Low copper prices push ZCCM IH in deep losses in 2015

ZCCM Investments Holdings Plc has reported a loss after tax of K987 million for the year ended 31 March 2015. ZCCM-IH reported a Group operating loss of K2.2 billion in 2015 compared to an operating profit of K871 million in 2014.

The firm blamed the losses to the fall in Copper prices which dropped from USD 6,289 in 2014 to USD 4,701 in 2015.

As a result, dividend income was only K45 million in 2015 compared to K803 million in 2014, amid declined revenues and production, in most of ZCCM-IH’s investee companies.

The operating loss in 2015, was mainly as a result of an impairment loss of K2.1 billion, recognized in respect of amounts receivable from Konkola Copper Mines of K719 million and Lubambe Copper Mines of K705 million.

A further impairment of K513.8 million was recorded, as a result of a decline in the fair value of the investment in KCM, in view of continued challenges at the mine.

And on improved copper prices, ZCCM – IH says copper prices have continued to be depressed in the recent past, and recovery is slow.
“The copper price has recently shown some recovery, however, it is expected that the impact on revenue will be slow. Hence, in order to move from relying on passive income and being dependent on mining, we have embarked on diversifying our investment portfolio, by actively looking for investment opportunities beyond mining, into other sectors such as energy, agriculture and real estate, so that the company can create and maximize shareholder value,” it said.

It added, “For instance, in energy, the Maamba Project is expected to be completed in June this year. ZCCM-IH owns 35% of Maamba Collieries Limited. ZCCM-IH and its partner have invested close to USD 850 million at Maamba Collieries Ltd, into this thermal power plant which will be producing 300MW of power.”

“Further, the recapitalization of Ndola Lime Company Limited has advanced, with the project undergoing hot commissioning. ZCCM-IH is reviewing the operations of Ndola Lime with a view to streamlining its operations and make it competitive and efficient.”

It added, “As part of diversification into real estate, ZCCM-IH recently acquired an investment property that will be leased out to generate passive income. ZCCM-IH has also been identifying a number of strategic legacy properties, with a view of bringing them to use and turn them into income generation projects. Further, ZCCM-IH is currently looking for strategic partners to invest in agricultural projects.

And Lubambe Copper Mine also reported revenue for the financial year ended 31st march 2015, at K1, 071 million as compared to K1,483 million in 2014.

It also reported a loss for the same period of USD78 million, compared to USD39 million in 2014.

The main challenge that Lubambe faced during the financial year under review was the dilution of concentrates.

Due to the above financial and operational challenges, Lubambe was unable to make repayments on the K705 million shareholder loan, and this loan was thus fully impaired as at 31st march 2015.

The way forward is to pursue the rights of ZCCM-IH PLC under the shareholder loan agreement.

On Konkola Copper Mines, the firm reported a net loss of USD178.5 million for the financial year ended 31st March 2015, compared to USD89.2 million loss in 2014.

Revenue reported for the year, was USD1, 077.1 million, down 15.0% (2014: USD1, 271.4 million) due to a decline in the sale of copper and copper related products.

Further, copper sales declined by 15.9% and sale of precious metals in slimes declined by 33.9%.
Total finished copper production during the year was 168,923 MT compared to 177,018 MT in 2014.

During the year under review, KCM faced acute operational and financial challenges including cash flow constraints that resulted in KCM purchasing third party concentrates in smaller quantities than what was sought. KCM is currently focusing on increasing production volumes, and addressing productivity across all of its operations.

To this end, KCM has been implementing various interventions, to improve the overall operating performance and drive higher equipment availability and utilization.

Source: Lusaka Times

Statement to the media on ZCCM-IH financial performance for 2014/15

Lusaka, Zambia – ZCCM Investments Holdings Plc (ZCCM-IH) group reported a loss after tax, of K987 million for the year ended 31 March 2015.

However, during the previous year ended 31 march 2014, the group recorded a profit of K277 million.

