MINES Minister Richard Musukwa says Glencore is planning to offload around 90 per cent of its collective shares in Mopani Copper Mines Plc to government through ZCCM-IH.
And Musukwa says ZCCM-IH will galvanise resources to ensure they manage and operate Mopani Copper Mines prudently.
Meanwhile, Musukwa says Konkola Copper Mines (KCM’s) operational performance has improved since the provisional liquidator Milingo Lungu’s appointment last year.
Speaking on Diamond TV’s programme, Costa, Sunday evening, Musukwa announced that Glencore, which held 73.1 per cent shares in Mopani, was planning on offloading its shareholding to ZCCM-IH, together with a further 16.9 per cent from Calisa Investment Corporation.
ZCCM-IH currently only holds a 10 per cent shareholding in Mopani, according to Musukwa.
“Zambia sits on a huge reserve in terms of mineralisation for copper and several other minerals. Mopani is sitting on huge resources, which can run in access of up to to 40 years, so it is very viable. So, we are very confident that we are able to navigate out of this critical time and ensure that the life of Mopani is sustained. Even from the Glencore perspective, in terms of the investments portfolio, which they have put in their operations is huge; billions of dollars in terms of a new schycotorium, new shaft…All these facets were as a result of Mopani and Glencore knowing very well that Mopani was sitting on a tenement that was viable and was able to sustain itself,” Musukwa said.
“ZCCM-IH has 10 per cent shares, Glencore has 73.1 per cent stake and a company called Calisa has 16.9 per cent. When ZCCM-IH, after this care and maintenance process commenced, ZCCM-IH, as a minority shareholder, submitted an expression of interest in increasing its shareholding in the company. I must report that graciously, Glencore, the majority shareholder, accepted favourably. Further to not only accepting the 73.1 per cent stake, Glencore has actually galvanized even the 16.9 per cent that sits on Calisa together making a total offer of 90 per cent to ZCCM-IH in order to ensure that they take full control of the company.”
Musukwa said Mopani faced a challenge of huge operational costs of highly-priced contracts and the engagement of a large number of contractors and expatriates.
“The huge challenge that Mopani has had been the cost profile of exploiting this resource. Government’s considered view is that we need to look at how best we can reduce the cost, increase production and ensure that the operations are done under safe rules. Mopani did indicate that they wanted to put the mine on care and maintenance, which is going to put in excess of 15,000 employees in the streets and the government did reject that proposal because it was inimical to the interests of our people. More also, it was inimical to sterilise a resource when we feel it can be exploited, economically, by ensuring that Mopani reduces its cost profile by stopping to procure highly-priced contracts and the engagement of a huge number of contractors and expatriates,” Musukwa said.
“So, basically, when they put up the care and maintenance (proposal), we constituted a technical team and the technical team revealed that they were overheads that were being developed by Mopani, which, in our view, if these overheads were reduced, the company can be viable. You will be interested to know that the technical team and experts and people from all walks of life have actually come across and given different perspectives of how to operate and run the mine going forward profitably. At a time like this, we hope that we can have a smooth managed exit in order to ensure that Glencore and the Zambian government can continue to enjoy a mutual relationship.”
And Musukwa said ZCCM-IH would galvanise resources to ensure the management and operation of Mopani was done prudently.
“There is no investor that comes to Zambia with a sack of money or, indeed, money held in some accounts in order to come and exploit these resources. The money that is invested in the mining sector is money that is generated through various vehicles from these mining entities because they have international confidence on the market. We think very strongly that this is a matter that Zambian players, through ZCCM-IH and other entities, are able to galvanise these resources going forward. If you propose to a woman, it means that you have the capacity to look after them in marriage that is why ZCCM-H has expressed interest. If it didn’t have the capacity, it was not going to express interest,” Musukwa said.
“ZCCM-IH could not be having money sitting on their profile of this magnitude in terms of a purchase of these shares. ZCCM-IH will be able to galvanise these resources through other entities, through other vehicles. In short, ZCCM-IH is being used as a platform and this is a time where Zambians should not be doubting where this money is coming from, Zambians should be able to organise themselves and look for stake in the company.”
He, however, stressed that the funds being mobilised to manage the acquisition of shares and the administration of Mopani would not derive from debt financing, but would be raised from the ZCCM-IH’s resources.
“It is not the Government of Zambia, which is raising this money; this resource will be raised through ZCCM-IH. This is a blessing in disguise, an opportunity has presented itself for ZCCM-IH to have a footprint in terms of the mining entity. The resources that are going to be mobilised will be mobilised at that platform, at a business trajectory and not a debt to Government of the Republic of Zambia. ZCCM-IH has connectivity to ensure that we get these resources to immediately pump in the operations and stabilise its production. This is a time where we, as government, are looking at a platform where we can sit and say, ‘how best can this operation be run with the support of Zambians?’ This is an opportunity where we can give some of our shares to the Zambian public or Zambian businesses or other entities in order to ensure that ZCCM-IH is not overburdened, but have a cake, which they are able to manage,” he explained.
Musukwa also said that ZCCM-IH had finalised the appointment of a transaction advisor to work out Mopani’s cost profile.
“So, in terms of how we will work out the cost profile, ZCCM-IH has appointed a transaction advisor, a professional transactional advisor, who will look at all these nitty gritties. The process of appointing a transactional advisor was just being concluded last week, so I am sure that in the spirit of openness and transparency, the government, through ZCCM-IH, will ensure it makes these details available. Apart from a transactional advisor, a team has been constituted, which bordering across technocrats in Ministries of Finance, National Planning, Ministry of Mines, Justice and other stakeholders, such as trade unions and all people from all walks of life would be incorporated. We are dealing with a process that the government would like to see an open, transparent process anchored on the rule of law,” Musukwa said.
“This process is anchored on mutual trust and understanding with the bedrock of negotiations and discussion. That is why government would like to ensure that Glencore comes out clean as we move through this process. I must say that tomorrow (Monday) the negotiation processes are going on. I must say from my team, they have actually told me that the last three, four negotiation processes that have been going on, Glencore has shown serious commitment, including ensuring that some of the costs you are talking about will not be costs that are paid in a day. This cost for this entire process cannot be paid in a day, these are costs, which will be escalated in the future as we operate the mine and so on. What we are going to do is that, actually one of the negotiating issues is to put on a temporal mechanism, where both Glencore and ZCCM-IH will begin to look at these cost profiles, even when we have the final process, so that these costs are looked at and ensure that the production and operations continue as priority.”
Meanwhile, Musukwa claimed that KCM’s operational performance had improved since Milingo’s appointment as the mining company’s provisional liquidator last May.
“And for avoidance of doubt, ever since the (provisional) liquidator took over, there are positive results that are being generated at KCM. Clearly, the company was mismanaged,” said Musukwa.