cent shares in ZCCM-IH to the Zambian citizens as a way of entrenching economic independence.

Following last week’s announcement I have been inundated with queries on how citizens can buy some of these shares.

To ensure clarity I want to restate that in my writing I represent neither the LuSE nor the ZCCM IH and that I obtain the information through independent research.

That said, I would like to revisit an article which we featured on November 26 2014.

In that article I said the government will offload more than 44 million of its shares in the ZCCM IH to the members of the public through the LuSE.

Following the first article on the matter, readers had been writing and calling in to find out more.

For instance, Mr John Misumbi had written from the Copperbelt Province on October 29 2014 saying:

How does someone like me purchase or acquire shares in listed company like ZCCM-HI or any other company?

Just this week, Mr Emmanuel Kasonde e-mailed from Copperbelt saying:

“I would like to find out where I can find the broker who can give me details regarding the sale of shares at ZCCM HI. I am staying in Luanshya.”
Others have, equally, called to inquire more about the issue.
To respond to those readers and other followers, I had decided to come up with the article on the matter for some more information.
To start with, LuSE listing regulations stipulate that no single shareholder should control more than 75 per cent of the equity in any company.
This is to ensure that more of the citizens take part in the capital markets in the country.
So, Finance minister Alexander Chikwanda had last year directed the Securities and Exchange
Commission to ensure that all listed companies comply with that requirement.
On its part, the Government resolved to reduce its shareholding in ZCCM IH to 60 per cent from the current 87.5 per cent.
Hence the 27.5- per cent shares which are now being sold to Zambians!
That decision followed a debt settlement agreement between the government and ZCCM-IH signed on March 25 2014 in which ZCCM-IH’s net indebtedness of K1,829,298,173.06 to the government was converted into equity.

This satisfied the issuance and subscription for the 87.5 per cent of the new rights offer shares by the government.
To adeptly handle the questions I had been receiving from the readers, I sought the expertise of the LuSE and Stockbroker Zambia (SBZ) on the matter.
My research findings from the two entities showed that ZCCM-HI’s total shares were about 160.8 million and the 27.5 per cent which the government intended to offload to the public through LuSE translated into 44, 252,238 shares SBZ indicated then that members of the public who were willing and able to purchase ZCCM-IH shares, even before the floatation of the additional 27.5 per cent, were at liberty to approach the nearest broker on how to purchase the shares.
Apart from the then pending 27.5 per cent shares which would be floated by the government at that time ZCCM-IH had a LuSE free-float of 12.5 per cent.
The 12.5 per cent shares followed the raising of fresh capital on the 12.5 per cent portion of the rights offer, for shares owned by the minority shareholders, which was underwritten by NAPSA on a claw-back basis.

According to SBZ, the citizens could participate by visiting any of the LuSE brokers to open up a brokerage account and purchase the shares.
The broker will advise on any further requirements but it suffices to state that all Zambian citizens are most likely to be given first priority.

This is just indicative and not set in stone. ZCCM-IH is still going through its internal processes to finalise how best they can offer these 27 per cent shares to investors,

SBZ had stated in a response to my query.

Another critical question was that of the minimum amount which one could require to participate in this and any other share acquisition.
To open a brokerage account one requires a minimum amount of K256, which means that the initial investment is likely not to go below that amount.
According to LuSE tranche one of the Government’s sell-down of 15,850,631 shares out of its total 43,811,868 ‘B’ shares in ZCCM-IH transacted in one trade.
It resulted in a turnover of K570,622,716 and a simple calculation shows that each share cost K36.
That leaves almost 28 million shares which can be bought by Zambians.
ZCCM-IH News

Zambia Sells $79 Million Mines Company Stake to Pension Fund

Zambia sold a 571 million kwacha ($79 million) stake in its mining investment company to the national pension fund as the government seeks to plug a growing budget deficit.

Zambia’s National Pension Scheme Authority bought the 15.9 million shares the government sold in ZCCM Investments Holdings on Tuesday, David Chewe, investment director at the fund, said in an e-mailed response to questions on Wednesday. The Lusaka Stock Exchange announced the government’s sale of the shares yesterday.

The deal is the first step in Zambia’s planned reduction of its stake in ZCCM-IH from 87.5 percent to 60 percent. The proceeds will help to cover a fiscal gap forecast by the International Monetary Fund to climb to 7.7 percent of gross domestic product this year.

It’s a milestone in our country’s history,” ZCCM-IH Chief Executive Officer Pius Kasolo told reporters in Lusaka Wednesday. The company’s shares are “the best performing on the Lusaka Stock Exchange,

he said. “They’re really sought after.”

