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ZCCM-IH News

Copper mining will rebound – ZCCM-IH

KOMBO KACHEMBA, Kitwe
THE Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) says the challenges facing the mining sector are temporary and they arise from changes in the supply and demand chain on the international market.

ZCCM-IH chief executive officer Pius Kasolo said the slump in copper prices on the international market is a routine economic trait which is not permanent but comes as a result of changes in the demand and supply chain.

What happens is that if China is not buying our copper, the mines reduce on production. At a certain point, when all the copper on the market is consumed, there will be high demand for the commodity and the prices will definitely go up. So what is happening in the mining sector in Zambia is temporary,

Dr Kasolo said.

He was speaking in an interview in Kitwe on Tuesday during a ZCCM-IH discussion forum dubbed ‘Share sale down promotion’.

ZCCM-IH is selling shares to members of the public at a share price of K38 per capital share.

Dr Kasolo projected that the price of copper on the international market is likely to improve in the next six months and appealed to Zambians to have confidence in the mining sector.

He said the mining sector still remains viable with mining activities still taking place in the North-Western Province.

Dr Kasolo said Zambia has plenty of copper ore deposits which are yet to be explored by investors willing to invest in the mining sector.

The North-Western Province will soon become the Copperbelt of Zambia. There are exploration works that are currently taking place here in Zambia for other minerals as well including gold, so our mines are still viable,

he said.

Dr Kasolo also said ZCCM-IH is capable of managing the mining sector should Government decide to take ownership of the mines.

He, however, said if ZCCM-IH has to take over the operations of the mines, it means the investment holding has to also inherit the huge debts accrued by the mine owners.

If President Lungu today tells me to be in charge of the mines, I can manage to run them, after all these mines are managed by Zambians,

he said.
Dr Kasolo said ZCCM-IH has the skills and expertise required to operate the mines effectively for the Zambian people.

And speaking during the forum, Dr Kasolo appealed to Zambians to buy shares in ZCCM-IH because it is diversifying its activities to include the agriculture and energy sectors.

He also assured Zambians that their investments will be protected should they choose to buy shares in ZCCM-IH.

Dr Kasolo said priority in buying shares has been given to Zambians for ZCCM-IH to be locally owned.
He appealed to Zambians to quickly buy ZCCM-IH shares before the promotion ends on November 30 this year.

And KELVIN CHONGO reports that mining expert Matheus Mphande has urged Government to consider value addition to copper as a way of protecting jobs in the mining sector.

“The only way we can develop the country is to get into processing of copper into copper wires, pipes and manufacturing of motor vehicle parts,” he said.
“With these plans in place even when copper prices fall at the London Metal Exchange, the economy will still remain strong,” he said.

Dr Mphande said many countries have no copper deposits and that Zambia must take advantage by getting into cooperation with countries like China, India or South Africa to set up a copper processing plant.

Dr Mphande said even South Africa, which manufactures cars such as Isuzu and Toyota, has no copper deposits and it would be appropriate for Zambia to enter into an agreement to supply finished copper products specifically for vehicle manufacturing.

Dr Mphande also said mine owners should stop importing lime but buy the locally produced one.

Copper at the London Metal Exchange was trading at US$4,525 per tonne yesterday.

Investee Company News

Zambians urged to buy ZCCM-IH shares

KABANDA CHULU, Lusaka
ZCCM Investments Holdings Plc has engaged the Ministry of Foreign Affairs to ensure that information is circulated to Zambians living in the diaspora participate in the buying of the 28 million government shares being sold on the Lusaka Stock Exchange.

ZCCM-IH chief executive officer Pius Kasolo said President Lungu directed that all Zambians living locally and abroad be engaged to participate in the running of the mining industry through shares, which are being sold at K38 per share.

“We have started working with the Ministry of Foreign Affairs to ensure that information about the sale down is disseminated to Zambians wherever they can be found and use all channels available to reach them.

“Generally, the response was slow at first but there is an improvement, and it is time Zambians get exposed to owning shares. In other countries, people in bars and clubs talk about shares they own and this is the culture which should be embedded in our society,” Dr Kasolo said.

When asked if the response will be good considering the low copper price on the international market, Dr Kasolo said ZCCM-IH is not worried.

“People buy shares when they are down and when things improve, you rise up together”, he said.

