First Quantum, Metorex mining increase Copper production, turnover in Zambia

Two of some of the leading multinational mining companies operating in Zambia, Africa’s leading copper producer, have found a niche for their investment and have this year increased mineral production and also increased their earnings.

First Quantum Minerals Limited, the Australian listed and diversified miner, with operations in Zambia at Kansanshi and the new ‘Greenfield’ US$2 billion Kalumbila Mine in north western province increased its copper production by four percent during the last three months to 30 June this year to 107,808 tons compared to 103.694 tons three months prior.

Copper sales per ton rose over 10 percent to US$114,449 against US$95,491 during three months ending 30 June this year at Kansanshi mine in Zambia as the cash cost of copper production per pound also increased to US$1.45 against an earlier US$1.34 three months earlier.

Nickel production in contained tons dropped to 10,651 against 11,927 three months earlier, although realized copper prices/per pound rose to US$12,223 against US$10,875 recorded three months prior to 30 June, the company said.

Gold sales rose US$60,135 against US$59,381 during the three months to 30 June this year while gold production dropped 60,723 ounces against 63,567 ounces three months prior to the period under review, it said in its report.

Sales revenues increased to US$945.1 million against US$869.3 million during the three months ending 30 June with gross profit rising to US$293 million against US$201.1 million.

Expected group production has been revised to be between 418,000 and 444,000 tons of copper, 45,000 and 48,000 tons for nickel, 221,000 tons and 242,000 tons for gold between 55,000 and 60,000 tons for Zinc respectively.

It has revised its capital expenditure for the group at US$2.4 billion from an initial US$2.2 billion, excluding capitalization of any pre-commercial production and capitalized interest.

Metorex Minerals Ltd. achieved a turnover of US$60.4 million at its owners Chibuluma Mine in Zambia during the six months ending 30 June this year as profit before tax re declined to US$14,490 at the end of the six months ending 30 June this year from US$15,888 recorded a year earlier.

Despite recording an increased production of the red metal to five percent, turnover for the company during its operations over six months remained flat chiefly on account of reduction in average copper price.

At 30 June, this year, Metorex Ltd’s Chibuluma mine spent US$3.8 million on development of its ‘Greenfield’ Chifupu copper project on the outskirts and south of Kalulushi on the Copperbelt, intended to extend the mine lifespan to the year 2020 from the estimated 2017.

To boost mine operations and increase copper outturn Metorex Mining, the owners of the Chibuluma mine have approved about US$24 million to be spent on the development phase of the Chifupu project and ensure it is done as scheduled, says Eustus Munsaka, Metorex’s Chief Financial Officer in his report.

During the period the company paid US$5.882 million to shareholders in interim dividends.

First Quantum Minerals and Metorex are among the multinational miners that emerged into Zambia after the privatization of the mining conglomerate-Zambia Consolidated Copper Mines (ZCCM) in the late 1990s as Zambia sought to promote private sector ownership of the mines in the copper-rich country.

Since the privatization of the mines, an investment of US$8 billion has been ploughed into the mines with copper production projected to rise to 1.5 million tons by next year and later rise to over 5 million tons by 2022, according to projections by the chamber of mines of Zambia, basing on the oncoming projects at various mining companies in the country.


Source: Mining News Zambia

Mopani Copper Mines injects US$15 million in artisanal training scheme

Mopani Copper Mines, a unit of global commodity trader and diversified miner, Glencore Xstratra, has injected more than US$15 million in reviving an artisan training school in Mufulira, one of its operational areas following calls by the Government to improve skills training in the country and reduce on the industry relying on expatriates.

Previously, Zambian mines under the then Roan Consolidated Copper Mines (RCM) and Nchanga Consolidated Copper Mines (NCCM)-which together formed Zambia Consolidated Copper Mines (ZCCM), various mining companies had established training skills centres in various towns.

This was meant to encourage Zambians to learn various trades as part of the country’s effort to reduce on labour outsourcing, which saw many Zambians learn the ‘various trades’ and rose to senior ranks.

