Glencore has concluded discussions with the Zambian government about the sale of a majority stake in the Mopani copper mine, state media reported on Friday, January 8.
An agreement will be signed this week, according to a report by the Zambian National Broadcasting Corp, citing President Edgar Lungu.
“Glencore confirms that it is in final-stage negotiations relating to a possible sale of Carlisa’s 90% stake in Mopani to ZCCM, Glencore said in a statement.
Glencore has concluded discussions with the Zambian government about the sale of a majority stake in the Mopani copper mine, state media reported on Friday January 8.
ZCCM IH has indicated that discussions around the future of Mopani are currently still under discussion, according to a statement released by the company.
“Further to the cautionary announcement date 4th September 2020, ZCCM Investments Holdings Plc (“ZCCM-IH” or “the Company”) wishes to advise Shareholders and the market that the Company’s discussions with Glencore Finance (Bermuda) Ltd regarding the future of Mopani Copper Mines Plc (“Mopani”) are still in progress which, if successfully concluded may have a material impact on the price of the Company’s securities”, read a statement issued by order of the Board through Company Secretary Chabby Chabala in Lusaka on 21 December 2020.
ZCCM-IH is in discussions with Glencore Finance (Bermuda) Ltd regarding the future of Mopani Copper Mines Plc (“Mopani”) for some time now. Glencore Finance is the major shareholder of Carlisa Investments Corporation which in turn is the majority shareholder of Mopani.
In August 2020, Mining-journal.com report that Mines minister Richard Musukwa told Reuters ZCCM-IH was seeking a larger stake “with a view to holding a controlling stake in Mopani”. Although the SENS announcements from ZCCM have not indicated that ZCCM IH are seeking a larger stake, this is the reason why they have advised Shareholders to exercise caution when dealing in the Company’s securities until a full announcement is made.
Discussions with the mining company and the investment group were prompted when Glencore CEO Ivan Glasenberg confirmed Mopani was operating under care and maintenance.
Source: http://fizambia.com/?p=9355
(Bloomberg) — Zambia expects to conclude talks over buying Glencore Plc’s stake in Mopani Copper Mines Plc within a month, according to Barnaby Mulenga, permanent secretary in the Ministry of Mines.
Mulenga declined to disclose the size of the stake that state-owned ZCCM Investments Holdings is trying to acquire. ZCCM-IH currently has 10% of Mopani, with Glencore holding 73.1% and Vancouver-based First Quantum Minerals Ltd. 16.9%.
Zambia wants to raise its holding after clashing with Glencore earlier this year over the company’s plan to mothball Mopani’s operations. But it’s unclear how the cash-strapped government, which last week defaulted on a Eurobond interest payment, would finance a deal. While impairments of $1.14 billion at Mopani contributed to Glencore posting a first-half loss, the Switzerland-based commodity giant still assigned a value of $704 million to the operations.
Mulenga expects a deal to be announced in the coming weeks by Mines Minister Richard Musukwa, who said in September that both companies were prepared to sell their entire holding in Mopani. Zambia won’t have trouble raising finance for the deal, according to Mulenga, even though no money will come from the Treasury.
Zambia Says Glencore, First Quantum Willing to Sell Mopani
“The resource attracts money, so the issue of financing is the least of the worries for the Zambian government,” Mulenga said in an interview on Thursday, referring to Mopani’s copper-mining operations. He didn’t give further details.
A spokesman for Glencore declined to comment. First Quantum spokesman John Gladston also declined to comment.
Mining Disputes
Glencore shelved its plans to place the operations under care and maintenance for 90 days, after Zambia threatened to revoke its mining license in April. The government strategy is driven by a need to safeguard jobs at Mopani, rather than any desire to raise its shareholding, said Mulenga.
Zambia’s increasingly tense relations with investors in the key copper-mining industry may partly reflect maneuvering by President Edgar Lungu ahead of next year’s elections. The government is also in arbitration over mining assets it seized last year from billionaire Anil Agarwal’s Vedanta Resources Ltd.
Other copper miners have halted $2 billion of planned investments because of a dispute over a royalty tax. A mining conference later this year will seek to address that issue, Mulenga said.
