GOLD Mining Cooperatives in Rufunsa are excited by President Edgar Lungu’s pronouncement that they will receive equipment and sales will be liberalised. The cooperatives have also requested to mine in the national parks where there is more gold. They have vowed that they will not allow foreigners to “steal” their God given resource. And President Edgar Lungu’s pronouncement that gold cooperatives be allowed to deal with any genuine buyers and not only ZCCM-IH have elated the artisanal miners. Rufunsa’s Chimwetu Gold Mining Cooperative Chairman, Emmanuel Tembo said the pronouncement was an indication that Government was serious with uplifting lives of Zambians.

What Emmanuel Tembo said…

“We are also elated to note that our two cooperatives, Chimwetu and Pokela will each receive their own equipment soon. This will help promote self-sufficiency in each group especially that we now have a wider market,” said Mr Tembo.

He however appealed to government to allow them go further and mine the deposits in the national park. Mr Tembo disclosed that during his recent visit to Rufunsa, President Lungu said assured the cooperatives that they were not restricted to only deal with ZCCM-IH. He said the Presidential assurance excited all cooperatives who initially thought that ZCCM-IH would monopolise the business in the area. Mr Tembo said that if the cooperatives were allowed to sell the gold to the best buyer then this would enable them to make favorable bargains. According to him, allowing for the market forces to determine the price of the commodity would enable the cooperatives to gain real value for the commodity. Mr Tembo also said the assurance by the President on the handover of the gold mining equipment was exciting. He however appealed to government to ensure that foreigners were removed from Rufunsa, saying that they were depriving the locals of their God-given wealth. “We are also elated to note that our two cooperatives, Chimwetu and Pokela will each receive their own equipment soon. This will help to promote self-sufficiency in each group especially that we now have a wider market,” said Mr Tembo. And Senior Headman Nyampande, John Mamba has requested the Ministry of Mines and Mineral Development and ZCCM-IH to give a clear roadmap regarding the formation of cooperatives for gold hosting communities to be engaged in the mining of the resource,. Bishop Mambo said Zambians were yearning to form cooperatives but were not guided on how it should be done. He said in an interview yesterday, it was important for the ministry and the relevant authorities mandated to oversee gold mining to give a clear picture on how the communities can be engaged in the mining of the resource. Bishop Mambo said only few cooperatives had been formed in the area because the communities had no proper information of how they could obtain the legal documents for them to start mining. Meanwhile Senior Headman Nyampande said it was unfortunate that he was not even approached by ZCCM-IH when it was putting the gold processing plant in his area. “How can the local people be employed if the ZCCM-IH has put a processing plant in my area and they have not approached me,” he said.

Source: https://www.pressreader.com/zambia/daily-nation-newspaper/20200609/281479278648754

In ZCCM-IH’s 2018 annual report, the investment group made a bold announcement when it unveiled its 2018 to 2023 strategic plan. Aptly titled “Taking Giant Steps”, the executive leadership announced that ZCCM-IH would pursue a transformational agenda that would permeate through all operational landmarks with a view to sustaining growth and value extraction for the benefit of its shareholders.

Till the announcement of the new strategic direction, the group had experienced periods of non-dividends being paid. Fortunes though were changing for its primary mined metal. “The improvement in the profitability is largely attributed to improved performance in investee companies due to continued upsurge in copper prices during the year”, read a statement in the 2018 annual report.

The management team understood that in order to deliver on shareholder promises, they needed to transform as an investment group. “We have chosen to transition the Company away from the traditional dependence on dividend income and have identified more forward-looking strategies which will improve revenue generation with predictability” echoed the Board Chairman in his letter to shareholders that year.

With an understanding that over-dependence on just copper, it was prudent for the firm to venture into ambitious projects that would allow it to create value. “These strategies will not only improve the Company’s cash position but will also facilitate organic growth as the Company will be better able to finance its investment projects”.

One of the things that ZCCM-IH has been good at when one reviews the last 10 years’ worth of annual reports that are readily on the ZCCM-IH investor website, there are a number of deals serve as a reminder of the expertise possessed by the group in structuring deals.

Nkana Alloy Smelting Company Limited

When ZCCM-IH had the appetite to participate in slag material processing, they retained a 10% shareholding in Nkana Alloy. According to the 2013 annual report, Nkana Alloy is a company formed jointly by ENRC (BVI) Limited who owns 90% of the total shareholding and ZCCM-IH. The company was formed for purposes of processing the slag material from the Nkana Slag Dump situated in Kitwe, Copperbelt province of Zambia. The slag material will be processed into a copper/cobalt alloy. The Slag Dump was previously part of Chambishi Metals Plc in which ZCCM-IH has a 10% stake. This is an example of a plain vanilla investment.

Cement Company Limited

When ZCCM-IH’s manufacturing appetite led them to seek out cement production, the Company entered into a Joint Venture partnership with Sinoconst for purposes of setting up a cement manufacturing company. According to the 2018 annual report, Central African Cement Company Limited (CAC) was incorporated and ZCCM-IH owned 49% of CAC while Sinoconst owns the remaining 51%. CACs operations will be located in Masaiti district in the Copperbelt Province of Zambia.

What is interesting was that ZCCM-IH moved in for 35% of the outfit that had a planned production capacity of the Plant of 5000 tonnes per day of Clinker with a two (2) by twenty five (25) MW Thermal Power Plant. It is expected that the Plant will take 3 years to construct and employ over 1000 people during construction. Once completed, the plant is expected to employ about 400 people.

