MOPANI Copper Mines Plc has no plans to make any employee redundant once ZCCM-IH takes full ownership from March 31, 2021, says acting chief executive officer Charles Sakanya.

And Sakanya has insisted that ZCCM-IH’s imminent 100 per cent ownership of Mopani is the “best deal” for Zambians because citizens will benefit more compared to the previous status quo under Glencore Plc.

Meanwhile, ZCCM-IH chief investments officer Brian Musonda has disclosed that Mopani’s enterprise value is above the US $1.5 billion debt that will be due to be repaid back to Glencore, an indication that the anticipated return on investment will outweigh the cost of purchasing the mine.

Speaking during a Radio Icengelo programme in Kitwe, Thursday, Sakanya said Mopani employees’ jobs were secure and no one would be laid off following ZCCM-IH’s imminent takeover set to be completed by the end of this month.

Mopani’s outgoing parent company, Glencore, is set to relinquish its majority stake in its subsidiary following the signing of an off-take agreement with ZCCM-IH by March 31.

“There are no plans to declare anyone redundant, it’s a going concern, and there’s been no plans for redundancy at all,” Sakanya said in response to a listener who asked a question on miners’ job security.

And he insisted that the transaction was the “best deal” for Zambians because citizens would benefit more compared to the previous status quo under Glencore.

He outlined that the Kitwe-based mine still had in excess of 330 million tonnes of copper ore reserves still required to be mined, signalling a long mining shelf-life.

“In terms of the reserves, we had an independent consultant looking at this as part of the transaction, and they have confirmed what we know. The resources are in excess of 255 million tonnes at Nkana, 76.6 million tonnes at Mufulira, that’s a very big mining resource. With deepening exploration, that life can be extended beyond the 25 years. This transaction is the best that has happened for Zambians. Glencore started off by trying to put the mine on care and maintenance, and government took the opportunity to increase their shareholding and the plan they gave Glencore was accepted by Glencore,” Sakanya said.

“So, there are people worrying about: ‘what’s going to happen? What about the ownership, benefit to Zambia?’ I think this is where we need the support of everyone because, now, Mopani Copper Mines will be 100 per cent owned by Zambians so all the benefits that will ensue will be to the benefit of Zambia whereas in the past, it was to the benefit of the shareholders who were foreign.”

He dismissed any assertion that locals were incapable of successfully running the mining company.

“Zambia has more than adequate capacity to run the mines; we’ve been running the mines for close to a 100 years. The people who run the mines, mostly, are Zambians. In terms of capacity, Zambia has more than adequate capacity to run the mines. For example, from April (2020), when Glencore the care and maintenance shutdown, Mopani has run mainly 95 per cent Zambian workforce, and this will be the twelfth month when Zambians will be running the asset so we have more than adequate capacity in terms of human resource,” he said.

Meanwhile, Musonda disclosed that Mopani’s enterprise value was actually above the US $1.5 billion debt that would be due to be repaid back to Glencore.

He was responding to persistent concerns from various stakeholders about the debt being more than the actual value of Mopani, widely reported at an estimated US $750 million.

“First and foremost, this debt has always been on the books of Mopani so ZCCM-IH is not bringing cash of US $1.5 billion to buy the asset. In comparison to the value being referred to, there’s a very big difference between finance and accounting; when accountants are preparing statements, they go by a number of rules provided, according to the International Financial Reporting Standards (IFRS). So, the US $750 million being referred to, is a number sitting on the books of Mopani, according to the requirements of the accounting standards, so it has nothing to do with the actual value. This is an asset that we are comfortable with; we know everything; we have been part and parcel of the board; we know the value we are going to generate. And when you look at the enterprise value, it is way over and above the US $1.5 billion debt that it is going to carry,” he explained.

“There are also a lot of assets that have been invested in at Mopani whose value is way over and above the US $1.5 billion under discussion. So, to put in simple terms: ZCCM-IH is not paying an amount of US $1.5 billion; Mopani is just going to continue servicing the debt, which it has always carried.”

He also outlined that the State-controlled mining investment firm will not need to raise capital outside Zambia to run the mine as there were sufficient resources locally to manage the asset.

“When we were doing a detailed analysis, which was done, and also, this is the reason we accepted the value of the debt of US $1.5 billion because we know that this is sustainable. Also, we don’t need to look for money from outside. However, in case there’s need, it is possible that we can raise funds from the market. But from the interactions that we’ve been having with management, we don’t need to go to the market and raise funds for Mopani, it is a very good asset,” said Musonda.

In line with one of the pillars of its new strategic plan for 2020-2026 of increasing stakes in its underlying mining assets, ZCCM-IH is set to acquire 90 per cent of the issued shares of Mopani Copper Mines from Carlisa Investment Corp as represented by Glencore.

The acquisition will result in ZCCM-IH taking full ownership of Mopani.
The transaction is scheduled to be fully consummated by March 31, 2021, after the ZCCM-IH Extraordinary Annual General Meeting on March 30 in which ZCCM-IH shareholders will vote on the unprecedented transaction.

On January 19, 2021, the Zambian government, through ZCCM-Investment Holdings acquired 90 per cent shares in Mopani, adding to its already existing 10 per cent shareholding in the company.
The signed off-take arrangement deal is priced at US $1.5 billion, which will be financed through a loan to be serviced from Mopani’s future copper sales.

Government now has 100 per cent ownership of Mopani, a move, which, however, received mixed reaction, with more stakeholders voicing serious concerns as to the commercial viability and economic benefits government would accrue on behalf of taxpayers in the off-take arrangement deal negotiated with Mopani’s outgoing parent company, Glencore, the Swiss-based commodities and minerals trader.

Source : https://diggers.news/business/2021/03/22/no-job-losses-once-we-take-over-mopani-zccm-ih/