Among some of the Zambians that rose to senior positions at the time of ZCCM included then Superintendent, Albano Mutati, Pius Mambo and Francis Kaunda, among others as part of the Zambianisation of jobs by then President Kenneth Kaunda ostensibly to encourage the locals to run the mines.

However, with the continued outcry from Government on the need for the industry to maximize on locals to take up senior jobs and reduce on outsourcing, which has seen various Zambians fail to rise to senior positions, Mopani Copper Mines has taken a step ahead in meeting the desires of the Government.

In a statement by the miner, US$15 million (about K90 million) has been ploughed into constructing (reviving) a central training centre in Mufulira, which the company then under RCM had before the unbundling of the ZCCM conglomerate, to mitigate the critical shortage of artisan skills across Zambia’s mining industry.
Mopani Copper Mines chief executive officer, Danny Callow, says the continued growth of the copper mining industry in Zambia has led to a shortage of key technical skills and unavailability of suitably qualified and experienced local artisans. This situation necessitated the establishment of the training centre.

Callow stated that the training centre had been equipped with the world’s best engineering equipment and had so far enrolled over 140 students in its first intake. A total of 200 apprentices would be enrolled by the end of 2014.

Additionally, the Technical, Education, Vocation and Engineering Training Authority (TEVETA) accredited Centre, has come in handy and is offering courses under Mechanical Engineering that include, Fitting and Machining, Plating and welding, Heavy Mining Equipment Diesel Mechanics and Rigger Rope man. In Electrical Engineering, the school will offer courses in Electrical, Auto Electrical and Instrumentation.

The course being offered to the miners, Callow, added would last between two and three years. This was similarly the trend before under ZCCM, in which many Zambians learnt various trades ranging from fitting, electrical, boiler makers, metal fabricators and welders, among others.

It is envisaged, according to the syllabus being offered that the first class of fully trained artisans is expected to graduate in 2016 in which training will be accessible to Zambian school leavers and other local candidates seeking qualifications leading to a career within the mining industry.

According to Callow, the miner would spend a minimum of approximately US$20,000 annually on each apprentice in standard training and other related costs. Other than offering the training for free, Mopani would also provide the students with upkeep allowances, meals and accommodation and recreation facilities.

More than 30 years ago since Zambia’s mining industry became active, leading the country into becoming Africa’s leading copper producer-a feat it has maintained for the past 26 years, Zambia had well-established and funded training institutes that produced highly-qualified artisans and technicians for the mining industry.

Regrettably, the slowdown in copper prices on the international metal market in the 1970s which saw Zambia contribute a paltry 250,000 tons per annum from an average 700,000 tons earlier led to reduced investment in mining and training infrastructure.

Zambia was eventually forced to abandon artisanal training programmes on account that most undergraduates opted to pursue engineering courses at university level, Callow notes in his statement adding that the few remaining artisans could not satisfy the growing industry demand which led to the increased cost of hiring artisans.

During a recent workshop in Kitwe, northern Zambia, Chamber of Mines of Zambia President Emmanuel Mutati, an engineer himself, lamented the low skilled manpower-especially at Artisanal levels a situation he said needed to be reviewed to prop up the industry.

He attributed the decline to the development of the mines in north western Zambia, which has taken most of the skilled laborers to start up new projects in the area, now dubbed “The new Copperbelt” because of its vast mineral resources including gold and uranium.


Source: Mining News Zambia

Zambia’s IDC Plans Bond Sales for State-Owned Companies

Zambia’s Industrial Development Corp. said it plans to sell bonds and stakes in state-owned companies to boost investment and economic growth in Africa’s second-largest copper producer.

The IDC, as the company is known, plans to restore profits at the loss-making government entities and reinvest any dividends, Charles Mate, corporate affairs director, said in an interview in Lusaka today. The creation of the IDC this year doesn’t signal a return to nationalization, said Andrew Chipwende, operations director.

“With the IDC we will probably be undertaking privatization even more vigorously,” through publicly listing more state-owned companies, Chipwende said. “We are actually setting a platform to undertake even further privatization.”