At Company level the loss was K639 million in 2015 versus a profit of K893 million in 2014.

As a result of the good performance in 2014, ZCCM-IH declared and paid a dividend of K1.56 per share, totaling K256 million, equivalent to about USD 40 million.

This was a record dividend in the history of ZCCM-IH, as it had never paid any dividend since its inception.

In 2015 however, a number of factors impacted the performance of the group.

Copper prices continued to decline falling from USD6,289 in 2014 to USD 4,701 in 2015.

As a result, dividend income was only K45 million in 2015 compared to K803 million in 2014, amid declined revenues and production, in most of ZCCM-IH’s investee companies.

ZCCM-IH reported a Group operating loss of K2.2 billion in 2015 compared to an operating profit of K871 million in 2014.

The operating loss in 2015, was mainly as a result of an impairment loss of K2.1 billion, recognized in respect of amounts receivable from KONKOLA COPPER MINES (KCM), of K719 million (USD94.9million) and LUBAMBE COPPER MINES of K705 million (USD93 million).

A further impairment of K513.8 million was recorded, as a result of a decline in the fair value of the investment in KCM, in view of continued challenges at the mine.

LUBAMBE COPPER MINE (LCM)

Lubambe Copper Mine (LCM) Limited reported revenue for the financial year ended 31st march 2015, at K1, 071 million or USD164.7 million as compared to K1,483 million or USD237 million, in 2014. It also reported a loss for the same period of USD78 million, compared to USD39 million in 2014.

The main challenge that LCM faced during the financial year under review was the dilution of concentrates. Following an extensive ore body stoping design review conducted by SRK consulting, Lubambe evaluated various slot development methods and equipment requirements, with the recommended solution being inverse raise, using 3x SANDVIK dl411-15 long hole drill rigs.

Due to the above financial and operational challenges, LCM was unable to make repayments on the K705 million (USD93 million) shareholder loan, and this loan was thus fully impaired as at 31st march 2015.

The way forward is to pursue the rights of ZCCM-IH PLC under the shareholder loan agreement.

KONKOLA COPPER MINES

For KCM, it reported a net loss of USD178.5 million for the financial year ended 31st March 2015, compared to USD89.2 million loss in 2014.

Revenue reported for the year, was USD1, 077.1 million, down 15.0% (2014: USD1, 271.4 million) due to a decline in the sale of copper and copper related products.

Further, copper sales declined by 15.9% and sale of precious metals in slimes declined by 33.9%. Total finished copper production during the year was 168,923 MT compared to 177,018 MT in 2014.

During the year under review, KCM faced acute operational and financial challenges including cash flow constraints that resulted in KCM purchasing third party concentrates in smaller quantities than what was sought. KCM is currently focusing on increasing production volumes, and addressing productivity across all of its operations.

To this end, KCM has been implementing various interventions, to improve the overall operating performance and drive higher equipment availability and utilization.

BRIEF OUTLOOK

ZCCM – IH core assets lie in the mining sector, and this makes about 80% to 90% of our portfolio. Since privitisation, ZCCM-IH has relied on dividend pay-outs largely from mining firms. Copper prices have continued to be depressed in the recent past, and recovery is slow. The copper price has recently shown some recovery, however, it is expected that the impact on revenue will be slow.

Hence, in order to move from relying on passive income and being dependent on mining, we have embarked on diversifying our investment portfolio, by actively looking for investment opportunities beyond mining, into other sectors such as energy, agriculture and real estate, so that the company can create and maximize shareholder value.

For instance, in energy, the Maamba Project is expected to be completed in June this year. ZCCM-IH owns 35% of Maamba Collieries Limited. ZCCM-IH and its partner have invested close to USD 850 million at Maamba Collieries Ltd, into this thermal power plant which will be producing 300MW of power.

