During the period under review, Chambishi continued to be under care and maintenance due to lack of feedstock for the plant and other strategic reasons.
There were no dividends paid during the year under review (2022: Nil).
Kansanshi Mining Plc (Kansanshi Extract from 2023 Annual Report
The principal activities of the mine includes mining, prospecting for minerals and processing of ore in Solwezi area of North Western Province. The key notable occurrences in 2023 were:
The successful conversion of ZCCM-IH’s dividend right in KMP to a 3.10% Life of Mine Royalty Right. This will ensure that ZCCM-IH’s cashflows are more stable and predictable going forward.
KMP implementation of the S3 Expansion project commenced. The S3 Expansion is a significant $1.5 billion investment by First Quantum Minerals aimed at extending the mine’s life into the 2040s, enhancing its production capacity, and generating employment opportunities. It includes expanding the mining pit, upgrading the fleet, and enlarging the processing plant and smelter. This expansion is pivotal for adding value within Zambia and contributes to the nation’s goal of increasing mineral processing locally and aiming to maximize the mine’s output and efficiency, thereby contributing to local economic development and job creation. Completion is anticipated by mid-2025.
For the year ended 31 December 2023, Kansanshi recorded revenue of ZMW32.30 billion (US$1.57 billion) (2022: ZMW25.98 billion US$1.52 billion). Net profit over the period reduced to ZMW343.83 million (US$16.75 million) from ZMW 2.62 billion (US$153.93 million) in 2022. The geological and hydrological challenges at Kansanshi continued to affect average grades which were at 0.6% in 2023, significantly affecting the amount of copper and gold recovered.
Royalties received in 2023 were ZMW1,200.19 million (US$56.13 million) and dividends received were ZMW170.74 million (US$9.05 million).
Maamba Collieries Limited (MEL) Extract from 2023 Annual Report
In 2023, significant developments were observed at Maamba Collieries Ltd (MCL), particularly around the Maamba Power Station and its coal mining operations. MCL operates a modern Coal Handling and Processing Plant (CHPP) that facilitates the production of different coal products with consistent quality. Since its privatization in 2010, MCL has made significant improvements in managing coal dumps to mitigate air pollution caused by spontaneous combustion in the overburden dumps. These efforts in environmental management have been recognized through awards from the Zambia Environmental Management Agency (ZEMA) .
Maamba Collieries Limited (MCL) reported total revenue of ZMW5.00 billion (US$243.69 million) for the year ended 31 December 2023 (2022: ZMW4.75 billion (US$278.68 million)) and had a profit after tax of ZMW2.57 billion (US$125.04 million) (2022: profit of ZMW1.53 billion (US$89.95 million).
In 2022, ZESCO, Zambia’s state power utility, reached a settlement in international arbitration with Maamba Collieries Ltd to pay $518 million by August 2024 to settle outstanding arrears for power supplied. This settlement follows arbitration in London where both parties agreed on the terms for resolving the debt. According to the agreement, ZESCO will discharge the arrears in tranches by August 2023, after adjusting for a cash discount of $60 million extended by Maamba. The settlement was reached amicably to address overdue power purchase bills while ensuring that monthly payments for power sales from May 2022 are fully paid to Maamba. As at the year ended 31 December 2023 the outstanding debt from ZESCO to Maamba was USD323.18 million (2022:US$539.93 million).
The Maamba Power Station, fuelled by low-grade coal from MCL’s Maamba mine, plays a crucial role in Zambia’s energy sector. Currently, the station has two operating units, each with a capacity of 150 MW, commissioned in 2016. There is potential for expansion, with plans to add two more units, each also with a capacity of 150 MW, to meet the growing electricity demand in the country. This expansion, projected to cost around US$400 million, would potentially double the station’s output to 600 MW.
Maamba Collieries has also explored the possibility of increasing the power station’s capacity to 600 MW to support Zambia’s ambition to become an electricity hub in the region. A technical feasibility study for the expansion was completed, and MCL is seeking third party funding for the project. These developments indicate MCL’s commitment to enhancing energy production capabilities in Zambia, contributing significantly to the national grid and supporting sustainable energy security in the region.