Zambia, Africa’s No. 2 copper producer, relies on the metal for about 70% of its export earnings. The impact of the coronavirus pandemic is forecast to cut output this year to about 764,188 tons, far short of the nation’s target of 1 million tons, according to Zambia Chamber of Mines.
“Hopefully we will come to some consensus to what should this tax regime look like,” Mulenga said.
(Updates with copper output in penultimate paragraph)
©2020 Bloomberg L.P.
Source: Swissinfo.ch
SEAN Tembo is asking the PF government to state measures it has put in place to avert a catastrophe should Mopani Copper Mines shut down operations.
The Patriots for Economic Progress (PeP) leader notes that the macroeconomic objectives for 2021, as contained in the national budget, are not ambitious enough.
Tembo noted that finance minister Bwalya Ng’andu acknowledged, when he presented the 2021 budget to Parliament last Friday, that copper prices on the world market have significantly risen to peak at about US $6,840 per metric tonne in September.
“However, the minister failed to explain why, with copper prices being that high, Mopani Copper Mines Plc is still insisting to suspend its operations in Kitwe and Mufulira? Given the fact that Mopani is one of the key players in the mining sector in Zambia today, and their decision to shut down operations will obviously have dire consequences on the Copperbelt Province in particular and the nation at large, the Minister should have addressed this issue in his 2021 national budget address,” he said. “The Minister should have shared with the nation, what measures his government has put in place or intends to put in place to mitigate this impending catastrophe. The only mention of the Mopani issue by the Minister is in paragraph 53, and even then, he only talks about the fact that Glencore, the major shareholders of Mopani have offered to sale their shareholding to government. However, what is of importance is why Glencore wants to exit the market. What policy challenges have they been facing which has compelled them to exit? It is important to do a proper diagnosis here because if we do not, other mining houses will soon follow the footsteps of Glencore and exit our market.”
In his budget speech, Dr Ng’andu said, “With regard to Mopani Copper Mines, government has been offered to acquire additional shares in the mine through ZCCM-IH. Further, government is in the process of negotiating with Glencore on the terms of purchase of the shares. To this end, the nation will be updated on the progress made in due course.”
Tembo noted that developing a national budget in the midst of multiple economic challenges, including the downturn in the global economy due to the COVID-19 pandemic, could not have been an easy task.
He said the 2021 budget theme, “Stimulate Economic Recovery and Build Resilience to Safeguard Livelihoods and Protect the Vulnerable”, acknowledges the fact that Zambia was in a recession and that something needs to be done to recover from “where we currently are”.
“And that while we are doing all that, we need to pay special attention to the livelihoods of the most vulnerable in our society. Having put such an appropriate theme in place, the only question that now remains to be determined is whether the rest of the 2021 national budget actually lives up to its own theme,” Tembo said.
He stressed that the macroeconomic objectives for 2021 were not ambitious enough.
“An objective is supposed to be reasonably ambitious, otherwise it loses its purpose of driving performance. A GDP growth rate target of 1.8 per cent for 2021 is too low by any standards. Equally, a target of increasing the Gross Foreign Reserves from the current 2.3 months of import cover to 2.5 months of import cover in 2021 lacks any ambition on the part of the minister,” Tembo said. “Similarly, targeting a tax-revenue to GDP ratio of 18 per cent for 2021 from the current 17.8 per cent, is a display of total lack of ambition on the part of the Minister of Finance, especially given the fact that Zambia’s tax-revenue to GDP ratio is the lowest in the region. South Africa’s tax-revenue to GDP ratio has averaged 25 per cent in the past five years, whereas that of Zimbabwe is 23 per cent, Botswana 26 per cent, Namibia 27 per cent and Lesotho 24 per cent. Under these circumstances, we would have expected the Minister to set a tax-revenue to GDP ratio target of at least 20 per cent for 2021.”
The PeP also noted the lack of consistency by the minister in the cut-off dates that were used in his review of the 2020 budget performance.
“With regard to expenditure to date, the minister uses a cut-off date of August 2020. With regard to the balance of our Gross Foreign Reserves, the Minister uses a cut-off date of July 2020. With regard to the exchange rate between the kwacha and the US dollar, the minister uses a cut-off date of September 2020. With regard to our stock of foreign debt, the minister uses a cut-off date of June 2020. With regard to our stock of domestic debt, the minister uses a cut-off date of August 2020,” Tembo noted. “This haphazard approach in assessing different economic variables in measuring the 2020 budget performance, makes it difficult if not impossible to draw any meaningful conclusions. In the next budget presentation, the minister is advised to pick one cut-off date against which all economic variables will be measured.”