Zambian President Michael Sata, who was voted into office in 2011 on pledges to reduce unemployment and poverty, announced plans for the IDC and a sovereign wealth fund in January. Less than 1 million of the 14 million population in the southern African nation are formally employed, according to government estimates.
“There is a fundamental desire for job creation,” Mate, who was managing director at Stockbrokers Zambia Ltd. before joining the IDC, said. “We have an unemployment crisis.”

One of the companies being housed in the IDC is ZCCM Investments Holdings Plc, which was created to hold minority stakes in mines after the government reversed the nationalization policies of former President Kenneth Kaunda. Others entities include Zambia Railways Ltd., Zambia State Insurance Co., and Zambia Forestry and Forest Industries Corp.

New industries the IDC plans to invest in through partnering with private companies include agriculture, horticulture, manufacturing, renewable energy and tourism, according to Chipwende and Mate. Zambia is seeking to reduce dependence on copper, which accounts for about two-thirds of export earnings.
Most of the profits the IDC makes will go toward Zambia’s sovereign wealth fund, managed by the central bank, and the rest will be reinvested, said Chipwende.

Copper output in Zambia declines 2 percent-Central Bank

Zambia’s copper outturn has continued to fluctuate-barely days after the country; Africa’s leading copper producer, raised its bar of the red metal on the international metal market, according to the Lusaka-based Bank of Zambia.

According to the data by the Central Bank-copper production from Zambia took a downturn-declining 2.5 percent in the first quarter this year compared to a year earlier, says Bank of Zambia Governor, Michael Gondwe.

In his address to Lusaka-based journalists, August 5, the Bank says copper output dropped 2.5 percent to 276, 075.0 tons from 283,042.3 in the first quarter of 2014. On a year-to-date basis, copper production stood at 559,117.3 tons representing 16 per cent higher than the 480, 892.6 tons produced in the first half of 2013.

Earlier, Bank of Zambia stated on its website that copper production in Zambia rose to over 400,000 metric tons in the first quarter of 2014 from around 300,000 tons produced in the same period last year.

Copper production rose to 473,249 metric tons between January and May from 399, 515 tons produced in the same period last year, the Lusaka-based bank stated.

The development was chiefly attributed to the increase in the mineral output to new developments currently taking place in the mining sector across the country. Copper production increased by 18 percent on year, during the period under review. “Copper export earnings grew by 7.4 percent to US$3,209.1 million during the first five months of the year from US$2,987.5 million recorded over the same period last year, driven by higher export volumes,” the Bank said according to data posted on its website recently.

Copper export volumes, at 477.485.3 metric tons, were 19.4 percent higher than 399,919.8 metric tons recorded during the corresponding period in 2013. The average realised price of copper, however, declined by 10 percent to US$6,720.86 per ton from US$7,471.77 registered during the same period last year.

However, it said the decline in copper prices by 9.1 percent to the US$6,691.00 per ton as at June 11 this year from US$7,360 per ton at the end of December 2013, impacted on market sentiment.

Government policy would remain focused on diversifying the export base through supportive interventions in economic sectors and activities with the greatest potential for exports.

Local contractor commends joint venture partnership initiative by Mopani

Mopani Copper Mines Plc has implemented a number of programmes aimed at empowering and building capacity of local contractors and other small and medium enterprises in Zambia. The Company is encouraging formation of joint venture partnerships between local contractors and internationally-recognized and well-established foreign firms wishing to do business with the mining company. This has cheered the local contractors who have commended Mopani for coming up with the initiative.

One such joint venture supported by Mopani is between Shawonga Enterprises Limited of Zambia (33.3%) and ZINPRO Engineering of South Africa (66.7%). The two have partnered to form ZINPRO Zambia Limited, a company specialized in Shaft and structural steel rehabilitation works. ZINPRO Zambia has been engaged by Mopani to undertake massive refurbishment of the shaft infrastructure which Mopani inherited in a highly dilapidated state at privitisation.

Mopani Chief Executive Officer explains the company’s policy on joint ventures and the benefits that will be derived from supporting these partnerships:

“We have a deliberate policy that encourages foreign manufacturing companies wishing to do business with us to partner with local companies or involve Zambians in their shareholding structures. This, we believe, will help to build capacity of local companies, encourage skills transfer and give a competitive edge to the local firms whilst improving quality and efficiency,” said Mr. Callow.