During the year, Maamba undertook semi-annual maintenance on unit 1 of the 150 MW thermal power units between 4th August 2023 to 17th August 2023. Unit 2 underwent semi-annual maintenance between 25th March 2023 and 7th April 2023 as well as forced shut
CEC records 3% increase in amounts of power sold in 2022
THE Copperbelt Energy Corporation (CEC) has described its business performance in 2022 as “generally well”. CEC Managing Director Owen Silavwe says the corporation saw a 3 percent increase in the amount of power it sold last year. Addressing the media, Friday, Silavwe said although the 3 percent was a modest growth, it was good for a mature business like CEC. “We believe as a company that we performed generally well in 2022. And when we talk about performance, one of our key priorities, and we would like to start with how we are performing from a safety perspective. And for us, we look at that holistically; so we look at health, safety, environmental and social. And when you look at……
Source: News Diggers
Mopani Copper Mines Plc Extract from 2023 Annual Report
For the year ended 31st December 2023, Mopani Copper Mines (MCM) recorded cumulative net revenue of ZMW11.55 billion (US$562.87 million), (2022: ZMW11.85 billion (US$695.25 million)). The net loss for the year under review was ZMW8.96 billion (US$435.29 million) (2022: ZMW5.05 billion (US$292.55 million)).
During the year under review, MCM produced a total of 65,602 tonnes of finished copper (2022: 72,694 tonnes). The lower production during the year under review was mainly due to low equipment availability, and limited ore sources to mine due to delayed development. In addition, there were multiple outages of the fixed plants across all shafts.
After the year ended 31 December 2023, ZCCM-IH achieved a significant development on Mopani involving a new partnership and an investment that marks a transformative chapter for Zambia’s mining sector and its economy at large. Zambia selected the United Arab Emirates’ International Resources Holdings (IRH), a unit linked to Abu Dhabi’s most valuable listed company, International Holdings Company (IHC), as the new strategic equity partner for Mopani Copper Mines. This partnership is aimed at investing funds into Mopani to help with short-term working capital and finance the completion of the mine development to unlock its long-term potential. Additionally, this move is expected to restructure the Mopani’s balance sheet and increase copper production to at least 200,000 metric tons per annum in future.
In 2024, ZCCM-IH has a 49% equity stake in Mopani Copper Mine, with IRH through its subsidiary Delta Mining Limited (Delta) holding a 51% equity stake after an initial investment of US$1.1 billion was made. This agreement included financing MCM’s Project Development Plan (PDP) by providing working capital and restructuring certain existing Glencore liabilities. A new Board of Directors reflecting the revised shareholding structure has been established, and further capital has been made available as shareholder loans based on future working capital requirements.
There were no dividends declared during the period under review (December 2022: Nil)
Copperbelt Energy Corporation Plc (CEC) Extract from 2023 Annual Report
Copperbelt Energy Corporation PLC (the “Company”) is incorporated in Zambia under the Zambia Companies Act as a public limited Company and listed on the LuSE. The Company and its subsidiaries (together “the Group”) is involved in power generation, transmission, distribution, supply, and professional football through its Club subsidiary.
Key milestones noted during the year:
CEC commissioned the 34 MW Solar PV plant at our Riverside location in Kitwe and commenced with the evacuation of power into the grid. In addition, CEC commenced the implementation of the 60MW Solar PV plant located at Itimpi in Kitwe. All this is in line with the green growth agenda and comes alongside technological improvements to the transmission network. The combined capital investment made for the Riverside and Itimpi Solar plants was US$75 million.
Copperbelt Energy Corporation (CEC) has also initiated Zambia’s first green bond program to raise $200 million on the LuSE for further investment in solar and other renewable energy generation projects. Through the Green Bond, CEC’s subsidiary, CEC Renewables raised US$454 million in the oversubscribed first tranche of the bond program, and this expected to anchor CEC’s green energy generation ambitions.
For the year under review, CEC reported total revenue of ZMW7.85 billion (US$382.27million), (2022: ZMW6.38 billion (US$374.449 million)) and profit after tax of ZMW2.83 billion (US$137.65 million), (2022: ZMW866.41 billion (US$50.82 million)). Further, the CEC share price opened at ZMW3.78 per share and closed at ZMW7.09.
The Company declared a dividend of US$ 55.25 million with ZCCM-IH receiving US$14.59 million (2022:US$10.3 million).
Stock Performance Review – Listings Review for First Quarter of 2023
The first quarter of 2023 saw ZCCM Investments Holdings Plc (“ZCCM-IH” or “the Company”) stocks underperform by a 21.14% average when compared to the Markets on which it is listed. ZCCM-IH has its primary listing on the Lusaka Securities Exchange (“LuSE”), and secondary listings on the Euronext Access in Paris, and the London Stock Exchange (“LSE”).