He said the 2021 budget lacks the gravitas necessary to stimulate economic recovery and build resilience to safeguard livelihoods and protect the vulnerable.
“In other words, the content of the budget falls far short of its own theme,” Tembo said.
He said PeP would present to the nation its alternative budget on October 21.
“It is worth mentioning that we are happy as a party that government saw it fit to adopt two of our recommendations in last year’s PeP Alternative national budget. These were to increase the threshold of the tax exempt portion of the monthly salary from K3,300 to K4,000 as contained on page 17 of the PeP 2020 alternative national budget,” said Tembo. “Additionally, government saw it fit to adopt our recommendation to increase the tax rate on the gross proceeds of gambling from the current 10 per cent to 25 per cent, as outlined on page 19 of the PeP 2020 alternative national budget.”
Source: Themastonline.com
MINES Minister Richard Musukwa says government will ensure that workers at Mopani Copper Mine are protected as discussions for its eventual takeover are expected to be concluded in the shortest possible time.
And Musukwa says the purpose of ZCCM-IH increasing its shareholding in Mopani is to have controlling stake, but it will later look for a business partner to operate the mine.
Musukwa was responding to various issues raised by the Mineworkers’ Union, who stressed the need for workers to go through a fresh employment process so that they could access benefits for the work done for Glencore.
The Union equally expressed concern over the owning of shares by workers in Mopani as Glencore proceeded to sell off its shares to ZCCM-IH, among other would-be investors.
“We do not want the new company or the new entity to move into the platform with liabilities. We would like that all those issues will be addressed and it applies to the issues of KCM. We want to ensure that all the issues surrounding workers, workers’ conditions of service, especially those who have worked in the past, are addressed so that as people go to another platform, they go on a clean slate. But tell bashi mine, not ukwamba ukukongola ngabaya pa zero mileage (tell the miners not to start getting credit because they have reached zero mileage); getting credits on benefits that they have not yet seen. They must use this money that they have worked for many years to invest in some sustainable future processes that should be able to help them when they retire,” Musukwa said.
“What we are just careful, as government and the negotiating team is that, we don’t want us to get into the story of KCM, which was sold for US $25 million and the following day, we were told that money was recovered. We don’t want to be a laughing stock of the negotiating process that’s why we want to ensure that key professionals undertake the process. That’s why ZCCM-IH has appointed a transaction advisor, who is actually also trying to run through all things once they are done. So, we would like to assure the workers at Mopani that as we negotiate out of this difficult challenge, we are very confident that we will come out of this process in the shortest possible time, and that that all the issues that you have raised are being tackled so that we create a full package for everyone.”
He added that the negotiation team had made progress with conclusions expected at the earliest convenience.
“I also want to assure you that the technical team negotiating this process has made very good progress, in fact, that is how now we have ensured that the unions are part of the negotiations so that we are able to send the information across to the public and the people out there so that there is no gap in terms of information. I can assure that we are looking at concluding these discussions at the earliest convenience and must commend Glencore that they have been extremely very forthright coming in terms of ensuring that we conclude these processes,” Musukwa said.
And he explained that the purpose of ZCCM-IH increasing its shareholding in Mopani was to have controlling stake, but it would later look for a business partner to operate the mine.
“Now, I know that there has been issues from several entities, including politicians, as regards the competence of ZCCM-IH to run and operate Mopani. We have firmly indicated that ZCCM-IH’s expression of interest to grow the shareholding is meant to have controlling shares. In this instance, Glencore has said they do not want to continue operating or investing in Mopani, what are we supposed to do? To force Glencore to continue? Government is an option of the last resort in this case and that’s why we have allowed ZCCM-IH to proceed on this trajectory as a platform merely as a platform for offloading these shares and then you know very well that our directive to ZCCM-IH is to ensure they operate as a business, then they are going to look for a business partner to operate the mine,” Musukwa explained.
