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Industry News, ZCCM-IH News

GOVT DETERMINED TO INCREASE STAKES IN MINES

Mines Minister Richard Musukwa says Government through ZCCM-IH is working towards increasing its stake of shareholding in mining firms.

And Mr. Musukwa has challenged emerald mining firms in Lufwanyama to invest in infrastructure development so that locals benefit from its mineral wealth.

The Minister was speaking when Kagem Limited donated medical supplies and oxygen ventilators to Nkana Health Center, at a cost of 1-Million Kwacha.

He said authorities want to see ZCCM-IH and Industrial Development Corporation-IDC play a major role in mining operations for citizens to derive maximum benefits.

Mr. Musukwa said Government will continue to create an enabling environment for both small and large scale mine operations to enable indigenous Zambians fully exploit the country’s wealth.

And Copperbelt Province Permanent Secretary Bright Nundwe said Government continues to embrace new investments in the sector.

Meanwhile,  Chief Nkana of Lufwanyama District assured authorities that traditional leaders are actively supplementing Government efforts in the fight against COVID-19.

Meanwhile Lufwanyama Member of Parliament Leonard Fungulwe hailed Government for embarking on the upgrading of feeder roads in his area.

Source: https://www.znbc.co.zm/news/govt-determined-to-increase-stakes-in-mines-2/

 
Industry News

COVID-19 slashes mining revenues by 30%

MINING companies’ revenues in Zambia have drastically fallen by around 30 per cent over the three-month period, February-April 2020, mainly triggered by the deep impact the COVID-19 pandemic has had on slashing copper earnings.

According to Zambia Chamber of Mines data, the COVID-19 virus has cut Zambian mining companies’ copper sales as a result of a disruption in the mining supply chain, which facilitates the export of the red metal to foreign markets.

Data reveals that the severe global restrictions on movement have wreaked havoc on the mining supply chain, and hindered the export and sale of copper, and that the copper price collapse early in the crisis, though has since strengthened, is still down on average by 12 per cent over the period when compared to 2019.

The fall in mining revenues is mirrored exactly in the fall in mineral royalty payments, as royalties are levied on each tonne of copper that is sold.

“For the industry, royalty payments are estimated to have come in at approximately US $60-65 million over the three months, rather than the US $90 million that could have been expected. This simple calculation illustrates how closely government revenues mirror the fortunes of the mining industry,” the statement read.

Commenting on the mining industry’s dwindling earnings, Chamber chief executive officer Sokwani Chilembo stated that mining companies had, however, performed well in maintaining production amid the COVID-19 crisis.

“The industry has done a magnificent job of maintaining production over this difficult period. But, for various reasons, revenues have fallen massively. Zambia’s miners have been battling even higher costs for years, and we are concerned about the potential consequences of such a big hit to earnings occurring now,” stated Chilembo.

“Furthermore, in this extraordinary period we are living through, it is impossible to accurately forecast where we will be even a few months from now. When will we be out of the woods? No-one can tell. We hope that some of the revenue pressures may ease in the months to come. But we are unlikely to be entirely free of them for at least 12 months, and quite probably longer.”

Sources: https://diggers.news/business/2020/06/20/covid-19-slashes-mining-revenues-by-30/
ZCCM-IH News

What they missed about the golden ambitions of ZCCM-IH

There is a livelihood that has been the bedrock of small-scale mining since time in memorial. The men, women, and children from across the world who wake up eat morning in search of pieces of minerals that promise to change their lives. Ironically though, though the informal nature and on the whole un-mechanized operation that is artisanal mining generally results in low productivity, the sector represents an important livelihood and income source for the poverty affected local population.

These miners deserve structure to participate in the Gold mining value chain.