Mr. Callow said initially attention was directed at improving processing plants and that time had come to address mining related issues.

“At privitisation we inherited highly dilapidated infrastructure both on surface and underground. Our major focus initially was to upgrade the Smelter to eliminate SO2 emissions and improve its efficiency. This project was completed 15 months ahead of schedule in March 2014 and is currently doing very well.

“Our focus now is to improve efficiency and productivity of underground operations. Maintenance of vertical shaft infrastructure is a highly specialised job and there is lack of local skills in this regard due to many years of lack of investment. Every month Mopani loses about 6000 metric tons of copper due to shaft shutdowns to facilitate maintenance.

“By bringing in shaft experts, ZINPRO Zambia Limited, Mopani will address the problem of frequent shutdowns and achieve continued production and less maintenance costs. This will also make shaft maintenance skills available in Zambia through the exchange that will take place as a result of the partnership,” Said Mr. Callow.

ZINPRO Zambia Operations Director, MrLondon Mwafulilwa has hailed Mopani for coming up with the initiative of supporting joint ventures. He has reiterated that the move will benefit all stakeholders involved, including the nation.

“First and foremost this venture is important to our Company because we are able to realize the full potential of the skills that are available, blend them with those of experienced hands and be able to participate in improving productivity in the mining industry as well as grow the mining support base. We are also able to provide employment and develop the local skills of the Zambian personnel,” said Mr Mwafulilwa.

He also reiterated that by partnering with ZINPRO Engineering, the local company has been able to upgrade its profile and working culture and expects a lot of future benefits.

“The ZINPRO Team has brought on board experience and an adorable working culture which most of our technical people do not have. The approach to how we look at the entire business has changed because we now drive solutions as compared to merely seeking contract opportunities.

“In the long term, there will be appropriate technology transfer and in the next 5/10 years we should have in the country dependable and reliable teams to be able to manage such projects without external expertise.”

Mr Mwafulilwa appealed to other local contractors to be consistent and prove their worth as opposed to seeking quick rewards. He further commended Mopani for the initiative.

“It is important for local contractors to remain focused and concentrate on their core business. This is the only way the mining industry will benefit from their input as they become specialists in their fields.

“Shawonga Enterprises Limited has been consistent for over 22 years of operation and therefore gained the necessary recognition from the players in the industry to a point where we are now able to contribute positively to the growth of the industry.

“I would like to commend Mopani for supporting such ventures as they create sustainable growth and support for the mining industry which can then be passed on from generation to generation. This is good not only for the mining industry, but the country as a whole especially that such specialised skills are getting fewer and fewer globally.

In order to promote efficiency in mining, Mopani is promoting other joint ventures between International world class contractors and solid, dependable local Zambian Contractors to form a Zambian owned, world-class mining contracting company by introducing expert skills and resources. This should lead to improved effectiveness and efficiency. The Company is further encouraging value addition and local procurement by empowering local manufacturers of various mining inputs such as cables, mill balls among other things.

Other local contractor development initiatives by Mopani include giving preference to local contractors before a tender can be extended to foreign contractors, Conducting capacity building workshops and trainings in addition to creating new business linkages for local contractors by assisting them to do business with other sister mines across the borders.

“Formation of joint venture partnerships, where Zambian companies take an equity stake, and add significant Zambian expertise to the newly formed company, create a win-win situation for all stakeholders. Empowering local contractors is a great step forward in developing the mining industry in Zambia in line with Government’s local content strategy,” Said Mr. Callow.


