By Peter Sinkamba
SHOULD GOVERNMENT USE ZCCM-IH TO BUY MOPANI SHARES FROM GLENCORE OR WHAT?- THE GREEN PARTY PERSPECTIVE
Last week, it was revealed by Government, through ZCCM-IH, is seeking to buy controlling shares in Mopani Copper Mines (MCM) by buying off Glencore shares.
At the moment, ZCCM-IH is a shareholder in MCM with only 10% shares. Glencore holds 73.1% shares while First Quantum owns 16.9%.
MCM is valued at about US$1.67 billion. This means Glencore shares are worth about US$1.22 billion.
The question is: should Government use ZCCM-IH as a vehicle to buy these shares?
First of all, at the moment, we do not think that ZCCM-IH has financial resources to pay US$1.22 billion cash. However, IDC has the capacity to do so.
Of course, we are aware that IDC has 60.28% shares in ZCCM-IH, while Government has 17.25% shares in ZCCM-IH.
Our view as the Green Party is that acquisition of the MCM shares is a very welcome move in the sense that in 2022, we expect the prices of copper and cobalt to spike. This could therefore a golden opportunity for Government to find money to pay the first Eurobond loan of US$750 million which is due about that time. Otherwise, it will be extremely hard for Government to find such colossal funds if restructuring efforts fail to materialize.
Having said this, we think that ZCCM-IH is a wrong vehicle to acquire the MCM assets. Rather, we think that it is better for Government, through IDC should set up a new company altogether to takeover the Glencore and Government shares in MCM.
The reason is simple. You will recall that two years ago when Felix Mutati was Finance Minister announced in Parliament that Government would soon sale 17.3% of its shares in ZCCM-IH?
You remember he said the long term strategic plan was to reposition ZCCM-IH for growth through strategic partnership and to comply to LUSE requirements? He said that the LUSE listing requirements stipulates that no single shareholder should control more than 25% of equity in any one listed company? And that in compliance with the listing requirements, government intends to sale 17.3% of its shareholding in ZCCM-IH?
You also recall that Government planned to sell the shares to an Israeli company? You also recall that a search on the physical address of the company in Israel for the said company was elusive? And you recall that ZCCM-IH paid over $100 million advance payment to an Italian company to rehabilitate Ndola Lime, and that company went into liquidation making ZCCM-IH lose so much money?
You will also recall that ZCCM-IH is in court and arbitration with KCM over multi-million claims? Are you aware that if, ZCCM-IH loses, it may be liable to compensate Vedanta billion dollars?
How far has Government gone with the sale of the 17.3% of ZCCM-IH shares to comply with LUSE listing requirements? How far has ZCCM-IH gone to recover the US$100 million advanced to the Italian company in liquidation? How far is the ZCCM-IH and Vedanta KCM case in court? How far is the ZCCM-IH and Vedanta KCM case under arbitration?
As Green Party, we do not think it is wise to use ZCCM-IH as a special vehicle to take over MCM shares owned by Glencore. We think that ZCCM-IH has too many skeletons that require to be cleansed or exorcised. Otherwise, ZCCM-IH will be a public liability that will swallow for nothing MCM shares.
We demand that Government abandons the dirty scheme of transfer of MCM shares to ZCCM-IH as the scheme will ultimately not be in public interest.