ZCCM-IH shares unbundled

ZAMBIAN public shareholders have bought 11,792,337 shares out of the 27,961,237 Class B shares advertised by the ZCCM-IH this year.

In the 2015 National Budget address delivered in October 2014, the Government announced intention to sell all its Class B shares held in ZCCM-IH to members of the public.

As at October 10, 2014, the Government held 87.5 per cent of shareholding in ZCCM-IH through the minister of Finance, made up of 96,926,966 as Class A shares, representing 60.3 per cent shareholding in ZCCM-IH and 43,811,866 Class B shares, representing 27.2 per cent shareholding in ZCCM-IH.

The primary motivation for the sale down of the GRZ B shares held in ZCCM-IH was because Lusaka Stock Exchange (LuSE) listing requirements 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 participate in the capital markets.

To comply with the listing requirements, the Government would reduce its shareholding in ZCCM Investments Holdings Plc to 60 per cent from 87 per cent.
The 27 per cent shares were to be sold to Zambian citizens as a way of entrenching economic independence of the people.

In this regard, ZCCM-IH management was mandated by the Government, through the minister of Finance, to sell all the Class B shares held by the Government to the Zambian public and eligible Zambian institutions.

The process of selling the 43,811,868 Class B shares initially held by GRZ has begun and to date a total of 15,850,631 shares, representing 9.9 per cent of the shareholding in ZCCM-IH, have been sold to the National Pension Scheme Authority (NAPSA).

On July 30, 2015, ZCCM-IH issued an Information Supplement regarding the GRZ Preferential Secondary Market Offer on the remaining balance of 27,961,237 shares (17.4 per cent shareholding in ZCCM-IH) to be sold to the Zambian citizens and eligible Zambian institutions.

According to the ZCCM-IH statement for this month, as at close of business on August 23, 2015, the Government held 77.7 per cent shareholding in ZCCM-IH, through the minister of Finance, made up of 96,926,669 as Class A shares and 27,961,237 as Class“B” shares.

On August 24, 2015, GRZ transferred to the IDC all the 96,926,669 Class A shares, representing 60.3 per cent shareholding in ZCCM-IH,

the statement reads.

The 27,961,237 Class B shares, representing 17.4 per cent shareholding in ZCCM-IH, have not been transferred to the IDC at this stage and are currently being sold to the Zambian public under a Preferential Secondary Market Offer.

The shares transferred to the IDC represent 60.3 per cent of the shares while those for NAPSA represent 15.0 per cent and for the rest of the shareholders they represent 7.3 per cent.
Currently, ZCCM-IH is operating under the 2012-2016 Strategic Plan which includes such sectors as real estate and agriculture.

The strategy to diversify the portfolio whose aim is to maximise shareholder value is currently ongoing,

the organisation said.

The ZCCM-IH mission will continue to be one of maximising shareholder value for all its shareholders, which now includes the IDC. The shareholders own the company and management will continue to engage with its shareholders as it executes its mission.—Times of Zambia

Zambia to up copper output

ZAMBIA will be the second largest contributor to global copper by 2018, the latest International Copper Study Group (ICSG) report indicates.

According to the report, Global copper production capacity at mine level is expected to grow at an average annual rate of six per cent to reach 27.4 million tonnes a year in 2018.

The report shows that, globally, Peru is expected to contribute the largest show of 26 per cent followed by Zambia, which is currently second largest copper producer in Africa.

The two countries are among the six which will together account for 66 per cent of the global copper production increase.

“Peru is projected to account for 26 per cent of the additional capacity from new mine projects and expansions through 2018, followed by Zambia, Mexico, Mongolia, China and the Democratic Republic of Congo. Together these six countries will represent 66 per cent of the world growth,” the ICSG said.

In its bi-annual directory of copper mines and plants, the Lisbon-based research group states that concentrate output will represent more than 80 per cent of the expansion with production jumping by 4.8 to 21.7 million tonnes in 2018.

More than 900,000 tonnes of solvent-extraction or electro-winning capacity will be added over the same period to reach 5.7 million tonnes capacity.

Projects are also being planned in countries that currently do not mine copper, including Afghanistan, Ecuador, Ethiopia, Fiji, Greece, Israel, Panama, Sudan and Thailand.

By 2018, total expected copper production capacity from projects starting in these new copper mining countries could reach 150,000 tonnes per year, and capacity could continue to increase well above one million tonnes per year if projects planned beyond 2018 in these countries are developed,” the ICSG indicates.

Concurrently, production from countries that started mining copper in the last decade is expected to increase to 550,000 tonnes per year by 2018 from only 4,000 tonnes per year in 2003.

Annual copper smelter capacity growth is forecast to lag behind mine output expansion, growing an average 3.1 per cent per year to reach 22.5 million tonnes per year in 2018, an increase of 2.6 million tonnes or 13.1 per cent from 2014.

Zambia to triple power generation in two years with solar

LUSAKA- Zambia expects to triple power output to 6,000 megawatts (MW) in 2 years through expansion of solar energy by foreign investors, the head of its investment agency said.