ZCCM-IH, based in Lusaka, the capital, holds minority stakes in the local units of companies including First Quantum Minerals Ltd., Glencore Plc and Vedanta Resources Plc. The company is the successor to Zambia Consolidated Copper Mines, which held the government’s stakes in the country’s copper operations after they were nationalized.

NAPSA bought the shares at 36 kwacha each, according to calculations by Bloomberg, representing a 10 percent discount to the price of ZCCM-IH shares on the Lusaka Stock Exchange. NAPSA added to its holding of 8.3 million shares it acquired in July through underwriting a rights issue the company held. Its combined shareholding amounts to 15 percent of ZCCM-IH’s ‘B’ shares, according to calculations by Bloomberg using data on the mining investment’s company’s website.

Investee Company News

Nava Bharat’s Zambia project to achieve financial closure by June-end

Hyderabad-based Nava Bharat Ventures Limited is likely to achieve financial closure by this month end for a 300-Mw coal-fired thermal power project being set up in the African nation, Zambia.

The power project is an extension of the coal mine operations of Mamba Collieries Limited (MCL), in which the company’s wholly-owned subsidiary Nava Bharat (Singapore) Pte Limited holds 65 per cent stake. The balance is held by ZCCM-Investment Holdings Plc, an investment arm of the government of Republic of Zambia.

The company has already signed a power purchase agreement (PPA) for a 20-year period with the government of Zambia and the government’s decision to extend the guarantee against the utility’s payment obligation as insisted by the project lenders has finally cleared the way for the financial closure, according to GRK Prasad, executive director of Nava Bharat Ventures.

Nava Bharat has so far invested about $ 223 million in the project mostly as its equity out of a total funding requirement of $830 million for the coal and power projects. The company had revived the coal mining operations in MCL, which is estimated to have 140 million tonnes of high grade coal and thermal coal reserves spread on 1070 hectares out of a total concession area of 7,900 hectares.

Responding to a question in a recent earnings conference call in this regard, Prasad said the coal mine operations had achieved break even in 2014-15 with a total volume of 100,000 tonnes of high-grade coal earning about $ 48 a tonne.

“Our Zambian company — Mamba Collieries Limited has achieved considerable progress with reference to debt financing. After the latest stipulation of lenders on the enhancement of security mechanism, the Zambian company has been able to obtain the approval of the Government of Zambia for a callable guarantee against the utility’s payment obligation for power purchase,” Prasad said.
Corporate Announcements

ZCCM-IH | Refund of Withholding Tax

UPDATE TO SHAREHOLDERS BASED IN FRANCE
REGARDING THE
REFUND OF WITHHOLDING TAX OF 15% LEVIED ON THE
ZCCM­IH DIVIDEND

Introduction

At the Annual General Meeting held on 7 October 2014, the shareholders of the Company approved a Final Dividend of K1.56 per share for the period ended 31 March 2014.

Subsequently, Dividend payments were made from Monday, 10 November 2014. Following Dividend payments to shareholders based in France, an issue regarding withholding tax on dividends paid to shareholders in France arose. The matter was pursued with the relevant authorities, specifically, the Zambia Revenue Authority (ZRA) regarding the provisions of the Double Tax Agreement (DTA) of 1950 signed between Zambia and France. The DTA provides for exemption of withholding tax at source. This means that dividends payable to shareholders domiciled in France by a Zambian company are legally not subject to withholding tax. This means that the shareholders on whom a withholding tax of 15% was levied on the ZCCM­IH dividend will be refunded the withheld tax once the process underlined below is fulfilled.

The ZRA will honor the provisions of the Double Tax Agreement subject to each individual shareholder providing the French tax residence certificate and completing the WHT3 form.

Required Action

If you are a shareholder who received a dividend payment, you are required to do the following:

  1. Provide proof that you have received a dividend payment by sending a copy of the dividend warrant
  2. Provide a copy of the French Residence Certificate
  3. Provide Bank details including: Bank Name , Account Holder’s Name, Swift Code and

Kindly note that the process will take some time and it is entirely upto each shareholder to provide the correct details and submit all the requirements on time. You have upto 30 September 2015 to submit the required documentation after which you will have to deal directly with ZRA.

Once you have all the required documentation, kindly send these to the following address:

Corpserve Transfer Agents
House No. 6
Mwaleshi Road, Olympia Park,
P.O. Box 37522
Lusaka, Zambia
Email: info@corpservezambia.com.zm

Issued on behalf of ZCCM Investments Holdings:

C Chabala
Company Secretary

Lusaka
Date: 4 June 2015

Investee Company News

KCM importing toxic copper concentrates

KONKOLA Copper Mines has started importing copper concentrate from Chile which contains arsenic, a toxic chemical element that causes cancer if exposed to humans in uncontrolled quantities.