Further, the recapitalization of Ndola Lime Company Limited has advanced, with the project undergoing hot commissioning. ZCCM-IH is reviewing the operations of Ndola Lime with a view to streamlining its operations and make it competitive and efficient.

As part of diversification into real estate, ZCCM-IH recently acquired an investment property that will be leased out to generate passive income. ZCCM-IH has also been identifying a number of strategic legacy properties, with a view of bringing them to use and turn them into income generation projects.

Further, ZCCM-IH is currently looking for strategic partners to invest in agricultural projects.

These are some of the efforts aimed at reducing dependence on revenue from the copper industry, and mitigating the impact from its cyclical nature.

-Ends-

NOTE TO THE EDITOR:

About ZCCM Investments Holdings Plc

ZCCM Investments Holdings Plc is NOT “Zambia Consolidated Copper Mines Limited”.

ZCCM Investment Holdings PLC is an investments holdings company stemming from the then Zambia Consolidated Copper Mines limited (incorporated in 1982), a copper mining conglomerate that operated more than 10 mines. In 2000, Zambia Consolidated Copper Mines limited was privatized; its mines were unbundled and sold off as separate entities to the private sector.

In its place a new company – ZCCM Investments Holdings Plc – was formed, as an INVESTMENTS HOLDINGS COMPANY. In this new company, ZCCM is a name, it does not stand for anything as was the case previously.

ZCCM-IH is currently triple listed on 3 stock Exchanges: (Primary listing) the Lusaka Stock Exchange where it is the largest company by market capitalization and on the (Secondary Listing) London Stock Exchange and the Euronext (Paris – Marche Libre).

Government holds directly about 17.25% shares and its 60.28% shares is held through the Industrial development Corporation (IDC) in Zambia, with the remaining 22.47% held by institutional and private individual shareholders.

ZCCM-IH currently has an investment portfolio of 15 companies, including biggest mines such as Kansanshi Mining Plc, Mopani Copper Mines Plc and Konkola Copper Mines Plc. Its shareholdings in the 15 companies range from 10% to 100%, with commodities and services that are diversified in nature, including copper, gold, cobalt, coal and power, telecommunication, limestone, mining consultancy, financial services and gemstones.


For media inquiries, please contact:

Loisa Mbatha-Kakoma kakomal@zccm-ih.com.zm
Public Relations Manager +260 211 221023

Konkola Copper Mines reopens health facility in Chililabombwe

ver 11,800 residents of Chililabombwe’s Mine Township, the RB and Helen Kaunda settlements will access quality healthcare closer to their homes following the reopening of a Health Centre 4 in the copper mining town.

Commissioning the refurbished facility, Deputy Minister of Tourism and Arts, Esther Banda, who is also Chililabombwe Member of Parliament said the facility would impact positively on the lives of employees and residents.

“The reopening of clinic 4 will increase the number of people benefiting directly from KCM health services to over 70,000 people,” Mrs Banda said. KCM currently operates two major hospitals and 14 clinics in Chililabombwe, Nampundwe, Kitwe and Chingola which provide health care services to over 63,000 people.

Mrs. Banda said the reopening of the health centre was in line with the government policy to bring quality health care closer to communities.

My government is keen on fostering public private partnerships (PPPs) in all areas of development, including health as this is the most robust way of ensuring sustainable development,

Mrs. Banda said.

The Deputy Minister commended KCM for complementing the government’s efforts to provide quality health care to employees and communities around its mining areas.

Speaking at the same function, KCM Chief Executive Officer Steven Din said reopening Health Centre 4 was symbolic of KCM’s continued focus to deliver quality health care to the people in the communities in which it operates.

Mr. Din said KCM would continue to support the health sector as a healthy population was essential for supporting higher production in the mining industry.

I am aware that the government cannot on its own meet the demands for health service delivery. Therefore, the private sector has a major role to play in providing quality health services and KCM will continue to take a lead in this area,

Mr. Din said.