The Table below shows the Company’s stock performance on the three (3) listings:
|
ZCCM Investments Holdings Plc |
|||||||
|
Quarterly Stock Performance (Q1 2023) |
|||||||
|
Stock Exchange |
Opening Price |
Closing Price |
Variance |
Variance |
Trade Volume |
Trade Volume |
Turnover |
|
(Currency) |
(Currency) |
(Currency) |
(Percentage) |
(Stock Units) |
(Transactions) |
(Currency) |
|
|
LuSE |
ZMW 37.98 |
ZMW 37.98 |
ZMW 0.00 |
0.00% |
3,370 |
26 |
ZMW 127,992.60 |
|
Euronext Access |
EUR 1.48 |
EUR 1.27 |
-EUR 0.21 |
-14.19% |
145,712 |
239 |
EUR 194,944.00 |
|
LSE |
USD 1.65 |
USD 1.65 |
USD 0.00 |
0.00% |
0 |
0 |
USD 0.00 |
- LuSE Stock Performance Review
Share price on the LuSE opened and closed at ZMW37.98 (USD1.77) per share, which was also the high and the low for the quarter, representing a 0.00% change in share price for the period. 3,370 shares exchanged hands in 26 trades for a turnover of ZMW127,992.60 (USD5,980.90).
The LuSE All Share Index (“LASI” or “the Market”) shows that the Market was up by 6.83% as at the end of the quarter. When compared to the movement of the Market during the period, ZCCM-IH stock value trading on the LuSE underperformed by 6.83%, having not appreciated in value, while the market moved up by the latter percentage.
Market capitalisation for LuSE traded ZCCM-IH stock stood at ZMW5,692,746,809.70 (approximately ZMW5.7 billion or USD266 million) as at the end of the period. Note that the exchange rate used is at the conclusion of trade for the period.
- Euronext Access Stock Performance Review
On the Euronext Access, the shares opened trade for the period at EUR1.48 (USD1.61) per share, which was also the peak for the period. Despite a low of EUR1.22 (USD1.33), Euronext Access stock ended the quarter trading at EUR1.27 (USD1.38) representing an overall 14.19% decrease in share value over the period under review. A total of 145,712 shares were traded in 239 transactions for a turnover of EUR194,944.00 (USD211,937.27).
The Cotation Assistée en Continu All Shares Index (“CAC All Shares” or “the Market”) shows that the market went up 13.39% as at the end of the quarter. When compared to the movement of the CAC All Shares Index during the period, ZCCM-IH stocks listed on this exchange underperformed by 27.58%. The 27.58% difference is accounted for by the ZCCM-IH shares having decreased in value by 14.19% while the Market appreciated by 13.39%.
Market capitalisation on ZCCM-IH stock trading on the Euronext Access stood at EUR13,486,862.79 (approximately EUR13.5 million or USD14.68 million) as at close of trade on the last day of the quarter. Note that the exchange rate used is at the conclusion of trade for the period.
- LSE Stock Performance Review
ZCCM-IH stock on the LSE opened and closed the quarter at USD1.65 per share. This represents a 0.00% change in share price for the period. USD1.65 was also the high and the low for the quarter during which no shares were traded.
The Financial Times Stock Exchange All Shares Index (“FTSE All Shares” or “the Market”) shows that the market went up by 0.64% as at the end of the quarter. When compared to the movement of the FTSE All Shares Index during the period, ZCCM-IH stocks trading on the LSE underperformed by 0.64%, having not appreciated in value, while the market moved up by 0.64% over the same period.
Market capitalisation for LSE traded stock stood at USD482,945.10 (approximately USD0.48 million) as at the end of the period.
Industry News – Zambian Copper and Cobalt to Drive the Global Shift to Electric Vehicles
The need to reduce global greenhouse gas emission levels inspired the European Union (“EU”) to declare a ban on the sale of new petrol and diesel fueled vehicles. This will be effective 2035, after which only vehicles powered by electricity stored in batteries will be offered on the European market.
Zambia is the sixth largest copper producer in the world, holds the second largest cobalt reserves, and has ore mineralization of lithium, manganese, nickel, and graphite, all minerals critical for the Electric Vehicle (“EV”) battery industry.
The Government of the Republic of Zambia (“GRZ”) is already positioning itself to take advantage of the anticipated global demand for copper and cobalt, as well as the bullish EV battery market. Here is how:
Increasing Copper Output
In 2022 the Government of the Republic of Zambia (“GRZ” or the “Government”) set a national annual copper production target of 3 million metric tonnes to be achieved starting 2031. The 275% increase in annual production from the current 800,000 tonnes will be achieved by expanding output at existing mines and opening up of greenfield projects.
Since the current Government came into power in 2021, First Quantum Minerals (“FQM”) pledged a USD1.25 billion investment to expand operations at Kansanshi Mining Plc (“KMP”). ZCCM-IH in partnership with EMR Capital and KoBold are also in the process of setting up a new copper mine in the next 10 years Mingomba Mine whose detailed exploration works using AI technology commenced during the quarter, will sit on one of the richest ore bodies in the world with an estimated 247 Metric Tonnes (“MTs”) of ore with average grade of 3.64% copper according to the Lubambe Extension Project study.