But the mining company says it has taken the necessary precautions to ensure that “this and all impurities are captured and safely stored so that there is no adverse impact on the environment or human health.”

According to studies, concentrated arsenic content can contaminate groundwater, leading to widespread epidemics and if exposed in larger quantities to humans, the brittle steel-grey semi-metal can cause arsenic cancer.

Technical sources at KCM also feared that the copper concentrate the company was importing from South America could be harmful to humans and the environment.

The sources said the workers who are handling the copper concentrate feared for their health as the consignment from Chile had levels of arsenic as high as four per cent.

“If you recall from your chemistry, arsenic is not like any other ordinary chemical friendly to the environment and human beings. Arsine gas is highly toxic. The toxicity is due to arsenic’s effect on many cell enzymes, which affect metabolism and DNA repair. Medical experts will tell you that long-term exposure to arsenic, either in drinking water or any other source, can cause cancer in the skin, lungs, bladder and kidney. It can also cause other skin changes such as thickening and pigmentation, “ sources said.

“We are not saying KCM has not done anything about this. They have put up strict safety and protection measures and that’s why it is important that the mining firm tells the nation how it is handling this highly contaminated concentrate to allay fears because the four per cent of arsenic gas is too much for any mine in the world for smelting. Other means maybe must be explored.”

The sources said it was believed that the first consignment had a total quantity of 3,000 tonnes of copper concentrate and about 900 tonnes had so far been received.

And responding to a press query, KCM public relations manager Shapi Shachinda stated that arsenic content was common in copper concentrates.

“The concentrates contain some amounts of arsenic, which is a common component of copper concentrates, depending on their source. KCM has taken the necessary precautions to ensure that this and all impurities are captured and safely stored so that there is no adverse impact on the environment or human health,” Shachinda stated.

“The Zambia Environmental Management Authority (ZEMA) has been informed accordingly about the imports of the Chilean concentrates”
He said the concentrate is blended with KCM’s own concentrates and other third party concentrates.

“The company will smelt these concentrates in its Nchanga smelter. The source of the concentrates is the Chilean state-run Codelco, which is the world’s largest copper producer and was once the technology partner of the ZCCM,” Shachinda stated.

“The purchases are part of a programme that KCM is undertaking to ensure that it operates the Nchanga smelter at full capacity. With changes in regulations around VAT refund, it has once more become viable for KCM to purchase concentrates from other local and foreign mining companies and smelt them at its own facilities. Currently, KCM is blending its concentrates with those from mines in the northwestern province and the Democratic Republic of Congo. It is a common practice globally for smelters to buy concentrates where they have excess smelting capacity.

Industry News

Mining rights applications will be decentralised

GOVERNMENT says it is in the process of decentralising applications for mining rights and renewal of licences to help grow Zambia’s mining sector to enable it become competitive on the international market.

Minister of Mines, Energy and Water Development Christopher Yaluma said application for mining rights and renewal of licences will be lodged in regional offices soon.

“This move will help market Zambia‘s mining sector and also help maintain our competitiveness on the global front,” he said.

Mr Yaluma was speaking in Kitwe when he officially opened the Copperbelt Mining Trade Expo and Conference (CBM-TEC)’ which has attracted multinational mining companies and local suppliers.

Mr Yaluma said since privatisation of the industry Government has pursued a mining policy aimed at ensuring a conducive environment to encourage private investment in the exploration of minerals.

“This is expected to result in development of a profitable and sustainable private sector-driven industry for the development of the country,” he said.

Mr Yaluma said the PF Government is more than committed to providing an enabling environment to ensure continued growth of the industry.

Government considers captains of the industry as partners in developing the sector and the country at large.

He said Government acknowledges the importance of a stable policy and regulation framework for the mining industry.

The revision of the mineral resources development policy in 2013 and ongoing review of the Mines and Minerals Development Act of 2008 are among some of the measures Government has undertaken to ensure the continued existence of a favourable investment climate and maximise benefits from the sector.

Government, through the geological survey department has embarked on mapping the remaining 40 percent of the country.

Electricity is a critical resource in the country’s mining industry, the coming in of new mining firms in Zambia has increased the demand for electricity.

ZESCO is undertaking a number of projects to increase power generation in the country.

On road and railway line infrastructure development, Mr Yaluma said it is vital to upgrade the networks considering that Zambia is a land-locked country.

He also called on stakeholders to supplement Government’s efforts in bettering the lives of the people through their social corporate responsibility.

And Zambia Chamber of Mines president Jackson Sikamo said the mining industry has created 90,000 jobs in Zambia.

Mr Sikamo said a lot of new developments are coming up in the mining industry through new investments by stakeholders.