Erratic electricity supplies have hit mining in the continent’s second biggest copper producer, where the bulk of its generation capacity of 2,200 MW of power is water-powered.

The power problems and copper price slide have driven the kwacha currency to record lows amid a selloff in commodity-linked currencies as top copper consumer China’s economy has slowed.

Zambia Development Agency (ZDA) Director General Patrick Chisanga said he had held “very positive” talks with an unnamed German company aiming to invest $500 million in a solar power plant but did not disclose its planned location.

“It is planned that they could produce about 400 megawatts of power in two steps,” Chisanga told Reuters.

“This is still at discussion stage but the investor is very keen and we envisage that early in the first quarter of next year we should see some serious development on the ground.”

Another group of investors from Italy were looking to set up a solar plant in the Lusaka South multi-facility economic zone and two others in the Western and Northwestern provinces.

“The proposals they put on the table suggest to me that these are very serious investors and they have the capability as well as the financial capacity to invest,” he said, without giving details

Added to that, power generation from Zambia’s Kariba power stations has dropped due to low rainfall in the previous season, forcing Zambia to implement power blackouts.

“This has been a wake up call for us. It has taught us that we need to diversify our sources of energy instead of relying on hydro which in turn relies on a good rainfall every year,” he said.

A number of new investments, including that by Africa’s richest man, Nigeria’s Aliko Dangote, whose firm has opened a cement plant, were setting up their own power plants and aiming to feed any surplus into the national grid.

The ZDA had also issued an investment licence to Sunbird Investments Ltd which was looking to put up a $150 million biofuel plant using cassava, Chisanga said.

“The totality of all this should help us to ramp up our production of power to the levels that we need to get to which is ultimately about 6,000 megawatts,” Chisanga said.

China’s CNMC says followed the law in closing Luanshya Copper Mines

China’s CNMC Luanshya Copper Mines followed Zambian law when it closed the Baluba mine and sent more than 1 600 workers on forced leave due to plunging prices and energy shortages, the company said on Monday.

Zambia Government had threatened to revoke Luanshya’s mining licence if the company did not reinstate workers. A slide in global copper prices has put pressure on Africa’s second biggest producer of the metal, with export earnings depressed despite the kwacha’s slump against the dollar this year.

“As a law abiding corporate citizen, we have always followed the Zambian laws,” CNMC Luanshya Copper Mines spokesman Sydney Chileya said in a statement, adding that it did not plan to make employees redundant. Those placed on forced leave would receive a monthly allowance and other entitlements such as medical cover, the company said. Chileya said the entire Luanshya Mine would have collapsed within three months if the company had not suspended production at Baluba.

The Mine Workers’ Union of Zambia (MUZ) said on Saturday it would challenge the decision, which it alleged was made without consulting labour unions. Glencore’s Zambian subsidiary Mopani Copper Mines, is in talks with the government and unions over plans to suspend its production, but a source close to the company said on Friday a large number of workers would be retained.

Copper mine to continue production

Zambia-based copper miner Konkola Copper Mines (KCM) has affirmed that it has not made a decision to close its Nchanga underground mine or scale down operations at the Nkana refinery, following media reports alleging closures. KCM, a subsidiary of London-listed global diversified natural resources company Vedanta Resources, is one of Africa’s largest integrated copper producers.

It has mines at Konkola in Chililabombwe, Nchanga near Chingola and Nampundwe in the Central province of Zambia. Its operations include openpit and under-ground mines, several concentrators, a state-of-the-art smelter and a refinery. In addition to copper, the company also produces cobalt, pyrite and acids. “The company’s operations remain open and production is continuing. No workers have been laid off and no contracts have been terminated,” the company states, noting that the basis of media stories circulating is an unofficial memo, which has no official sanction from within the company.

However, KCM notes that the implications of electricity cuts are still unclear, with the company in consultation with power provider Copperbelt Electricity Company and the Zambian government regarding the implications of load-shedding.

Zambia is experiencing a power supply deficit of 30%, as water levels at State-owned power utility Zesco’s hydroelectric plants decreased significantly, owing to drought.

Performance Focus

Meanwhile, KCM CEO Steven Din noted in the company’s July newsletter that, while the company continues to improve its operational performance, KCM has “a long way to go in ensuring that business plan target”. Din highlighted that integrated mine metal production at the end of the first quarter is 85% of the business plan target.

KCM is developing the flagship Konkola Deep Mining Project, in Chililabombwe. The project involves expanding the production of copper ore at the Konkola mine by accessing the rich orebody that lies beneath what current operations have been exploiting. “This involves the sinking of a new mine shaft to the depth of 1 500 m, the deepest new shaft sinking project in Africa,” according to Vedanta Resources’ website.

Din further highlighted in the company newsletter that there is steady improvement at the Konkola underground mine. “Phase 1 mining of ventilation and slot raises has been completed in the Konkola East section and Phase 2 of secondary development is progressing well,” he stated. Moreover, copper-in-concentrate production has been sustained above 4 000 t for the last two months, Din noted, adding that Konkola “achieved 85% of the business plan target in the first quarter, with production constrained by power outages resulting in flooding at the end of April and beginning of May”.

