ZCCM-IH | Unaudited provisional financial statements for the year ended 31 March 2017

In compliance with the requirements of the Listing Rules of the Lusaka Securities Exchange, ZCCM-IH Plc announces its unaudited Provisional Annual Financial Statements for the year ended 31 March 2017. Below are extracts from the results.

COMMENTARY

  • The Group’s performance improved during the year owing to increase in copper production for most major mining companies. This was due to stability in energy supply and an improvement in copper prices on the world market. The copper price increased by 23% from US$4,848/ton in March 2016 to US$5,956/ton in March 2017.
  • The Group recorded an operating profit of K1, 703 million (2016 Loss: K858 million), mainly attributable to the recovery of K1, 923 million impairment from investee companies whose performance improved during the year.
  • The Group’s share of losses of equity accounted investees significantly reduced by 91% from K2, 210 million in 2016 to K194 million in 2017.
  • Profit after tax was K1,764 million (2016: Loss K2,912 million).
  • Total assets marginally increased by 8% from K9, 797 million to K10, 575 million largely on account of the recovery of the copper price participation receivable that was impaired in the preceding year.
  • The Ndola Lime Company Limited recapitalization project is still undergoing a hot commissioning, though the process has been met with a lot of challenges.
  • In February 2016, ZCCM-IH undertook to subscribe for all shares not subscribed for by other Investrust Bank Plc (Investrust) shareholders in the Investrust Rights Offer. This resulted in an increase in ZCCM-IH’s shareholding in Investrust from 10.6% to 48.6%. As a result, ZCCM-IH was required to proceed with a Mandatory Offer to all the other shareholders in Investrust in accordance with Rule 56 of the Third Schedule of the Securities (Takeovers and Mergers) Rules, Statutory Instrument No 170 of 1993, issued pursuant to the Securities Act, Chapter 354 of the Laws of Zambia.

    The process is expected to be concluded by end of March 2018.

  • Subsequent to the period under review, ZCCM-IH’s subsidiary Mawe Exploration and Technical Services Limited which was scheduled for dissolution in prior year was formally in dissolved in April 2017.

OUTLOOK
Copper prices are expected to increase steadily premised on increased demand from high copper consumer countries. ZCCM-IH’s performance is expected to improve as a result of the improvement in copper prices which drive the performance of the mining portfolio. Furthermore, as a result of good rains experienced during the 2016/17 season, the generation capacity of hydroelectricity is expected to improve thereby stabilising energy supply.

The recovery in copper prices as well as stability in energy supply will contribute to the growth in copper production which in turn will lead to growth in copper exports. The expected growth is further confirmed by additional investments of over $ 2 billion over the next several years announced by major multinational investors in the mining sector of Zambia.

In response to the positive outlook, ZCCM-IH will implement a new Strategic Plan hinged on expansion of its investment footprint in various sectors of the economy including mining with a focus on industrialisation, energy, agriculture, manufacturing, real estate and financial services.

By Order of the Board
Chabby Chabala
Company Secretary
Issued in Lusaka, Zambia on 2 January 2018

Lusaka Securities Exchange Sponsoring Broker
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Stockbrokers Zambia Limited (SBZ) is a founder member of the Lusaka Securities Exchange and is regulated by the Securities and Exchange Commission of Zambia

First Issued on 2 January 2018


Download the original SENS Announcement

ZCCM-IH Provisional Abridged to 31 March 2017

Konkola Copper Mines commissions new x-ray facilities

Konkola Copper Mines has commissioned new, state of the art x-ray medical facilities at its Nchanga South Hospital in Zambia valued at over US$135 000.

The x-ray facilities are expected to speed up radiological diagnostic services for the Konkola Copper Mines medical services which currently serve a catchment population of over 63 000 in four towns, namely: Chililabombwe, Chingola, Kitwe and Nampundwe.

Chingola District Commissioner Mary Chibesa, who commissioned the facilities, said that the facilities would not only benefit mine employees and commended Konkola Copper Mines for their longstanding partnership with the government to delivering quality healthcare.

“My government appreciates the long standing relationship with Konkola Copper Mines and it is our desire to sustain this mutual cooperation aimed at improving the quality of life of the Zambian people,” she said.

Acting Konkola Copper Mines CEO, Enock Mponda, reiterated the company’s commitment to the health and safety of its employees as top priority and stated that the company would continue to ensure that the health and safety of its workforce remained paramount as it embarks on its rigorous growth plan.

“The health and safety of our people is the number one priority for management. By firstly providing our employees with the best possible health care and ensuring that everyone is healthy and well, only then can we can focus on growing production and taking Konkola Copper Mines to even greater heights,” he said.

Konkola Copper Mines manager for medical services Edward Chilekwa hailed the new facilities as a big step in raising the standards of radiological diagnostic services and overall patient care at the Konkola Copper Mines medical facilities.

“The x-ray machine is something we have been looking forward to and it couldn’t have come at a better time than this as it will help us improve diagnostic quality. I am positive that this upgrade will enable our staff to serve patients in much more efficient manner,” said Dr. Chilekwa.