Industry News

Government sees end to mine tax impasse

The Ministry of Mines says Zambia is still capable of beating the Democratic Republic of Congo’s copper production output because of the country’s favourable conditions.

And the ministry says the ongoing mining fiscal regime impasse that is disturbing the sector will soon be resolved and is sure “everyone will be happy.”

According to the 2015 Deloitte State of Mining in Africa report, new data shows that copper production in the DRC will continue to outstrip Zambian production for the next five years, despite being ranked the least attractive investment destination on the continent in terms of ‘ease of doing business’.

The DRC managed to produce over 900,000 tonnes of copper in 2013, registering a sharp rise, surpassing Zambia’s 754,916 tonnes produced that year.

According to the copper production profile for both countries, production estimates are projected to be around 1.5 million metric tonnes for Zambia, against 1.7 million metric tonnes for the DRC by 2020.

But mines acting permanent secretary Paul Chanda, in an interview, said Zambia was still very capable of beating its northern neighbour as the former enjoyed better socio-economic conditions.

“We are very capable. There are a lot of factors involved in this industry and we have a very stable political environment. Economically, we are doing better, so we command that confidence with the financing institutions, so we will catch up,” he said.

Chanda said the government was in the process of lining up new investors, which would also be expected to add to existing production.

“We are inviting more investors in this industry. It is competitive, but we are trying. Some of our mines are very old, but we are opening up like at Mopani [who are] starting new shafts and when those are completed and smelters coming up, investors will also have to increase production to make use of those huge investments,” he added, explaining that the DRC was only doing well now because they have higher grade copper.

And Chanda said discussions with mining houses over the raised mineral royalties were progressing well.

“They (discussions) are progressing well, although it is still at preliminary level just by way of meeting, so there is a lot of hope. I am sure everyone will be happy since all parties are involved,” said Chanda, without disclosing details of whether cost structures for individual mining companies are critically being analysed.

Industry News

Zambia Declared Most Peaceful Country In Africa

The concept of peace is difficult to define – and even more difficult to measure. However, since 2006 the Global Peace Index has defined peace as the “absence of violence” and has sought to determine what cultural attributes and institutions are associated with states of peace. The most recent ranking has Zambia as the most peaceful African country. Somalia is considered the least peaceful country followed by South Africa and Sudan.

The Global Peace Index (GPI) defines a nation at “peace” as being one “not involved in violent conflicts with neighboring states or suffering internal wars” – which is sometimes called “negative peace” (i.e., absence of war). This is more measurable and can be used as a starting point to identify the attributes of “positive peace” (structures and institutions that create and maintain peace).

Top 5 peaceful countries in Africa are as follows:

  1. Zambia
  2. Island of Mauritius
  3. Botswana
  4. Chad
  5. Burundi
Investee Company News

GEMFIELS sets another record at Lusaka Emerald auction

At least $14.5 million has been realized at the seventh Kagem local auction of precious stones held in Lusaka last month, Gemfields, has announced.

Chief Executive Officer Mr. Ian Harebottle said the stones auctioned were of lower quality rough emerald and Beryl from Kagem mine in Ndola rural.

“”We’ve set another record for realized per carat prices at an auction of lower quality emerald and beryl, and have now completed seven successful auctions in Zambia, all during the last 22 months.

It is pleasing to see a total of 88% of the total value of the lots placed on offer being bought and Zambian emeralds continuing to enjoy such firm demand.

Gemfields is increasingly becoming the supplier of choice for many of the world’s leading polishing and jewellery-manufacturing houses.

We look forward to our auction of lower quality Montepuez ruby in Jaipur later this month where we believe the market is as excited as we are to be a part of this first ever offering of such a considerable volume of non-domestic ruby rough in India.” Said Harebottle.

A total of 21 companies bid in what was the third Gemfields auction of Kagem emeralds during the current financial year (ending 30 June 2015). The auction was the seventh to be held in Lusaka, a practice which commenced in April 2013.

The auction saw 10.1 million carats of lower quality emerald and beryl extracted from Kagem placed on offer, with 19 of the 26 lots offered being sold, generating auction revenues of USD 14.5 million.

Kariba Minerals also participated for the first time in the Lusaka auction. The firm place an amethyst bid. Gemfields has 50 percent interest in Kariba Minerals.

This auction of rough amethyst from Kariba Minerals Limited (in which Gemfields has a 50% interest) was the first to be held within Zambia. Gemfields has hosted only one prior rough amethyst auction which took place in Jaipur in March 2011 and was used to test demand for amethyst in that market.

The amethyst auction saw 27.7 million carats of higher quality amethyst extracted from Kariba placed on offer, with 13 of the 14 lots offered being sold, generating auction revenues of USD 0.45 million. The amethyst auction realized an overall average value of 1.77 US cents per carat.