One country that has had its fair share of artisanal mining in Brazil. In their article aptly titled “Policies and regulations for Brazil’s artisanal gold mining sector: analysis and recommendations“, Rodolfo Sousa et al. published in the Journal of Cleaner Production stated that “In Brazil, artisanal and small-scale gold mining (ASGM) produces in the range of 6 tonnes of gold (Au) per annum, and employs approximately 200,000 people. Most of this mining activity is in the Amazon region, where miners have been extracting gold for more than 40 years. In the Tapajos River Basin, assessments indicate that around 99% of miners operate without the environmental and mining permits required by law. This is a result of a combination of unrealistic or lack of proper policies and regulations, lack of political will, lack of infrastructure to enforce the existing regulations, and lack of incentives to miners to comply with legal requirements”.

In present-day Zambia, artisanal gold miners who have long been “mining” alluvial gold which can easily be obtained on the surface have been exploited by environmental elements that have taken advantage of the lack of structure around their operations. This includes the lack of security, lack of health and safety mechanisms, lack of a trusted market for the gold, and devoid of traceability among others. These are all factors that make up the fulcrum of sustainable and the now trending ethical mining.

According to mining.com and echoed at this year’s Mining Indaba in February 2020, “the ethics of any business-related operation have never been more in focus and prone to scrutiny – and the natural resources industry is no exception, indeed it should, in principle, be one of the most attentive, given its transformative qualities where landscape and labour are concerned”. What this means is that for artisanal miners in Zambia to carve a roadmap that will see them sit at the same table as the AngloGold Ashanti of this world, there has to be structure in what they are doing.

With the first step being taken by Government to give artisanal miners gold panning certificates to legalise their alluvial or riverbed gold mining activities, the next logical step was to bring forth infrastructure that would enable the transition of the artisanal miners to high yielding mining. This has been made possible by ZCCM Gold which has been established to work with these licenced artisanal gold miners by providing them with gold equipment, access to earth-moving machinery, and offering technical expertise among others.

Source: https://fizambia.com/?p=7205
Investee Company News, ZCCM-IH News

ZCCM-IH charts way forward for Ndola Lime

Three months after the ZCCM IH management team signalled a way forward for their distressed asset, Ndola Lime, a way forward has been established, according to a statement from the investment group.

In March 2020, ZCCM IH announced the appointment of a Business Rescue Administrator (BRA) who would oversee the much need turnaround of Ndola Lime. The BRA had commenced the process of restructuring the operations of NLC with a view to creating a business that will take over the running of the limestone operations sustainably.

With over K1 billion kwacha already sunk into the lime company over the last 10 years, the entity continued making losses from operations. According to year on year annual reports from ZCCM IH in the last 5 years, indications of the causes of the challenges the entity was facing emanated from its core asset (Vertical Kiln).

In the 2012 AR, ZCCM IH reported that it had recapitalized Ndola Lime Company through a shareholder loan of K28.7 million (US2.82 million) for the NLC Recapitalization Project. At the time of publishing the 2016 AR, the Second Vertical Kiln (VK-2) was still undergoing hot commissioning.

Fast forward to the 2017 AR, it appears that the hot commissioning phase of the Recapitalization Project was met with a series of technical hurdles that affected the performance of the company. Small wonder why in the 2017 AR this particular update appeared under the “Strategic New Investments” section of the report? We asked the question because according to the 2017 AR, the Board was undertaking a review of the entire operation of the Ndola Lime to determine an appropriate option that will result in improving operations of NLC as well as the performance of the Group. This marked the first strong single that it was only a matter of time that the management team at ZCCM IH would make the strategic decision of bringing on board the BRA to turnaround this operation.

The task for the BRA according to the published statement from ZCCM IH entails the rollout of restructuring proposals in the Scheme of Arrangement which include:

  1. The creation of a New Company (NewCo);
  2. The restructuring of the liabilities of NLC;
  3. The transfer of the assets and business of Ndola Lime to the NewCo;
  4. Retrench, pay and transfer the employees of NLC to the NewCo; and,
  5. Dissolve NLC with or without winding up.

The new company is a vehicle that is being used as part of the road map to financial health. The management team is well aware that there was need to start life anew for this segment of their portfolio and hence why the NewCo has been incorporated and is known as Limestone Resources Limited (LRL) 100% owned by ZCCM-IH.