“ZCCM-IH is not mobilising resources from government, they will mobilise resources from international platforms in terms of partners. In brief, just to help the ‘doubting Nichodemus,’ ZCCM-IH will find partners; they can find any partner and structure a model in terms of shareholding. If you [workers] are coming on board to be shareholders, that will be good because we want this to run at an economic platform, and for a long time, the people of Zambia have not had an opportunity to be real shareholders in the mining industry, which commands 80 per cent of our economic performance. What we are looking forward to is also indigenous Zambians should come and be part of the shareholding.”
Meanwhile, the minister said the government would ensure a credible investor takes over KCM’s operations from Vedanta to guarantee continued operations at the mine.
“I know that the liquidation process for KCM has taken extremely long, but there is no case that lasts forever. We were frustrated with several court processes. As a law abiding government, we have been religiously following these processes and we know that these issues are now nearing conclusion and we think that government will move in to ensure that a credible investor comes on-board and ensures that we guarantee the operations of KCM. What KCM requires is fresh injection of capital in order to ensure that ramping up takes effect and the project, especially KDMP projects, becomes a reality and guarantees the future,” Musukwa said.
“We feel that the resource that lies at KCM is the future of Zambia, the resource that lies at Mopani is the future of Zambia and we feel that put together, the mining industry still remains buoyant and will create huge employment and contribute to our economic trajectory.”
The Chililabombwe PF member of parliament further disclosed that four companies had expressed interest in taking over Chambishi Metals.
“We have told our colleagues at Chambishi that after the 30 days expired, we have actually received expressions of interest from various entities that want to take over the operation and invest. So, we have started the process because we cannot continue with business as usual. The same operation we have had presentations from four different companies that have given us a serious projection of how they can restart the operations so we have asked our colleagues that this is the process that we are embarking to ensure that we guarantee job security and also the economic trajectory in our areas, especially Chambeshi, Kitwe,” said Musukwa.
Glencore Plc is facilitating the offloading of 90 per cent shareholding in Mopani to ZCCM-IH.
The Swiss-based commodity and mining company had earlier this year announced its intention to place Mopani on care and maintenance, signalling its desire to exit the Zambian mining sector amid its huge operational costs.
Source: Diggers News
MINES Minister Richard Musukwa says Glencore is planning to offload around 90 per cent of its collective shares in Mopani Copper Mines Plc to government through ZCCM-IH.
And Musukwa says ZCCM-IH will galvanise resources to ensure they manage and operate Mopani Copper Mines prudently.
Meanwhile, Musukwa says Konkola Copper Mines (KCM’s) operational performance has improved since the provisional liquidator Milingo Lungu’s appointment last year.
Speaking on Diamond TV’s programme, Costa, Sunday evening, Musukwa announced that Glencore, which held 73.1 per cent shares in Mopani, was planning on offloading its shareholding to ZCCM-IH, together with a further 16.9 per cent from Calisa Investment Corporation.
ZCCM-IH currently only holds a 10 per cent shareholding in Mopani, according to Musukwa.
“Zambia sits on a huge reserve in terms of mineralisation for copper and several other minerals. Mopani is sitting on huge resources, which can run in access of up to to 40 years, so it is very viable. So, we are very confident that we are able to navigate out of this critical time and ensure that the life of Mopani is sustained. Even from the Glencore perspective, in terms of the investments portfolio, which they have put in their operations is huge; billions of dollars in terms of a new schycotorium, new shaft…All these facets were as a result of Mopani and Glencore knowing very well that Mopani was sitting on a tenement that was viable and was able to sustain itself,” Musukwa said.
“ZCCM-IH has 10 per cent shares, Glencore has 73.1 per cent stake and a company called Calisa has 16.9 per cent. When ZCCM-IH, after this care and maintenance process commenced, ZCCM-IH, as a minority shareholder, submitted an expression of interest in increasing its shareholding in the company. I must report that graciously, Glencore, the majority shareholder, accepted favourably. Further to not only accepting the 73.1 per cent stake, Glencore has actually galvanized even the 16.9 per cent that sits on Calisa together making a total offer of 90 per cent to ZCCM-IH in order to ensure that they take full control of the company.”
Musukwa said Mopani faced a challenge of huge operational costs of highly-priced contracts and the engagement of a large number of contractors and expatriates.