Kangwa Chirwa, a miner’s spouse and mother of two, said the facility would not only improve the healthcare of the community but would ease the burden of people walking more than two kilometres to the nearest health facility.

“I am very happy because I experienced the difficulties of walking long distances to the nearest clinic. It was more difficult when a mother fell ill at the same time as her child. It meant she would not be able to go to the clinic, thereby worsening the illness. But I thank KCM that we now have a clinic close to our homes,” she narrated.

KCM spent k800,000 on the rehabilitation works which included reinforcing the foundation of the building, replacing the roof and ceiling, improving water reticulation and sanitation facilities. Other works were done on the Antenatal, VCT and main consultation rooms. The clinic offers free VCT, under-five clinic and family planning services.

Gemfields achieves record price per emerald carat at auction

JOHANNESBURG (miningweekly.com) – Aim-listed Gemfields has achieved a record price per higher-quality carat at its latest emerald auction, held in Lusaka, in Zambia, from March 30 to April 3.

Revenue of $33.1-million was generated through the sale of 469 000 ct of predominantly higher-quality rough emeralds extracted by 75%-owned Kagem Mining, in Zambia.

The auction, which placed 558 000 ct on offer, achieved a new record of $70.68/ct overall average value for the emeralds sourced from the Kagem mine.

“Our return to Lusaka has delivered another strong – and indeed record – result at a time when global commodity and diamond prices remain volatile and uncertain. Demand for – and prices of – emeralds clearly remain as robust as ever and gemstone mining represents one of the healthier segments of the sector,” Gemfields CEO Ian Harebottle said in a statement on Monday.

Thirty-three companies placed bids in Gemfields' third auction of Kagem production in the current financial year, with 16 of the 18 lots on offer sold.

Gemfields has hosted 21 Kagem auctions since July 2009, generating an aggregate $412-million in revenue.

The auction also included the offering of 9.4-million higher-quality amethyst carats from 50%-owned Kariba Minerals, of which 6.6-million carats had been sold, generating revenue of $220 000 at an average realised price of $0.03/ct, with 8 of the 14 lots on offer sold.

The amethyst auction was Gemfields’ fourth, with previous auctions taking place in Jaipur, in India, in March 2011, Lusaka in February 2015 and Singapore in September 2015.

Gemfields' next auction, scheduled for May, in Jaipur, would comprise mostly lower-quality emerald and beryl sourced from Kagem.

Source: Mining Weekly

KCM appoints Mrs Chimango Chikwanda as Vice President Human Capital Management

CM is pleased to announce the appointment of Mrs. Chimango Chikwanda as Vice President Human Capital Management effective 1st April 2016.

She joins KCM from ZANACO where she made significant contributions to the cultural transformation of the largest retail bank in Zambia. She has over 20 years’ experience in strategic and operational Human Resource with other ‘ best-in-class’ multinationals such as Zain Zambia, SABMiller and Pricewaterhousecoopers.

Mrs. Chikwanda holds a BSc in Economics from the University of London, a MSc in Economics from the university of Warwick, an MS degree in Consultancy and Coaching for Change from HEC (Paris) in partnership with Oxford University and is a certified MBTI and Belbin practitioner.

Her predecessor, Mr. Njovu leaves KCM after completing close to two years in the role where he has provided leadership to the KCM function and maintained cordial relations with the unions.

Management has thanked Mr. Njovu for his contribution to the organization and wishes him well in his future endeavors.

Glencore to invest $1.1 billion in Zambia, kwacha gains

Glencore will invest over $1.1 billion in Zambia to sink three copper mine shafts with new technology that will extend mine life by over 25 years, pushing the kwacha to its highest in two months.

By 1040 GMT (6.40 a.m. ET) the currency of Africa’s number 2 copper producer had gained 1.3 percent to 11.1100 per dollar, its firmest level since Jan. 19.