According to their published statement, “at a Final Creditors Meeting held on the 10th June 2020, the creditors passed a special resolution to approve the Restructuring Proposals as contained in the Scheme of Arrangement and the main objectives of the restructuring plan are for NLC’s successor company, LRL, to commence operations on a clean slate, debt-free, recruit a new management to spearhead the re-orientation of strategy and operations without any legacy problems associated with NLC”.

Limestone Resources Limited begins life anew and will address the challenges that were faced in Ndola Lime’s resources and capabilities. Without the institutional memory that Ndola Lime held, the management team at LRL can choose to cut the losses of Ndola lime and attract fresh capital to revamp the business. Furthermore, LRL can adopt its own business strategy that can relook at the manufacturing of quicklime (calcium oxide), slaked lime (calcium hydroxide), cement, and mortar which are typical limestone business segments and carve out the best option going forward that can create value for ZCCM IH. Furthermore, LRL can also decide to partner up with other successful entities in the same sector so that mistakes of the past are avoided.

Investors will be pleased with this move as a way forward for the investment group’s Achilles heel has been found.

Source: https://fizambia.com/?p=7195

limestone
Investee Company News

Ndola Lime’s metamorphosis to Limestone Resources as shareholder seeks recapitalization

Once upon Limestone giant in Africa’s second largest copper producer, Ndola Lime Company, has undergone drastic metamorphosis in the quest to rally back to profitability. After grappling with insolvency and financial woes amassed over close to a decade on the back of hard core debtors, the limestone producer and once pillar of Ndola is coming back to life. This follows efforts to capitalize, resuscitate and inject back operational resilience into the Copperbelt’s city.  Ndola Lime will now operate under a new name, Limestone Resources Limited – LRL fully owned by Lusaka Securities Exchange mining investment vehicle ZCCM-IH Plc.

Due to negative jaws, NLC has struggled to be a key employer and heart beat of Ndola, a position which it housed together with the likes of Indeni Oil Refinery in times when State Owned Entities – SOEs were still viable. However it is hoped that with the proposed re-strategization, the new legal entity, LRL will seek to drive limestone production as a going concern and will breathe life into the provincial capital of Zambia’s Copperbelt province.

June 10, marked the final turning point for the defunct Ndola Lime Company as a special resolution of creditors was passed to finalise restructure the Limestone producer through a scheme of arrangement plan. The scheme of arrangement provided for creation a new entity, restructure the NLC liabilities, transfer of the NLC business to the new entity, address the remuneration needs of NLC resources with smooth transition to the new entity and dissolution of NLC with or without winding up.  

The meeting established that LRL will commence operations totally free of debt under new management that will re-orient strategy and drive performance harder to profitability and viability. Limestone Resources Ltd shareholders will proceed with capitalization initiatives.

The implication of the metamorphosis is that Ndola Limes business will continue but under a new name whose management is earmarked to commence in 3Q20. 

ZCCM-IH is currently in the process of obtaining statutory and other approvals to facilitate the transition of NLC to LRL.

The processes of approvals, transfer, recruitment and recapitalization are estimated to take half a year from August 2020.

LRL has immense potential to further break into cement production following the ICBC $550million deal that ZCCM-IH signed up with Industrial Commercial Bank of China for a cement plant. Until this is completed, LRL has a readily available market for limestone in the mines.

The Kwacha Arbitrageur

Sources: https://thebusinesstelegraph.com/2020/06/15/ndola-limes-metamorphosis-to-limestone-resources-as-shareholder-seeks-recapitalization/
Investee Company News, ZCCM-IH News

ZCCM-IH’S EYES ON NDOLA LIME

ZCCM IH is currently in the process of obtaining statutory and other approvals to facilitate the transition of Ndola Lime Limited to the newly created company Limestone Resources Limited.

The proposed restructuring plan will ensure the continuation of Ndola Lime business under a different entity name Lime Resources Limited.

The move comes after ZCCM-IH was granted an order by meeting of creditors to consider and approve the scheme of arrangement.