“The huge challenge that Mopani has had been the cost profile of exploiting this resource. Government’s considered view is that we need to look at how best we can reduce the cost, increase production and ensure that the operations are done under safe rules. Mopani did indicate that they wanted to put the mine on care and maintenance, which is going to put in excess of 15,000 employees in the streets and the government did reject that proposal because it was inimical to the interests of our people. More also, it was inimical to sterilise a resource when we feel it can be exploited, economically, by ensuring that Mopani reduces its cost profile by stopping to procure highly-priced contracts and the engagement of a huge number of contractors and expatriates,” Musukwa said.
“So, basically, when they put up the care and maintenance (proposal), we constituted a technical team and the technical team revealed that they were overheads that were being developed by Mopani, which, in our view, if these overheads were reduced, the company can be viable. You will be interested to know that the technical team and experts and people from all walks of life have actually come across and given different perspectives of how to operate and run the mine going forward profitably. At a time like this, we hope that we can have a smooth managed exit in order to ensure that Glencore and the Zambian government can continue to enjoy a mutual relationship.”
And Musukwa said ZCCM-IH would galvanise resources to ensure the management and operation of Mopani was done prudently.
“There is no investor that comes to Zambia with a sack of money or, indeed, money held in some accounts in order to come and exploit these resources. The money that is invested in the mining sector is money that is generated through various vehicles from these mining entities because they have international confidence on the market. We think very strongly that this is a matter that Zambian players, through ZCCM-IH and other entities, are able to galvanise these resources going forward. If you propose to a woman, it means that you have the capacity to look after them in marriage that is why ZCCM-H has expressed interest. If it didn’t have the capacity, it was not going to express interest,” Musukwa said.
“ZCCM-IH could not be having money sitting on their profile of this magnitude in terms of a purchase of these shares. ZCCM-IH will be able to galvanise these resources through other entities, through other vehicles. In short, ZCCM-IH is being used as a platform and this is a time where Zambians should not be doubting where this money is coming from, Zambians should be able to organise themselves and look for stake in the company.”
He, however, stressed that the funds being mobilised to manage the acquisition of shares and the administration of Mopani would not derive from debt financing, but would be raised from the ZCCM-IH’s resources.
“It is not the Government of Zambia, which is raising this money; this resource will be raised through ZCCM-IH. This is a blessing in disguise, an opportunity has presented itself for ZCCM-IH to have a footprint in terms of the mining entity. The resources that are going to be mobilised will be mobilised at that platform, at a business trajectory and not a debt to Government of the Republic of Zambia. ZCCM-IH has connectivity to ensure that we get these resources to immediately pump in the operations and stabilise its production. This is a time where we, as government, are looking at a platform where we can sit and say, ‘how best can this operation be run with the support of Zambians?’ This is an opportunity where we can give some of our shares to the Zambian public or Zambian businesses or other entities in order to ensure that ZCCM-IH is not overburdened, but have a cake, which they are able to manage,” he explained.
Musukwa also said that ZCCM-IH had finalised the appointment of a transaction advisor to work out Mopani’s cost profile.
“So, in terms of how we will work out the cost profile, ZCCM-IH has appointed a transaction advisor, a professional transactional advisor, who will look at all these nitty gritties. The process of appointing a transactional advisor was just being concluded last week, so I am sure that in the spirit of openness and transparency, the government, through ZCCM-IH, will ensure it makes these details available. Apart from a transactional advisor, a team has been constituted, which bordering across technocrats in Ministries of Finance, National Planning, Ministry of Mines, Justice and other stakeholders, such as trade unions and all people from all walks of life would be incorporated. We are dealing with a process that the government would like to see an open, transparent process anchored on the rule of law,” Musukwa said.
“This process is anchored on mutual trust and understanding with the bedrock of negotiations and discussion. That is why government would like to ensure that Glencore comes out clean as we move through this process. I must say that tomorrow (Monday) the negotiation processes are going on. I must say from my team, they have actually told me that the last three, four negotiation processes that have been going on, Glencore has shown serious commitment, including ensuring that some of the costs you are talking about will not be costs that are paid in a day. This cost for this entire process cannot be paid in a day, these are costs, which will be escalated in the future as we operate the mine and so on. What we are going to do is that, actually one of the negotiating issues is to put on a temporal mechanism, where both Glencore and ZCCM-IH will begin to look at these cost profiles, even when we have the final process, so that these costs are looked at and ensure that the production and operations continue as priority.”