Source: Mining Review

Mining in 2018: Copper price to power on

The price of copper ended 2017 near a four-year high of $3.30 a pound ($7,260 per tonne) extending the bull run in the red metal for a second year. Measured from its multi-year lows struck at the beginning of 2016, copper has gained more than 70% in value.

What happened in 2017

The run started on hopes (since dashed) of massive infrastructure investment in the US following the presidential election, but strikes in Q1, which at one point saw nearly a tenth of global production go offline, really set the tone for the year.

By mid-year the rally was flagging, but talk of a Chinese ban on scrap imports saw the price take off again. The year-end surge may have been mostly due to dollar weakness but the buoyant mood evident throughout the year (not least among speculators on futures markets) was underpinned by prospects of a demand spike in coming years on the back of an electric vehicle boom.

How things could change in 2018 (and beyond)

2017 is likely to have been the first year in 12 to see a decline in global mine production, but growth should return this year as world number two producer Peru adds some 300,000 in new production, mines like Norilsk’s Bystrinsky mine in Russia ramp up output, Glencore restarts its Zambian operations and greenfield commissioning such as First Quantum’s Cobre Panama mine begins to factor into supply projections.
“The markets where technology hasn’t substantially shortened the supply cycle, and where cost are rising, (i.e. copper) have the greatest long-term upside in prices”
But as happened last year labour action is likely to crimp any projected output growth. Wage negotiations could trigger disruptions at mines producing about 40% of global supply according to Barclays. INTL FCStone is penciling in a 1.26m tonne or 6% disruption allowance and most analysts see widening – if smallish – deficits.

The upside:

  • Factories around the world are buzzing – the JP Morgan composite PMI index is at its highest since February 2011 – and concerted global economic growth could hit 4% this year
  • Warehouse and exchange inventories are under control – Comex is up sharply, but Shanghai is down despite winter refinery shutdowns and at 200,000 tonnes, LME is nowhere near peaks seen during copper’s bear years
  • China’s pollution clampdown and shake-up of state-owned industry open up gaps for producers elsewhere – refined imports have held up surprisingly well and concentrate shipments are at record highs hitting 1.8m tonnes in November
  • The switch to electric vehicles, the build out of EV infrastructure (Beijing’s promised 4.8m charge points by 2020) and green energy investment lives up to the hype
  • Long-standing industry issues are not going away: Declining grades, rising costs, dirty concentrates, water and other environmental concerns, stricter regulations, community opposition, agonizingly slow project permitting processes and exploration activity still in the doldrums

On the downside:

  • Cooler heads prevail and Chile’s biggest ever year of copper mine wage negotiations concludes without major disruptions
  • The Chinese construction market correction turns into full-blown slump, transport slows and the scrapping of subsidies puts the brakes on EV sales – the biggest sources of demand for the metal in a country that consumes nearly half the global total
  • Higher prices encourage Chinese miners to ramp up output, domestic secondary supply rises and the purported ban on scrap imports never materialize
  • Copper from large scale expansions – Oyu Tolgoi and Grasberg going underground spring to mind – and greenfield projects like Udokan, Wafi-Golpu and Quellaveco – reach the market before new wave of demand from EVs does.

Key event to watch in 2018

Mid-year wage negotiations at Escondida – the globe’s only 1m tonne copper mine – crippled by a 44-day strike last year.

All bets are off if…

The promised $500 billion infrastructure investment program in the US gets off the ground, especially if the money goes into the electricity grid (not gonna happen)

Quote for the year

“The markets where technology hasn’t substantially shortened the supply cycle, and where cost are rising, (i.e. copper) have the greatest long-term upside in prices. The lack of investment over the past few years implies that copper mine production is likely to decelerate notably after 2019, given its long-cycle nature” – Goldman Sachs

MINING.com’s call

Above $3.50 ($7,800 a tonne) by the end of 2018 and a rising trend into 2019. And that may be conservative.


Source: Mining

ZCCM-IH gets extra $36 million

An English Court has awarded ZCCM Investment Holdings PLC an addition 36 million U.S dollars in claims against Konkola Copper Mines -KCM.

This is was as a result of unpaid sums due to ZCCM IH pursuant to a settlement agreement entered by the parties in 2013.

This brings the total amount awarded to ZCCM IH to 139 million US dollars in claims against Konkola Copper Mines.

The court has also given directives for the inquiry to determine whether KCM had breached the settlement agreement by making payments to Vendetta group of companies whilst sums remained due and owing to ZCCM-IH.

ZCCM-IH Executive Director Pius Kasolo disclosed this at a media briefing in Lusaka on Tuesday.

Dr Kasolo said the parties have since agreed a repayment plan for the recovery of the additional sums which consists of 21 equal months instalments together with interest at three percent.

He said the final payment is expected on August 31st, 2019.

Dr Kasolo said partners should not take the move as a deliberate attack on them but a move that will make the investment holdings answerable to Zambians.

He however, said that ZCCM IH remains committed to ensuring that the KCM operations continue in Zambia.

Dr Kasolo said ZCCM IH will continue to provide the necessary support to ensure the value of the stake in the company.


Source: ZNBC