“The news from Glencore obviously sent a positive signal but overall we are seeing a lot of dollar supply with very little demand,” analyst Maambo Hamaundu said.

Glencore plans to make the investments between now and 2018 and it was expected that Mopani Copper Mines (MCM) would be turned into a world-class mining operation by 2023, it said.

“We firmly believe that we shall be able to overcome the challenges that we face today as a company and become profitable and operationally efficient,” Mopani said in a statement.

Glencore was fully committed to Mopani and had invested over $3 billion in upgrading infrastructure and in major capital expansion programs since 2000, Mopani said.

An electricity shortage in the southern African country and weaker copper prices have put pressure on Zambia’s mining industry, threatening output, jobs and economic growth.

Source: Mining News Zambia

Keynote address by Dr. Pius C. Kasolo at the Zambia Mining Investment Forum, London

Keynote address by Dr. Pius C. Kasolo, Chief Executive Officer, ZCCM Investments Holdings Plc at the Zambia Mining Investment Forum, Piccadilly Hotel, London, on 21 March 2016

  • The Honorable Minister of Mines and Minerals Development in Zambia, Mr Christopher Yaluma
  • Your Excellency Ambassador Muyeba Chikonde, Zambia’s High Commissioner to the UK and North Irelend
  • Distinguished invited guests, ladies and gentlemen

Thank you for inviting ZCCM-IH to be part of this forum.

Let me start by saying that the previous year has not been good for the extractive sector, particularly mining. We witnessed low prices in the sector slumped by about 30% at the beginning of 2015, dropping to six-and-a-half year low.

However, we have already seen a slight change from trading about 4 thousand dollars per ton in November 2015, to a significant jump, trading at slightly above 5 thousand dollars at the beginning of March this year.

Despite this, ZCCM-IH has put in place steps to respond to the cyclical nature of the commodity prices.

As a Company, we are diversified in nature. But we want to build on this by having a multi-commodity approach as an important part of our resilience.

This approach, presents ZCCM-IH as an investment gateway not only into Zambia’s mining sector, but into other sectors as well, as I shall highlight in a while.

Allow me to give you a very brief background about ZCCM Investments Holdings plc.

We are a Zambian investments holdings company with a rich historical background.

ZCCM-IH stems from the then Zambia Consolidated Copper Mines limited, a copper mining conglomerate that was incorporated in 1982 but with roots going back to the early 20th Century that operated more than 10 mines.

Before I go into details, let me play a short clip about ZCCM investments holdings.

(CLIP DURATION 3 MINUTES 11 SECONDS)
You notice from the video that ZCCM-IH is an Investment holding Company and not a mining company. Most people still call us “Zambia Consolidated Copper Mines limited”, and still think we are a mining company. However, this changed, as I have stated, in 2000 after privatization.

As a company, we retained minority shareholdings in the sold off mines at the time of privatization and started operations with a vision to be Zambia’s leading investments company and a mission to maximize shareholder value with due regard to the interests of all stakeholders.

The Government of the Republic of Zambia retained a significant shareholding in the new entity of about 87.5% at the time with the balance held by individuals and institutional investors spread around the world.

Mid last year 2015, Government launched the sale of some of its shares to the Zambian public. This was in accordance with the Lusaka Stock Exchange minimum free (public) float requirements of 25% of the shares.

As such, Government embarked on the sell down of its shares from 87.5% to 60.3% through the preferential secondary market offer.

The first sell down was done, successfully, as one of the leading pensions authority in Zambia bought about 15%. The second sell down specifically to the general public, was done late last year. GRZ still has 17.25% of the shares to sell down.

Currently government’s shares of about 17.25% and about 60.28% are being held by the Industrial development corporation (IDC) in Zambia.

Again if you saw, ZCCM-IH is listed on 3 stock Exchanges: a primary listing on the Lusaka Stock Exchange and also on the London Stock Exchange and the Euronext (Paris – Marche Libre).

