ZCCM-IH minority shareholders have defended the decision to partner with foreigners in the gold mining project in North-Western Province, citing weak financial status.
Recently, stakeholders have questioned the partnership over Kasenseli gold deposits in North-Western Province between the Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH) and Karma Limited of Sudan.
Responding to public concerns, Euronext Minority Shareholders of ZCCM-IH representative Thierry Charles further blamed the previous Pius Kasolo-led management, among others, for the company’s weak financial status.
“As a result, our company has emerged exangue (bloodless carcass) from the Pius Kasolo era: more than $100 million from the dividends of the only ‘generous’ mining company, Kansanshi Mine, were injected in pure loss at Ndola Lime. More than $20 million was needed to bail out Investrust bank. The foolish $640 million CAC cement plant project was fortunately stopped by the current team,” Charles said in a statement yesterday. “Our company was on the verge of becoming a zombie company like ZESCO. Furthermore, ZCCM-IH is a collateral victim of the disastrous energy sector: it’s 25 per cent shareholding in CEC no longer pays any dividends as KCM, being bankrupt, owes it more than $132 million. ZCCM-IH has had to lend over $20 million to KCM in order for it to resume operations and maintain jobs.”
Charles stated further that Zesco owed the Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH) a lot of money which could have allowed it to be the major shareholder in the gold mine.
“Zesco is unable to pay over $200 million debt owed to Maamba collieries in which ZCCM-IH has a 35 per cent shareholding. Our company has even had to lend $10 million to Maamba collieries, which now refuses to return it to our company,” he stated.
He questioned the rationale behind Chambishi Non-Ferous Metals’ failure to pay dividends, yet it was able to bid for the purchase of Konkola Copper Mines.
“Now the funny thing that happened is that we have a mine called Non-Ferrous Metals in Chambishi which for the last 21 years has never given the government a single dividend because it has been claiming to be making losses. Which has been the same story for KCM. For 12 years KCM has never given government the dividend but kept on accumulating these loses. But the funny thing is that China Non-Ferrous Metals was the first company to make a presentation to buy KCM,” he stated.
Charles also wondered how Kansanshi Mine which had failed to pay reasonable dividends was able to lend $520 million to First Quantum Minerals.
He stated that a small loan from Kansanshi through ZCCM-IH’s 20 per cent shares could have fully financed the gold mining project.
“Finally, Kansanshi Mine no longer pays substantial dividends. However, we have learned from the press that it has loaned $520 million to its 80 per cent-owned parent company First Quantum alone without the approval of the Board. Our holding company is unable to obtain a bank loan due to low and irregular revenues,” Charles stated. “A fair loan of $130 million from our 20 per cent share of Kansanshi Mines would have financed all the projects in gold without having recourse to any financial partner! On top of that, we learned through an announcement a few days ago that ZCCM-IH will have to incur legal fees for a confidential arbitration in London because FQM reproaches it for having filed a criminal complaint in Zambia…’’
And Charles defended current chief executive officer Mabvuto Chipata and team, saying: “The serious charges and calls for dismissal demonstrate a lack of a comprehensive view of our company, particularly of the progress that has been made.”
He stated that the current team surpassed the Kasolo team.
“We have been shareholders of ZCCM-IH for many years and also investors in other mining companies, and the contrast with the Kasolo and Mung’omba years is striking. For ZCCM-IH’s own gold mining and for the development of the country for and by Zambians, it would be more beneficial if the understandable anger and rage were directed solely at those who strangle ZCCM-IH with indifference,” Charles stated. “This impunity also raises questions…For the past year, ZCCM-IH management has refocused investments on our core business, mining
operations as an operator and is gradually turning the company around despite the challenges. Copper was the historical metal but we have confidence in the diversification of mining investments such as manganese with our subsidiary Kabundi and gold in partnership with specialised partners. This partnership will undoubtedly contribute to the acquisition of experience and skills specific to gold, ZCCM-IH will then be able to exploit deposits on its own.”
He stated that so far ZCCM-IH was happy with the technical and legal structures put in place.
“In just a few months, we were pleased to see the technical and legal structures put in place, which are essential for a rapid start to the process, thus fulfilling the task entrusted to ZCCM-IH by the GRZ. All the gold obtained will be sold to the BoZ to build up foreign exchange reserves in order to obviously put a quick stop to the kwacha’s infernal fall,” stated Charles. “This purpose therefore made it impossible for some people to propose that the Zambian citizens be financially involved in the projects to compensate for the lack of resources of ZCCM-IH. Indeed, Initial Public Offerings are complex, costly and time-consuming operations, and are subject to regulatory bodies, among others. We also trust our management to choose the appropriate partners and to formalise the legal and control frameworks so that this partnership in gold is fair and equitable, unlike that in copper.”