Revisions to Taxation on Mining to Boost Investment
The first significant revision by the Government to the country’s mining tax regime was to introduce the deductibility of the Mineral Royalty Tax (“MRT”) payments. Previously, MRT was non-deductible which was widely viewed by mining companies as double taxation.
Non-deductibility of MRT meant that mining companies had to pay MRT on revenue in addition to income tax from profits. This resulted in decreased output, as well as an overall decrease in investment by new entrants into Zambia’s mining sector, and reinvestment by mining entities already operating in the country. This is no longer the case, as evidenced by reinvestments in KMP, as well as the USD150 million investment to develop Mingomba Mine among others.
Value Addition to Minerals Used in EV Battery Production.
Zambia is Africa’s second largest producer of both copper and cobalt, eclipsed by the Democratic Republic of Congo (“DRC”) which accounts for 70% of global cobalt production. In spite of this, both countries are considered among the least developed, and continue to export raw metals critical for the EVs industry. To change this narrative, both Zambia and the DRC signed a Memorandum of Understanding (“MoU”) with the United States of America (“USA”) to jointly develop manufacturing plants that will increase their involvement in the global supply chain for EV batteries.
In addition to the extraction of raw materials needed to produce EV batteries, both countries will be involved in processing, manufacturing, and the assembly of EV batteries and battery components for export. By engaging in the refining of and value addition of minerals extracted to produce EV batteries and battery components, both countries will yield significantly greater economic benefit from their copper and cobalt deposits.
Expected Outcomes for Zambia
Investment in mining, increased commodity output, and value addition to commodities will put Zambia on the path to economic recovery. This is cemented by analyst predictions of copper prices settling around the USD9,000 per tonne mark in the near future, gradually increasing amid widening supply and demand deficits over time.
In time, the country itself will abandon fossil fueled internal combustion engines and shift to using EVs.
Company News – ZCCM-IH Pays ZMW85.2 Million (USD4.43 Million) Dividend to Shareholders
ZCCM Investments Holdings (“ZCCM-IH” or “the Company”) on Monday 6 February 2023 commenced distribution of ZMW85.2 million (USD4.43 million) or ZMW0.53 per share being a total final dividend payable to shareholders for the financial year ended 31 December 2020. This was approved by the company’s shareholders at the 18th Annual General Meeting held on 9th December 2022.
The dividend paid was as a result of a Group profit of ZMW2.1 billion (USD109 million), and a Company profit of ZMW568 million (USD29.5 million) recorded for financial year ended 31 December 2020. A Group profit of ZMW307 million (USD15.98 million) and a Company profit of ZMW153 million (USD7.96 million) were recorded the year prior, representing a 594% and 271% increase in profit respectively.
Profit Recorded at Group Level was on account of a 70% increase in the value of dividends received due to improvements in the performance of investee companies. Additionally, two companies paid dividend during the period, as opposed to the year prior where one dividend payment was received by the Company.
Due to favorable copper prices of USD6,200 per ton recorded in 2020, a 3% increase from the USD6,000 per ton recorded in 2019, investee company share of profit on equity increased by 254% during the period.
Total Group assets also increased with value going from ZMW15.2 billion (USD790 million) in 2019 to ZMW 23.7 billion (USD1.2 billion) by the conclusion of 2020. This 55.9% increase was on account of a 63% increase in investment of associates, and a 219% increase in Cash and Cash equivalents resulting from a receipt of ZMW208 million (USD10.8 million) in dividends in 2020.
Further, the Group recorded a 95% increase in retained earnings during the period under review. This increased from ZMW2.1 billion (USD109 million) in 2019 to ZMW4.2 billion (USD218 million) in 2020.
Profit Recorded at Company Level was attributed to a recorded income of K226 million (USD11.75 million) for the year, a growth of 32% when compared to ZMW171 million (USD8.89 million) recorded the year prior.
With most assets being denominated in USD, some gains achieved were a result of the significant depreciation of the Kwacha against the United States Dollar. The years under review saw an average increase of 40.9% in exchange rate gains, with the average rate increasing from ZMW13.2/USD in 2019 to ZMW18.6/USD in 2020.
Retained earnings at Company level also increased, with ZMW1.5 billion (USD78 million) recorded for 2020 from ZMW978 million (USD50.9 million) recorded the year prior, a 53% increase.