On the LuSE, ZCCM-IH is the largest company by market capitalization.

Current Portfolio
ZCCM IH occupies a very unique and strategically advantageous position as an investments holding company, as it holds key minority interests across the mining industry in Zambia as shown in the video clip you just watched.

ZCCM-IH currently has a shareholding portfolio in 15 companies, including biggest mines such as Kansanshi mines plc, Mopani copper mines and Konkola copper mines.

Our shareholdings in these companies range from 10% to 100%. The commodities are diversified in nature, from copper, gold, cobalt, coal and energy, telecommunication, limestone, mining consultancy, financial services and gemstones.

Copper makes about 80 to 90% of these commodities.

Diversification
Let me hasten to mention that, maximizing shareholder value underpins ZCCM IH operations.

As I have stated earlier, ZCCM Investments Holdings core assets lie in the mining sector, and this makes about 80% to 90% of our portfolio. For the past years ZCCM-IH has relied on dividend pay-outs largely from mining firms.

As we all know, the extractive industry is very cyclical in nature. As such, in order to move from being passive and just being a holding company, we have embarked on diversifying our investment portfolio by relentlessly and actively pursuing investment opportunities in other sectors such as real estate, agriculture, energy and manufacturing.

To start with, in AGRICULTURE, ZCCM-IH has about, 2 thousand Hectares of land in Lufwanyama with a water frontage on the Copperbelt Province, which has great potential for farming high yielding crops such as soyabeans, oilseeds or livestock (cows and pigs) and fisheries (aquaculture).

This farm land, is in an area which has a good rainfall pattern, and fertile soil. We are currently, seeking any financials or any strategic partnerships to come on board on this project.

Secondly, we have also gone into the PROPERTY MARKET. We have a number of properties, both residential and office, which are dotted on the Copperbelt Province and in Lusaka. We have decided to upgrade them, some of them to be sold off and others rented out.

Then in ENERGY, a number of projects in solar and hydro are on the cards for investment, and this is in effort to leverage on the power deficit the country and the region is experiencing. For example, ZCCM-IH with its partners have invested close to $850 million at Maamba Collieries Ltd, into a thermal power plant which will produce 300MW of power by this year 2016 and 600MW once completed.

Further, in our diversification agenda, as ZCCM IH, our aim is to optimize operations and add value to our subsidiary companies via investments and stringent monitoring of these investments. As such, ZCCM-IH has invested millions of dollars in its wholly owned subsidiary, Ndola Lime Company to restructure operations and improve efficiencies and the bottom line.

One of the planned investment projects through Ndola Lime Company Limited is the setting up of a cement plant, which will have a daily production capacity of 5000 tons per day. Related to this plan, is for the cement plant to generate energy for its operations and the surplus sold to the national grid.

Through these and other programmes, we will be able to deliver compelling long-term returns and maximise shareholder value.

ZAMBIA: SNAP SHOT
I would like to state that the investment environment in Zambia is enabling in almost all aspects.

Zambia has had one of the world’s fastest growing economies for the past ten years, with real GDP growth averaging roughly 6.7% per annum, in spite of a drop in this growth in the previous year due to weaker global demand for commodities, lowered mining sector production, a poor farming season and electricity supply constraints, among others.

Despite the current global economic and domestic challenges Zambia remains well placed to weather the storm and maintain its progress with development objectives.

With substantial mineral wealth and untapped resources in agriculture, hydropower, and tourism, Zambia’s growth potential is very good.

For instance, ZAMBIA’s ranking in capacity to attract foreign direct investment in the region, on the continent and globally has tremendously increased in the recent past.

The World Bank released its ‘Ease of doing business’ report late last year which showed Zambia’s increased credit ranking from being 24 to number 19 out of a total of 189 countries which are monitored by the Bank.

In addition, Zambia is ranked 8th in Africa, 5th in SADC, and 4th in COMESA when it comes to rankings of the country’s conducive investment environment in as far as issues of doing business are concerned.