ZCCM-IH Public Relations Manager Loisa Kakoma says the restructuring proposed in the scheme involves creating a new company, restructuring the liabilities of Ndola lime and dissolve Ndola Lime with or without winding off.

Mrs. Kakoma says the main objective of the plan are for Ndola Lime’s Successor company to commence business on a clean slate, recruit a new management and spearhead the formation of the new strategy.

She says this new approach will ensure workers welfare is taken into consideration, debt is resolved and ensure the company’s assets are secured.

Meanwhile Mrs. Kakoma said the processes of approvals, transfer, recruitment and recapitalization will take approximately six months from August 2020.

She said in a statement to ZNBC news that the achievement of the objective will enable the effective recapitalization of the business.

Source: https://www.znbc.co.zm/news/zccm-ihs-eyes-on-ndola-lime/
Investee Company News, ZCCM-IH News

ZCCM-IH denies selling off Ndola Lime

ZCCM-IH has denied reports that it has sold off Ndola Lime Company.

In a statement, ZCCM-IH Spokesperson Loisa Mbatha clarified that Ndola Lime Company has ceased to exist due to huge debts and that a new company known as Limestone Resources Limited has been created.

“Over the past 8 years Ndola Lime Company Limited (NLC) accumulated an insurmountable amount of debt, in excess of K1 billion, owed to various statutory bodies as well as private creditors, which led to the Company being technically insolvent,” Ms. Kakoma said.

“In September 2018, two (2) former employees instituted business rescue proceedings in the Lusaka High Court pursuant to the Corporate Insolvency Act No. 9 of 2017,” she said.

“By order of the Court dated 5th October 2018, the Official Receiver was appointed as Interim Business Administrator of NLC. Without the prospect of recapitalisation, the Business Rescue Administration (BRA) process would effectively result in the closure of NLC’s business and loss of jobs.”

“As such, ZCCM Investments Holdings Plc (ZCCM-IH) requested and was granted an Order to convene a meeting of creditors to consider and approve a proposed Scheme of Arrangement.”

“The restructuring proposals in the Scheme of Arrangement were to:
i. Create a New Company (NewCo);
ii. Restructure the liabilities of NLC;
iii. Transfer the assets and business of Ndola Lime to the NewCo;
iv. Retrench, pay and transfer the employees of NLC to the NewCo; and,
v. Dissolve NLC with or without winding up.”

She added, “The NewCo has been incorporated and is known as Limestone Resources Limited (LRL) 100% owned by ZCCM-IH.”

“At a Final Creditors Meeting held on the 10th June 2020, the creditors passed a special resolution to approve the Restructuring Proposals as contained in the Scheme of Arrangement.”

Ms. Kakoma said the main objectives of the restructuring plan are for NLC’s successor company, LRL, to commence operations on a clean slate, debt free, recruit a new management to spearhead the re-orientation of strategy and operations without any legacy problems associated with NLC.

“The achievement of the objectives above would enable effective recapitalisation of the business. In order to preserve jobs, a recruitment exercise for LRL will commence beginning August 2020.”

“The proposed restructuring plan ensures the continuation of NLC’s business, albeit under a different entity name – Limestone Resources Limited (LRL). This new approach and plan ensures that employee welfare is prioritised, NLC’s debt is resolved, and that NLC’s core assets are secured,” she said.

“ZCCM-IH is currently in the process of obtaining statutory and other approvals to facilitate the transition of NLC to LRL. The processes of approvals, transfer, recruitment and recapitalisation will take approximately six months from August 2020.”

She said ZCCM-IH remains committed to revamp the operations at NLC, under a new entity and brand, and the proposed restructuring plan provides practical solution to the key challenges currently faced at NLC.

Sources: https://www.lusakatimes.com/2020/06/14/zccm-ih-denies-selling-off-ndola-lime/
Industry News

AU pushes African trade deal to January 2021

The anticipated African Continental Free Trade Area (AfCFTA) might commence January 1, 2021, due to the ripple effects of COVID-19 on the initial date set for July 1st, 2020.

