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.