However, due to the nature of how the deal was structured, in typical investment deal structuring, ZCCM-IH increased its stake in Central African Cement Company Limited (CAC) from the initial 35% to 49%, according to the 2019 annual report. This is an example that of a deal structured well that ensures that ZCCM-IH can actually increase its shareholding over the life of the asset.

Kariba Minerals Limited

On 7th November 2018, ZCCM-IH acquired an additional 50% shareholding in Kariba Minerals Limited (KML) which is Zambia’s largest Amethyst mine. This acquisition meant that ZCCM-IH now owned 100% shares in KML. The shares were acquired from Gemfields Limited at a total consideration of US$2,500,000. In line with their strategic vision, ZCCM-IH also started implementing strategic activities aimed at improving the production and marketing of amethyst at KML. This is an example of where ZCCM-IH moved in for a smaller chunk of the pie and ended up owning all of it over time.

On Gold

Much has been published about the Golden ambitions of ZCCM-IH. However, very little has been published about the track record of its investment stories. One thing a discerning reader needs to understand is that the investment cycle is not one day. This is why the ZCCM-IH strategic plan is 5 years. For the plan to achieve the groups’ ambitions to “transition the Company away from the traditional dependence on dividend income and have identified more forward-looking strategies which will improve revenue generation with predictability”, Gold ventures and other investment desires will need to be pursed. The fortunate thing for ZCCM-IH is that they have the track record in deal structuring which has been the reason for them declared a dividend year on year over the last 3 to 4 years.

Source: https://fizambia.com/?p=7127

THE ZCCM-IH says the slowness to formalise the mining of gold in Zambia is due to a combination of factors.

ZCCM-IH chief executive officer Mabvuto Chipata says the amount of gold deposits at Kasenseli in Mwinilunga district will only be known once exploration works are complete, in the next three months.

He said the mandate of the ZCCM-IH in the gold sub-sector, as given to it by the Bank of Zambia, was to harness the entire gold sub-sector in the country.

“Harnessing means that we should work with everyone within the mining sector to help them explore, to help them [to] mine, to market and to help them process. Ultimately for us to be able to have gold reserves in the Bank of Zambia,” Chipata said on ZNBC TV’s Sunday Interview programme. “So, our mandate is very wide on the entire value chain. We have to work with everybody within the sector to develop and formalise this sector.”

He explained that gold had been in Zambia for many years and that traditionally, “this has been mined by artisanal miners and even informal miners – instead of the word illegal miners.”

“Essentially, in every place where the [gold] occurrence is there, you have had our people using traditional methods to mine gold and usually this is alluvial gold which is found on river beds. You get on the river bed and you get some soil, pan and you get some gold or you get some soil and using traditional methods you smelt that and get some gold,” he noted. “So, it (gold) has been around in this country for many years, it’s just that it has not been formalised.”

Asked by the programme host, Grevazio Zulu, why there was slowness to formalise the mining of gold in Zambia, Chipata said; “it’s a combination of factors.”

“A lot of Zambians who have got exploration licences in these places have had challenges to start exploration. As you are aware, exploration means that you sink in money in the ground to find out how much material is on the ground. For lack of financing, a lot of areas in Zambia are not exploited,” Chipata explained. “So, a lot of Zambians out there, as you saw from the statement from the PS (mines permanent secretary Barnaby Mulenga), do have gold licences. But for lack of funding, they have not been able to explore, and also lack of equipment to be able to do exploration. This is why this move that we are taking to formalise this sector is targeted at making sure that we can start helping our people to explore and determine the quantity of gold and then determine how much you need in order to start up a mine.”

He said Kansanshi Mine in Solwezi was the only one, as at now, that formally reports gold in the country.

Chipata pointed out that the moment the ZCCM-IH was given the mandate on gold mining, “we studied the whole gold sub-sector in Zambia.”

“We went to 21 areas to see what is happening on the ground. We immediately got a gold trading licence to enable us to buy gold from anyone who has gold and recently you have seen us advertising that anyone with gold in Zambia, let them come to ZCCM-IH and sell their gold,” he said. “What has been currently happening there is that our people on the ground, the artisanal miners, anyone goes there and offers them prices that are below market. [But] our prices are linked to the London market – we are able to offer them a better price so that they can get better value for the work they are doing.”

Chipata added that as a first step, the ZCCM-IH had targeted Kasenseli area, insofar gold mining.

“We now have got an exploration licence in Kasenseli. As we speak, drilling works have started in order to ascertain how much gold is in Kasenseli. The second step is that we have already invested in processing. So, we are in a hurry to develop this sector so that the country can begin to earn the required value from this sector,” he noted.

Asked whether or not Zambia’s biggest gold deposit was at Kasenseli, Chipata said such could only be determined once the exploration programme was complete.

“The exploration programme will take about three months. It started already about three weeks ago. After three months we’ll be able to know how much deposit is in Kasenseli and we’ll be able to inform the public,” he said.

On whether he agreed or not that gold could enable the country to pay back its loans, Chipata said such was possible.

“I agree, to the extent that, for example, our target for this year is that if we can get 40 tonnes of gold in this country, that we’ll be almost $2 billion,” said Chipata. “So, it is possible [to pay back our loans from gold earnings]. But we have to start quickly and we need the support of everybody for us to realise that. The task is very huge but it can be done!”

Source: https://www.themastonline.com/2020/06/02/were-in-a-hurry-to-develop-the-gold-sector-chipata/