Meanwhile, Musukwa claimed that KCM’s operational performance had improved since Milingo’s appointment as the mining company’s provisional liquidator last May.
“And for avoidance of doubt, ever since the (provisional) liquidator took over, there are positive results that are being generated at KCM. Clearly, the company was mismanaged,” said Musukwa.
Source: https://diggers.news/business/2020/08/31/glencore-will-offload-90-mopani-shares-to-zccm-ih-musukwa/
By Michael Kaluba
Mopani copper mines plc has confirmed that it has submitted a proposal to government and would resume mining operations as soon as an agreement is reached.
Mopani copper mines public relations manager Nebert Mulenga who revealed this to phoenix news says the mining firm will issue a notice of its intention to place its mining operations on care and maintenance after 90 days.
He says
during the 90 day period, Mopani copper mines plc will continue to engage with the government on potential solutions to its current challenges.
This decision comes after the mine went against government’s directive not to place its Mufulira and Kitwe mines on care and maintenance which was followed by a 7-day ultimatum from the state couple with mine unions led protests in Kitwe.
Anglo American is facing a huge class lawsuit for its past corporate practices over lead poisoning in Zambia’s Kabwe town.
Johannesburg-based attorneys Mbuyisa Moleele and London-based human rights law firm Leigh Day are preparing the case and an application to certify a class action will be filed in the Johannesburg High Court.
This is seen as a necessary first step in a class action against Anglo-American.
Indian mining giant Vedanta Resources which the Zambian government does not want anymore, is also connected to Anglo Americans.
The case of lead contamination involving Anglo stems from health issues linked to Kabwe, which Leigh Day said in a statement was once the world’s largest lead mine and operated from around 1915 until its closure in 1994. The law firm said Anglo owned and operated the mine from 1925 to 1974.
However, the diversified miner argues that the operation was nationalized and has been operated by the government for two decades.
Anglo American was one of the six companies involved in the R5bn silicosis class-action case in SA brought on behalf of former gold miners made ill by inhaling silica dust.
“The purpose of the action will be to secure compensation for victims of lead poisoning, including the cost of an effective medical monitoring system for blood lead levels among the community,” the two firms said in a statement on Friday.
They argue the mine was “owned and operated and/or managed” by Anglo American SA between 1925 and 1974 — the operation’s “most productive period”.
“It is alleged that from 1925 to 1974, Anglo American SA played a key role in the management of the medical, engineering and other technical services at the mine, and that it failed to take adequate steps to prevent lead poisoning of the local residents,” the lawyers said.
The mine was closed in 1994, after it was nationalised and taken from Anglo in 1974.
In its defence, Anglo said on Friday it was “one of a number of investors in the company that owned the Kabwe mine”.
“Anglo American was, however, at all times, far from being a majority owner. In the early 1970s, the company that owned the mine was nationalised by the government of Zambia and for more than 20 years thereafter the mine was operated by a state-owned body until its closure in 1994,” the London-based miner said.
“Since the nationalisation more than 40 years ago effectively placed these issues under the control of the Zambian government, we are not in a position to comment further about the matter, but we certainly don’t believe that Anglo American is in any way responsible for the current situation.”
The Human Rights Watch has published a report that puts Kabwe as the most toxic town, having disastrous effects on children’s health.
The Mineworkers Union of Zambia -MUZ- has demanded that Mopani Copper Mines plc cancels all letters given to miners when they placed the mine on care and maintenance as the mine owners seek dialogue with government.
MUZ President Joseph Chewe has told ZNBC News in Kitwe that Glencore, the owners of Mopani Copper Mines have engaged President Edgar Lungu seeking dialogue in view of the happenings at the mine.
Mr. Chewe has also demanded that Mopani Copper Mines apologizes to all miners who received letters.
He said the petition sent to President Edgar Lungu by mine unions when they held a peaceful protest demanding the restoration of all workers or have Mopani Copper Mines license revoked has been received.
Mr. Chewe stated that from the dialogue, mine unions want all workers to get back to work and that Mopani Copper Mines be given strict conditions that will stop them from engaging in activities that put workers’ jobs at risk.