Further, when it comes to social and political stability, there is a lot of political will to ensure peace. Zambia is the only country in the region that has changed political leadership through peaceful transitions.

Let me reiterate, the Zambian political situation remains stable and infrastructure is improving as the economy further develops. Roads, railways, and airports are being vastly improved, particularly in areas of economic significance like the Copperbelt region. All of this growth in infrastructure can be attributed to Zambia’s growing economy.

Potential markets are not just limited to Zambia, however, but extends to the entire region due to its central geographical location through its participation in SADC and COMESA Trade Protocols. Both of these agreements offer preferential tariff arrangements and growing markets.

Outlook
Coming back to ZCCM IH, we will continue to grow our portfolio beyond mining and will further increase our foothold in the energy sector, agriculture sector and real estate so that the company continues to maximize shareholder value.

The Company has identified value adding projects in these sectors and we are seeking strategic partners to bring these projects to fruition.

ZCCM IH remains confident about the fundamentals of the mining industry in general and those of copper in particular despite the low prices in the sector, which so far, have started going up as evidenced in the past two months.

But we must understand, that the cyclical nature of the commodities sector rewards those who are well positioned and we believe ZCCM-IH is uniquely well positioned, as a diversified principal stakeholder in Zambian mining, offering vast opportunities for investment.

So I invite you, to come and be part of the journey to success.

Thank you.

Chamber publishes a layman’s guide to understanding Mineral Royalty Tax (MRT)

In a bid to improve public understanding of mining taxation, and promote informed comment, the Chamber of Mines today released a report entitled “A guide to understanding Mineral Royalty Tax (MRT)”.

The short, 15-page report is available for download here>>> Guide to Mineral Royalty Tax (ZCM) – Medium Resolution (1)

Commenting on the release of the report, Chamber of Mines president Nathan Chishimba said: “We have recently commended the Government for annoucing the introduction of a sliding scale system for the determination of MRT rates, linked to the prevailing copper price. In order for the public to really appreciate the significance of this move, we believe the whole subject of mining taxation, and MRT in particular, needs to be better explained.

In recent years, MRT has been a hot topic. We wish to set out the cold facts, to give Zambians an understanding of a critical issue affecting the mining industry, and the wider context of taxation and investment in which the issue is situated.”

He added: “The publication of this report signals a more proactive approach by the industry in educating the public about important strategic issues. It is a natural follow-up to the media conference we held in December last year to explain the current crisis facing the global copper-mining sector. In the weeks and months ahead, there will be more such initiatives as the industry continues to engage constructively with stakeholders and the broader public.”

“A guide to understanding Mineral Royalty Tax (MRT)” has been designed to be accessible to a lay audience, and deals with the subject broadly rather than in complex detail. It covers the present situation in Zambia, explains the motivations and mechanics of MRT, and gives an outside view of our mining-tax system by the IMF and World Bank, and ends with some thoughts on the future of the mining industry.

Among the key learning points of the report are the following:

  • Unlike normal company tax, MRT is levied on revenues rather than profits; it is therefore payable even when mines are marginal or loss-making.
  • Mines can take several years to become profitable and pay profit-based tax, so MRT is an effective way for governments to get upfront short-term tax revenue;
  • MRT is used by many countries around the world, and always exists alongside a tax on profit – together, the two taxes assure a stable flow of tax revenue throughout the life cycle of a mine.
  • Unlike a profits-based tax, MRT is a cost to the business. A rate that is too high can therefore stifle economic activity and employment, discourage further investment, and thus diminish the long-term tax pipeline.
  • The report also considers Zambia’s approach to MRT in comparison with other mining jurisdictions.

Source: Zambian Mining Magazine

Governance, Risk and Compliance Column!

ear Colleagues,

I would like to introduce to you our first article on KCM’s commitment to a culture of compliance and governance. In this column, we will look at various aspects around this subject which are critical to the growth of thee business.