Source: Mining News Zambia

ZCCM-IH | Renounceable Claw­back Rights Offer

RESULTS OF THE RENOUNCEABLE CLAW­BACK RIGHTS
OFFER

INTRODUCTION
ZCCM­IH shareholders are referred to the Declaration Announcement dated Friday, 11 April 2014, and the Finalisation Announcement dated Wednesday, 16 April 2014, as well as the Circular to Shareholders dated Monday, 12 May 2014, setting out the details of the ZCCM­IH Renounceable Claw­back Rights Offer of 8,920,957 “B” Ordinary Shares subscribed for by the National Pension Scheme Authority (“NAPSA”), on the basis of 4 (four) new Ordinary Shares for every 5 (five) Ordinary Shares already held as at the Record Date, Friday, 09 May 2014, at a subscription price of ZMW 29.23 per new Ordinary Share.
The Claw­back Rights Offer opened on Monday, 12 May 2014 and the closing date was extended from Friday, 13 June 2014 to Friday, 27 June 2014 following delays with the postal delivery of the Claw­back Rights Offer Circular document to shareholders. The extension was, therefore, necessitated by the need to ensure that all shareholders were given sufficient time and opportunity to take any one of the prescribed courses of action set out in the Circular.

RESULTS
The results of the Claw­back Rights Offer are as follows:

SUMMARY RESULTS Number of Claw‐Back
Rights Offer Shares
Percentage of Claw‐Back
Rights Offer Shares
Claw‐back Rights Offer Shares available for subscription 8,920,957 100.0%
Total Claw‐back Rights Offer Shares subscribed for by minorities 651,545 7.3%
Claw‐back Rights Offer Shares allocated to NAPSA 8,269,412 92.7%

ISSUE OF CLAW­BACK RIGHTS OFFER SHARES
The new Claw­back Rights Offer Shares will be issued on Friday, 25 July 2014 and listed on the Lusaka Stock Exchange (“LuSE”) on Monday, 28 July 2014.

Qualifying Shareholders registered as such on the Record Date (or their renouncees), who validly subscribed for Claw­back Rights Offer Shares, will have their LuSE Central Shares Depository accounts credited with the new Ordinary Shares by Monday, 28 July 2014.

Lusaka, Zambia ­ 24 JULY 2014

Metorex Chibuluma Mines to spend US$26 million for explorations, official

Metorex Mining Limited, the South African based mid-tier mining group plans to spend over US$26 million to undertake exploration activities at its Chibuluma mine in Zambia over the next two years, says a mine official.

General Manager Jack Sikamo said while the company already spent US$12.7 million in strategic capital expenditure from 2010 to 2013, more resources have been earmarked in capital expenditure for 2014 and 2015.

In a paper presented during a workshop in Lusaka for various stakeholders recently, Sikamo stated that the company is also looking for acquisitions, explorations and joint venture partnerships with local or foreign companies to expand its operations in the country.

However, the miner is facing key challenges in the operations of the mining companies, among others, falls of ground, copper price reduction and increasing cost of production.

Government legislation without engagement, current resources mined out by 2020, skills retention, underground collisions, men/machines, safety, supervisor safety culture, historically supervisor- dependent and equipment availability and reliability are other challenges facing Metorex Mining Limited, a company established in 1995.

Chibuluma mine, formerly under Zambia Consolidated Copper Mines (ZCCM) and which produced 18,000 metric tonnes of copper last year, is expected to ramp up production to 19,000 metric tons of the red metal this year.

Metorex, a fully, owned subsidiary of Jinchuan International, was created with a vision to expand and explore activities in African base metal industry, based primarily on copper and cobalt production.

The company employing over 3,700 employees, generated group gross revenue US$408 million on copper sales of 45,000 metric tons and 3,000 metric tons of cobalt in 2012. It seeks to increase its outturn despite the challenges faced.

Chibuluma Mines plc is a modern mechanized underground copper mine owned 85 percent by Jinchuan Group Company Limited and 15 percent by ZCCM-IH plc.

The planned extensive exploration work is expected to extend its mine life by several years and significantly increase its minable reserves of both cobalt and copper.

Metorex Mining Limited, the South African based mid-tier mining group plans to spend over US$26 million to undertake exploration activities at its Chibuluma mine in Zambia over the next two years, says a mine official.

General Manager Jack Sikamo said while the company already spent US$12.7 million in strategic capital expenditure from 2010 to 2013, more resources have been earmarked in capital expenditure for 2014 and 2015.