Dr Kasolo also urged companies to take advantage of the share offer which ends on November 30.
ZCCM-IH News

Buy shares in ZCCM Holdings, citizens urged

SYLVESTER CHISHIMBA, Lusaka
ZCCM Investments Holding has implored Zambians to take advantage and buy shares floated by the company on the market.

During a ZCCM-IH share sale-down interactive meeting at Mulungushi International Conference Centre on Friday, ZCCM-IH chief financial officer Mabvuto Chipata said his company, through the share sale-down, intends to increase participation of Zambians in economic development.

We want to ensure a broad distribution of shares in order to increase the liquidity and trading of ZCCM-IH shares on the LuSE [Lusaka Stock Exchange]. We want to comply with LuSE listings requirements regarding the minimum percentage of shareholding available to the public, implement GRZ’s initial intention of the second phase of privatisation and also raise revenue for the treasury,

he said.

Mr Chipata said ZCCM-IH has put up 27,961,237 shares for sale at an offer of K38 and K40 as market price.

The preferred applicants, who are Zambian companies or the local people, will not pay any transaction fees but foreign nationals or companies will pay a transaction fee of 1.37 percent,

he said.

Mr Chipata said the share sale-down which has a percentage offer of 17.4 percent, closes on November 30, 2015, adding that the results of offer will be announced on December 14.

“We extended the period of offer for another two months in order to provide more opportunity to every Zambian within the country to know about the offer.We do not want to have at the end of the day people saying they did not hear about the offer,” he said.
ZCCM-IH News

ZCCM-IH share sale deferred

THE sale of ZCCM-IH shares to the public has been extended to November 30, 2015, due to lack of adequate information on the preferential market offer.

This is in compliance with the listing rules of the Lusaka Stock Exchange (LuSE), and an announcement made by ZCCM-IH on Friday August 7, 2015, detailing the salient terms of the preferential secondary market offer.

The investing public has been advised that the period for the preferential offer has been extended to Monday, November 30, 2015.

According to information posted on the Industrial Development Corporation (IDC) website, the preferential offer was targeted to close on Friday, October 2, 2015, but ZCCM-IH has noted that most members of the public have not been able to access adequate information on the preferential offer due to the delayed availability of the information supplement.

“The company has decided to extend the offer period to Monday, November 30, 2015. The revised time line for the offer is shown under the revised salient dates,” the announcement reads.

Investee Company News

First Quantum Minerals reports stable power supply to its Zambian operations

Zambia – First Quantum Minerals said on Monday that the Zambian power situation is stabalising enough that it anticipates its Sentinel copper mine, in Zambia’s North Western province to begin commercial-level production by the end of the year.

Sentinel, which has been in construction by First Quantum Minerals since June 2012, will produce between 280 000 and 300 000 tpa of copper at full production from a large low-grade ore body containing 0.51% copper.

Sentinel’s ramp-up to date has been affected by the limited power supply. Despite this, good progress has been made. One power line, supplying 55 MW is currently connected and supplying power to the Sentinel mine while construction of the second power line connecting Sentinel to Lusaka West is complete and scheduled to be energized shortly.

Once the second power line is connected and energized, Sentinel will be entitled to its full power requirement of 160MW. This will allow for the mine to ramp-up towards commercial-level production expected by the end of 2015.

Further, full power of 153 MW is currently being provided to First Quantum Minerals’ other Zambian operation – the Kansanshi mine and smelter.

ZESCO, the state-run power company, has requested the mining industry to use supplementary power for 30% of their requirements. Discussions are currently underway regarding the related tariffs for this supplementary power. First Quantum Minerals expects full production at both Kansanshi and Sentinel through the purchase and sharing of this power.

It is also expected that the country’s generating capacity will improve following the rainy season starting in November. In addition, approximately 400 MW of new power generation capacity is expected online in Zambia in 2016 from projects nearing completion – which includes 300 MW thermal and 100MW hydro power.

Meanwhile, in response to low commodity prices, market volatility and power shortages to its Zambian operations, First Quantum Minerals has taken steps to protect itself in the current market conditions, says First Quantum Minerals Chairman and CEO Philip Pascall.

“Our focus has been clear. It is first to ensure that profitability and cash flow from our mining operations are maximized and protected in these volatile market conditions and sustained lower commodity prices and second, that cash outflows are limited to essential and economically attractive projects so that our balance sheet integrity is maintained.

“Additional initiatives to further strengthen the balance sheet are being prioritized and are under active review.
ZCCM-IH News

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

Industry News

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.

Industry News

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.
Investee Company News

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.
Investee Company News

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.