We have embarked on a programme of ‘Zero Tolerance to Non-Compliance and our participation in this undertaking is critical. The company is required to be fully compliant with all company policies, procedures, technical specifications, regulations, general guidelines and the country’s laws.

Every one of us need to exercise responsibility and accountability in discharging our roles and responsibilities to ensure the growth and success of KCM. Compliance is not a requirement for only senior management, it is everyone’s responsibility.

There is need to strengthen our internal control environment in KCM. Every single person has a role to play a as we seek to achieve the company objectives. Being compliant has to first be a personal resolution, and then a collective corporate way of doing business. I wish to encourage all of you to join hands in ensuring100 percent compliance to our rules, guidelines, regulations and legal obligations.

Good attributes to compliance start with being punctual on duty and good time management. It requires upholding safety standards, using company assets and resources in a prudent manner. It must then extend to softer issues of our value system of being ethical in our conduct. We need to exhibit integrity – a culture of honesty in both private and business lives. We need to embrace this as a value system and not just a norm.

Compliance and ethical conduct eventually builds integrity which then leads to a robust business culture. The growth of our society, families and the company cannot be detached from a strong value system, underpinned on compliance to statutory requirements and company procedures and policies.

In our next discussion, I will share with you a synopsis of KCM’s compliance programme which will focus on the realisation of a stronger business environment that guarantees the survival of this organisation. I urge you to be compliant!

Sharad Gargiya

Chief Financial Officer

KCM Employees a part of a global Chairman’s “virtual town hall”

HINGOLA, 6 March 2016, Anil Agarwal, the Chairman for Vedanta Resources addressed more than 300 Konkola Copper Mines (KCM) employees as a part of a global “virtual town hall meeting.”

The Vedanta founder and Chairman was speaking during a live broadcast through a video link to more than 300 KCM employees and about 5,000 in total from all Vedanta subsidiaries and businesses in 30 locations in 5 countries. Employees from all locations were able to ask questions to the Chairman, who was participating in London.

This was the first time that this technology has been used in KCM and enabled a wide cross section of the company to interact directly with the Chairman of the company’s largest shareholder.

The event was well received by KCM employees: According to Innocent Chiluba, a metallurgist in the company: “It was great to be able to hear the Chairman talk directly to us from London and answer the questions on our mind. I was amazed to see groups from so many different places on the screen.”

Mr Agarwal spoke about his affection for Zambia and Vedanta’s long term commitment to the country. He said Vedanta’s 50-year vision to continue mining in Zambia would be fulfilled, underpinned on the world-class and high grade ore body at the flagship Konkola mine in Chililabombwe.

Mr Agarwal told the employees that,

our main intention at the moment is to survive the current challenges. It is all about our determination to take our company forward. You need to work hard, cut costs and increase production. We have to be innovative.

Mr Agarwal said Vedanta subsidiaries, including KCM, would continue to nurture young people into positions of leadership. The company would also promote the ascendancy of women into leadership positions as it seeks to expand its asset portfolio as a diversified global resources company.

I encourage all of you to remain ambitious for success, humble and hardworking. To find and recognise talent is the most important thing for us. Our success will be based on trust and honesty. I have seen a great passion from our employees at KCM and there is also great potential. We have done everything possible to develop this asset by investing over $3 billion on processing plants and the mines,

Mr Agarwal said, addressing KCM.

Vedanta Chief Executive Officer Tom Albanese, who is also KCM’s Chairman, reiterated that a strong foundation had been created at KCM.

“There is so much enthusiasm about copper mining in Zambia. Everyone is passionate about the KCM 50-year vision,” Mr Albanese said.

Mr Albanese said that companies which emerge strong from the downturn in mining are those that inevitably benefit most from the return to higher commodity prices.
“This is not the first time we have faced these challenges. I am optimistic we will come out stronger,” he added.