In a paper presented during a workshop in Lusaka for various stakeholders recently, Sikamo stated that the company is also looking for acquisitions, explorations and joint venture partnerships with local or foreign companies to expand its operations in the country.

However, the miner is facing key challenges in the operations of the mining companies, among others, falls of ground, copper price reduction and increasing cost of production.

Government legislation without engagement, current resources mined out by 2020, skills retention, underground collisions, men/machines, safety, supervisor safety culture, historically supervisor- dependent and equipment availability and reliability are other challenges facing Metorex Mining Limited, a company established in 1995.

Chibuluma mine, formerly under Zambia Consolidated Copper Mines (ZCCM) and which produced 18,000 metric tonnes of copper last year, is expected to ramp up production to 19,000 metric tons of the red metal this year.

Metorex, a fully, owned subsidiary of Jinchuan International, was created with a vision to expand and explore activities in African base metal industry, based primarily on copper and cobalt production.

The company employing over 3,700 employees, generated group gross revenue US$408 million on copper sales of 45,000 metric tons and 3,000 metric tons of cobalt in 2012. It seeks to increase its outturn despite the challenges faced.

Chibuluma Mines plc is a modern mechanized underground copper mine 85 percent owned by Jinchuan Group Company Limited and 15 percent by ZCCM-IH plc.

The planned extensive exploration work is expected to extend its mine life by several years and significantly increase its minable reserves of both cobalt and copper.


Source: Mining News Zambia

CEC sues KCM over US$30 million power debt

Copperbelt Energy Corporation, Zambia’s supplier of electricity to mining companies on the Copperbelt has dragged Konkola Copper Mines to court over a US$30 million debt it is owed based on an internal agreement, the Post reported.

Citing an affidavit filed before the Lusaka High Court, CEC wants KCM, a unit of London Listed Vedanta Resources Plc, to pay it US$30,923,091.92 being the amount due and owed to it for the supply of electricity power.

The power company also seeks the High Court’s indulgence to order KCM to pay the above amount with interest as well as costs arising from the court matter.

Lusaka High Court

The electricity power supply transaction, the paper adds, was done pursuant to the Power Supply Agreement made between the two parties on 31 March 2000, as amended. CEC had agreed to supply electricity and KCM also agreed to purchase all its electricity power requirements, the Post reported citing a claim accompanying the writ of summons.

In April this year, KCM obtained a restraining order for CEC not to restrict power supply to the mine by applying to the court.

Konkola Copper Mines Plc (KCM) is a major integrated copper producer in Zambia, primarily engaged in the exploration for mining, production and sale of copper. It is rated as one of the world’s wettest mines, yielding approximately 350,000 cubic metres of water per day from underground.

It is currently engaged in developing the more than IS$1 billion Konkola Deep Mine Project, in which it is expected to increase copper production to over 400,000 tons per annum when completed.


Source: Mining News Zambia 

ZCCM-IH | Trading Statement – Jul 2014

In accordance with the Lusaka Stock Exchange Limited (“LuSE”) Listings Requirements, the Board of Directors advises the Shareholders of ZCCM Investments Holdings PLC (“the Company”) that the earnings per share is expected to be 34% higher than that for the six months period ended 31 March 2013. It should however be noted that the total number of shares in issue increased from 89,296,428 to 160,800,286 on 29 March 2014. The weighted average number of shares in issue as at 31 March 2014 is therefore 90,488,159.

Shareholders are advised that the information contained in this trading statement has not been reviewed or reported on by the external auditors of the Company. The Company expects its results for the six months ended 31 March 2014 to be released on SENS and published in the local press on or about Friday, 11 July 2014. Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until publication of the results.

Lusaka, Zambia ‐ 09 July 2014

ZCCM-H shareholders to earn more

Zambia Consolidated Copper Mines Investments Holdings-ZCCM IH share earnings are forecast to rise 34 percent higher than the six months ending 31 March last year as total number of shares in issue almost doubled.

Stockbrokers Zambia, the agents for multi listed holding mining company, in a cautionary notice to shareholders and issued on behalf of the ZCCM IH board of directors, envisages the earnings per share to be 34 percent higher than that the price pegged for during the six months period ended 31 March 2013.

