KONKOLA Copper Mines (KCM) Provisional Liquidator Milingo Lungu has insisted that his decision to split the mining company is legal and within his powers.
Last week, KCM acting chief executive officer Enock Mponda announced that Milingo had decided to reorganise and restructure KCM into two subsidiary companies, namely KCM SmelterCo Limited, and Konkola Mineral Resources Limited effective February 1, 2021, in a bid to increase efficiency, foster optimisation and boost business opportunities.
The unprecedented move, however, triggered widespread backlash from legal experts and concerned stakeholders that the splitting of the troubled mining giant was illegal and ultra vires the Provisional Liquidator’s role.
But in a statement, Wednesday, citing a ruling by Court of Appeal Judge President Fulgency Chisanga, dated January 5, 2021, Milingo argued that the Court confirmed that his decision to split KCM into two subsidiaries was legal.
“The ruling by the Court of Appeal confirms the legal position taken by the Provisional Liquidator that the recent announcement to restructure and reorganise KCM into two separate companies, namely KCM SmelterCo Limited, and Konkola Mineral Resources Limited in a bid to increase efficiency and business opportunities, as well as asset and resource optimisation, was within the law. In managing the business, the Provisional Liquidator is entitled to adopt the business model that promotes efficiency and cost effectiveness. The business model so adopted is to disaggregate the company into mining and processing. This will prevent cross subsidisation between the units,” Milingo stated.
“KCM has been insolvent for a long period, hence the accumulation of debt to creditors and suppliers. The Shareholders have not provided funds to enable the company continue as a going concern. Under these circumstances, it is increasingly likely that the only option to fund the continued survival of KCM is through disposal of assets. The only other alternative is to cease operations. Effective 31st January 2021, the new companies will begin to operate under the names, KCM SmelterCo Limited and Konkola Mineral Resources Limited, respectively, with two separate management structures and employee arrangements. KCM SmelterCo Limited has been in existence since 2002 and has been a fully-owned KCM company, save it has been a dormant subsidiary.
He added that his powers to manage and effect decisions relating to the mining firm were equally within the law, including the disposal of the company’s assets.
“KCM wishes to inform that the Court of Appeal has confirmed that the Provisional Liquidator of Konkola Copper Mines, Mr Milingo Lungu, continues to operate and function as the Provisional Liquidator for KCM. His powers as contained in the 21st May, 2019, High Court Order are valid and have neither been curtailed nor vacated. Further to this, any exercise of the said Provisional Liquidator powers since 21st May, 2020, is within the law and Order of the High Court, which is the competent court for the Liquidation Proceedings. This is contrary to some media speculation and assertions that the Provisional Liquidator’s powers had been discharged or that they were curtailed,” stated Milingo.
“Specifically, the salient powers of the Provisional Liquidator, among others, are as follows: Carry on the business of Konkola Copper Mines so far as is necessary for the beneficial winding up of the company; make any agreement on all questions in any way relating to or affecting the company or its assets; take possession, custody and control of all the assets of KCM; dispose of assets by public tender or the most transparent manner under the circumstances; and sell the real and personal property and things in action of KCM by public auction, public tender or private contract.”