Nchanga Smelting and Refining He further highlighted that “overall, Nchanga has continued seeing an upward trend in production [having] achieved 89% of the business plan in the first quarter”. The Nchanga mining operations are situated near Chingola. The operations mine primary copper and cobalt through underground and openpits.

Media reports in the newsletter also highlighted that the Nchanga Open Pit Cut II increased production in the first quarter and “beat monthly targets by more than 100% in April and May”. Din noted that, although the company was affected by challenges, such as low dump truck availability, Old East Mill throughput constraints, power outages and power grid instability, the team has corrective action plans in place to stabilise production. Further, the Nchanga openpit mine achieved 123%; Nchanga underground mine achieved 97%; Tailings Leach Plant achieved 97%; and support service achieved 93% of the amount detailed in the business plan.

Din, however, acknowledged that the Nchanga smelter was unable to achieve its targets, owing to low receipts of integrated and custom concentrates resulting in knock-on, low production at the Nkana refinery. The Nchanga smelter achieved 67% of business plan targets, while the Nkana refinery achieved 56%. He added that the company has no control over the copper price, which is set in international markets.

“While we saw steady increases in the copper price at the start of the year, in June and July, this reversed sharply,” he stated. Therefore, Din emphasised the company’s need to redouble its business efforts under the circumstances.

Zambian kwacha hits record low on power, copper price woes

“Many entities are likely to use the dollar as the currency of choice for transactions, thereby putting more pressure on the demand side,” said analyst Peter Sitamulaho of the local Bonds and Derivatives Exchange.

“The kwacha is afflicted by lack of price transparency, lack of liquidity, too few market participants dominated by less than six banks, the majority being international banks,” he added.

The kwacha would remain on the back foot as a resolution to global and domestic economic concerns were out of sight, Zambia National Commercial Bank said in a note.

In addition to weak global prices, Zambian mines have also been hit by a power crunch, with one copper producer, China’s NFC Mining, shutting down some of its operations at local operations as a result, according to a union.

Zambia’s Konkola Copper Mines (KCM) owned by London-listed Vedanta Resources Plc has asked 133 employees to stay away from work on full pay while the company undertakes a review of the operations.

The government has said it plans to build 17 hydro power generation plants and a thermal plant by 2030, which together will add over 4,000 MW to power supply.

Gemfields raises $35.14m in Singapore emerald, amethyst auction

Zambia-focused precious stones miner Gemfields has garnered revenues of $35.14-million from its most recent auction of predominantly rough emeralds extracted by subsidiary Kagem Mining, as well as the sale of amethyst mined by 50%-owned Kariba Minerals.

Held in Singapore from August 31 to September 4, the auction followed seven successive emerald auctions held in Lusaka, Zambia, and marked the return of Zambian emerald auctions to the broader international market.

The auction saw 600 000 ct of higher-quality emerald extracted from Kagem placed on offer, with 18 of the 19 lots on offer sold, generating auction revenues of $34.7-million. The emerald auction realised an overall average value of $58.42/ct – the third-highest figure on record. The company’s 19 auctions of emeralds and beryl mined at Kagem since July 2009 had generated $360-million in total revenues, the company disclosed in a statement on Monday.

Gemfields’ amethyst auction, meanwhile, saw 11-million carats of higher-quality amethyst extracted from Kariba placed on offer, with 11 of the 16 lots offered being sold, generating auction revenues of $400 000 from the 10.1-million carats sold.

The amethyst auction realised an overall average value of $0.43/ct – an increase of 144% compared with the $0.17/ct realised in the February 2015 auction. Commenting on the auction results, CEO Ian Harebottle said that, with 98% of the emeralds sold, it was “very pleasing” to see Zambian emeralds continuing to enjoy such firm demand, aided by Gemfields’ return to running an auction in Singapore “Our Singapore auction has delivered another very strong result for our Kagem emeralds.

Despite severely depressed global commodity prices, well-documented difficulties in the diamond sector and recent volatility across international financial markets, emerald prices remain as robust as ever. “The countercyclicality often associated with precious gemstones, and their reputation as a store of value in turbulent times, have shone through,” he remarked. Investec, however, commented that the auction results were disappointing. “This perhaps indicates that the emerald market is not completely insulated from the pains the diamond industry has been going through.

The long-term value proposition remains intact in our view but near-term earnings could come under pressure if this trend is not reversed,” it said. Meanwhile, Harebottle noted that it was also pleasing to see that the prices received for amethyst had increased “markedly” since the last auction in February. “I’m delighted that these results underscore the intended vision and trajectory for coloured gemstones and for Gemfields,” he enthused. The proceeds of the auctions would be fully repatriated to Kagem Mining and Kariba Minerals in Zambia, Gemfields advised. The company’s next auction was expected to take place in November, comprised predominantly of lower-quality emerald and beryl.