However, the total number of shares in issue rose to 160 800 286 from 89 296 428 shares on 29 March 2014. The average number of shares in issue recorded as at 31 March 2014 is therefore 90 488 159, the stockbroker adds in a statement.

The notice to shareholders is in accordance with the listing rules, regulations or requirement for all companies trading publicly or otherwise on the Lusaka Stock Exchange expected on any bourse (capital market) to comply.

“In accordance with the Lusaka Stock Exchange Limited (“LuSE”) Listings Requirements, the Board of Directors advice the Shareholders of ZCCM Investments Holdings PLC (“the Company”) that the earnings per share is expected to be 34 percent higher than that for the six months period ended 31 March 2013.

It, however, cautioned shareholders to trade carefully as the information contained in the trading statement has not been reviewed or reported on by the external auditors of the Company.

The Company expects its results for the six months ended 31 March 2014 to be released on SENS and published in the local press on or about Friday, 11 July 2014.

“Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until publication of the results.”

Last year ZCCM IH ZCCM-IH announced plans to offer shares to its existing shareholders to raise money to clear its debt and help clean its balance sheet for future investments.

ZCCM-IH, which holds stake on behalf of the government in privatised mines, is currently battling liquidity problems, which were hampering the company’s ambitious transformation programmes.

“The proposed rights offer has a number of critical and important objectives that include to de-gear the ZCCM-IH balance sheet by expunging government debt of approximately K1.998 billion about US3 million and thereby unlock the value of ZCCM-IH for the benefit of shareholders,” company secretary Chabby Chabala said.

“After the implementation of the rights offer exercise, the government debt will be eliminated or significantly reduced, leaving ZCCM-IH with a clean balance sheet and therefore in a better position to consider payment of dividends to all shareholders going forward.” He added.

Clearing the huge government debt would help ZCCM-IH acquire fresh capital, which the company would use for its strategic investments and developments.

“The GRZ indebtedness has severely constrained the balance sheet of ZCCM-IH in the recent past. In turn, this has affected valuation of the company by the market and limited the capacity of management to unlock value for the benefit of shareholders,” Chabala stated.

ZCCM IH board believed at the time that the urgent action was necessary and a new strategic direction for ZCCM-IH is required in order to improve its operational performance and unlock value for the benefit of all shareholders on the one hand and simultaneously have capacity to participate in new projects and opportunities in Zambia and beyond going forward.”

The balance sheet of ZCCM-IH for the year ended 31 March, 2012 carried total liabilities of K2, 352 million against total assets of K2, 302 million, resulting in a negative book value of K50.5 million.

The bulk of the liabilities constitute debt owed to the government carried over from ZCCM, an earlier financial report stated.

History of ZCCM-IH

It is one of Zambia’s prime investments holdings companies with the majority of its investments in the copper mining sector of Zambia. It is quoted (trades secretly) on the Lusaka, London and Euronext Stock Exchanges.

The Company’s shareholders are the Government of the Republic of Zambia (GRZ) with 87.6 percent shareholding and private equity holders with 12.4 percent. Minority shareholders are spread throughout the world in various locations. ZCCM-IH is a successor company to Zambia Consolidated Copper Mines Limited (ZCCM Ltd). Prior to privatization in 2000, ZCCM Ltd was a consolidated copper mining conglomerate which owned and operated a number of mining divisions which at privatization were sold off as independent mining companies.

ZCCM Limited was majority owned 60.3 percent by the Government of the Republic of Zambia, 27.3 percent by Zambia Copper Investments Limited (ZCI), an associate company of Anglo American Plc and 12.4 percent by private investors.

Since the privatization of the mines in the early 2000, the mines that have been privatized have generated US$8 billion in direct foreign investments.

Various reputable multinational companies including First Quantum Minerals Limited, Vedanta Resources and commodity trader, Glencore Xstrata, have all initiated new projects in addition to the units secured during privatization.

“They in all, have injecting over US$8 billion, which is envisaged to grow to US$15 billion in the next few years,” said chamber of mines president Emmanuel Mutati.

Source: Zambian Mining Magazine