Payment of Dividends by ZCCM-IH to its Shareholders is governed by the Company’s Dividend Policy as amended on 29th March 2018. The ZCCM-IH Dividend Policy stipulates that a minimum of 35% of the unconsolidated Net Profit after Tax (“NPAT”) for any financial year in which a positive unconsolidated NPAT is recorded be paid to its shareholders as dividends.
The ZMW85.2 million (USD4.43 million) dividend paid constitutes 37.7% of NPAT and is the fifth consecutive year reported that the Company has declared a dividend for a return on investment to our shareholders.
To access the Company’s Strategic Plan, kindly click the following link: https://zccm-ih.financifi.com/download/2018-2023-strategic-plan/
Note, all USD conversions are as at the closing rate on 6 February 2023 when dividend payment commenced.
Portfolio News – Copperbelt Energy Corporation Upscales Investment in Renewable Energy
In an effort to diversify its energy mix portfolio, Copperbelt Energy Corporation Plc (“CEC” or “the Company”) commissioned a 33.11MW Solar Photovoltaic Plant (Solar PV Plant) in Kitwe on 15 February 2023. This is an upgrade of its 1.04MW Riverside Solar Photovoltaic Plant.
The solar project is being undertaken by CEC Renewables Ltd, a wholly owned subsidiary by CEC, in which ZCCM Investments Holdings (“ZCCM-IH”) currently holds a 31.03% stake.
Diversifying the CEC Energy Mix
CEC’s power energy is heavily reliant on hydro power sourced from ZESCO. This makes up approximately 91.05% of its power since the commissioning of the Solar PV Plant that is largely distributed to the mining firms on the Copperbelt. Owing to its extensive infrastructure, CEC has been the sole supplier of power energy to these mining firms in Kitwe, Luanshya, Mufulira, Chambishi Chingola and Chililabombwe since post privatisation operations commenced in 1997.
CEC’s high dependency on ZESCO for power supply however does put the Company business continuity at high risk. This risk is evidenced by what transpired during the expiration and renegotiating of the Bulk Supply Agreement (“BSA”) between CEC and ZESCO in March 2022. While the BSA has since been renewed for an additional thirteen (13) year period with a clause to safeguard CEC’s operations by granting the Company access to ZESCO transmission infrastructure for domestic wheeling purposes added, the continuity of the BSA was threatened. In addition, ZESCO itself is still heavily reliant (81.5%) on hydro-electric power which is prone to climatic and weather changes.
In view of the above, CEC through its wholly owned subsidiary CEC Renewables Limited has responded by taking the bold step to innovate and investing in renewable sources of energy to diversify the energy mix portfolio in order to avert some of the risks associated with the mono-power source that is largely hydro-based.
The Riverside Solar PV Plant Project
CEC Renewables Limited completed construction of the 33.11MW Solar PV Plant, expanding on an existing 1.04MW Solar PV Plant in Kitwe. The location of the plant was strategic as it is close to existing CEC infrastructure thus simplifying grid connectivity, monitoring and operation, as well as maintenance of the facility. The facility’s current total capacity is now 34.15MW which will be used for domestic wheeling. This is the first major step towards power generation, with CEC now being approximately 8.95% less dependent on ZESCO for power and reducing its operational costs at the same time.
Future CEC Renewables Projects
In its BSA with ZESCO, CEC has a fixed fee power supply limit of 380MW. The 380MW exceeds CEC’s current demand, however this is anticipated to change in the near future. As such, the Company is targeting to develop an installed capacity of 200MW of renewable energy on the Copperbelt by 2024. To this end, in addition to the Riverside Solar PV Plant, CEC:
- Has commenced construction of the first phase of the Itimpi Solar Development Project. The Itimpi Solar Development Project is a greenfield utility scale 60MW solar PV facility to be located on the outskirts of Kitwe’s Garneton. The first phase of the project is expected to be fully operational in the fourth quarter of 2023.
- Has plans to develop a 138MW wind powered facility in Masaiti, Ndola in partnership with Upepo Energy, a highly experienced group of energy project developers committed to bringing utility scale wind, solar, and battery storage projects to Sub-Saharan Africa.
Benefits to ZCCM-IH
ZCCM-IH has held a 24.1% stake in CEC in since November 2018. This was increased to 31.03% earlier in the year. The increase is as a result of the confidence in CEC’s business continuity and the projected business growth arising from the expansion into renewable energy that is aimed at delivering maximum shareholder value and return. With the global drive to decarbonisation and net zero, CEC is headed in the right direction to become a leading clean energy producer in Zambia. In addition, CEC has been a consistent dividend payer since 2015 with continuous payments on average of USD22 million per annum to its shareholders.