This was disclosed last Thursday by AfCFTA Secretary-General, Wamkele Mene during a webinar organized by the Africa CEO Forum. He also emphasized that the new date would be subject to the spread of the virus across the continent.

Mene indicated that this development can be attributed to the lockdown measures adopted by most African states, which has made traveling almost impossible at the moment.

“It is not credible for us to say that we are trading from July 1 when we know that trucks at borders are lined up 40 to 50 kilometers,” he said.

Mena hopes that African Union member countries are able to negotiate trade tariffs and other protocols under the AfCFTA within the next six months.

In a previous statement in May 2020, the African Development Bank Group said,”How we respond to this pandemic will determine, how quickly we return to the laid down plans.’’

With the announcement of this new date, it is also believed that investors will plan on a more feasible level to achieve business goals.

Furthermore, considering the fact that coronavirus is easily contactable, the postponement of the initial date might be in favor of public health, as the movement of people across different borders might trigger the wild spread of the virus.

According to a forecast by the World Health Organization (WHO), there will be a steady rise in the cases of COVID-19 until a vaccine is found.

Already the continent has about 216,775 coronavirus cases; 5,852 related deaths; 98,686 recoveries patients.

Upon implementation, the continental free-trade zone would be the largest new economic integration, since the creation of the World Trade Organization in 1994. Furthermore, the trade deal has the potential to bring together 1.3 billion people in a $3.4 trillion economic partnership.

However, the change of date for full operations might mean that the project will experience a significant setback in boosting intra-African trade by 52 percent in 2022 (according to a forecast by the United Nations Economic Commission for Africa).

 Source: https://venturesafrica.com/nigeria-ranks-highest-personnel-cost-in-the-global-petroleum-industry/
Industry News

Zambia tackles ‘deliberate’ undervaluation of mineral exports

Zambia on Wednesday said mines ministry officials will, starting next month, personally collect samples from mine sites around the country to prevent mining companies seeking to undervalue their production to pay less taxes.

The ministry said some mineral exporters deliberately submit low-grade samples to the state laboratory, causing an undervaluation of mineral exports and depriving the government of mineral royalty tax revenue.

“The loss of revenue could amount to hundreds of thousands, or even millions of dollars per export, depending on the discrepancy in mineral grade between the sample and the consignment being exported,” Barnaby Mulenga, permanent secretary at the ministry of mines, said in a statement.

The change, which takes effect on July 1, means the ministry will no longer accept samples submitted by exporters and is the latest push by Zambia’s government to squeeze more revenue from the mining sector.

Mining accounts for more than 70% of Zambia’s foreign exchange earnings, an income that has become even more critical as the Covid-19 pandemic hits the economy.

Africa’s second-largest copper producer, Zambia is also trying to diversify its revenue base by boosting its gold production, and making copper mining companies account for the gold they produce as a by-product.

Companies operating in Zambia include First Quantum Minerals, Glencore, Barrick Gold and Vedanta Resources.

None of them had any immediate comment.

Source: https://www.miningweekly.com/article/zambia-tackles-deliberate-undervaluation-of-mineral-exports-2020-06-10/rep_id:3650
Annual Report Summaries, Investee Companies

CNMC Luanshya Copper Mines Plc (CLM) Extract from 2020 Annual Report

CLM increased its production volumes in 2020 with total copper output of 55,976 tonnes, up from 55,000 tonnes in 2019. This was due to increased mining activities and increased slag reclamation at Muliashi and Baluba.  

During the year, revenue increased to ZMW6,435.79 million (US$345.45 million) from ZMW2,992.91 million (U$S 224.67 million) as at December 2019 with net profit increasing to ZMW784.97 million (US$42.13 million) from ZMW 274.91 million (US$20.64 million).  

In the quarter under review, ZCCM-IH signed a loan facility with CLM. With a positive equity position, the company shall continue to explore the possibility of dividend payments in 2021 so as to reduce this loan amount.  

No dividends were declared during the year (31 December 2019: nil).