Analyzing the Mopani Copper Mine Deal, Ministerial Statement Sparks More Questions
It seemed wise to provide some background on the topic at the beginning. The ownership and disposal of Mopani Copper Mines in Zambia are primarily governed by a combination of laws that regulate mining operations, state-owned properties, and corporate governance. Some of the key legislation governing the mining sector in Zambia include:
The Mines and Minerals Development Act, 2015 (Amended 2016) covers mining rights transfer and disposal, specifically for state or foreign investors. The Public Finance Management Act of 2018 oversees public asset management, including the Zambian government’s stake in Mopani Copper Mines via ZCCM-IH. Per the Companies Act of 2017, Mopani Copper Mines must follow regulations on ownership, shareholder privileges, and corporate activities such as mergers, acquisitions, or disposals. The 2020 Public Procurement Act focuses on procurement processes, regulating the acquisition, utilization, and disposal of public assets. The Constitution of Zambia, 2016 regulates public property, serving as the legal basis for governance. Article 257 requires Parliament to pass laws for managing national resources. Article 210 bars the unauthorized transfer of public property without Parliament’s approval, which is crucial for protecting public assets in Zambia.
Controversy over the Mopani Copper Mine deal led to anticipation of a comprehensive statement by the minister on legal compliance. However, the focus of the bidding process was mainly on the 2020 Public Procurement Act, overlooking other legal aspects. This has raised more questions rather than clarified. Let us delve into key concerns.
Based on legal advice, the Minister of Mines stated that no sales, transfers, or disposals of state assets had taken place. The government-owned no shares in Mopani Mine Company and therefore could not sell any shares. Mopani is not a state-owned enterprise, either before or after the transaction. Review the Further Cautionary Announcement which was issued by ZCCM Investments Holdings regarding the acquisition of 90% of Mopani Copper Mines on March 10, 2021 it was stated that: ”The acquisition of 90% of the issued shares in Mopani will result in ZCCMIH being the holder of 100% of the issued shares in Mopani and represents an opportunity for ZCCM-IH to transform from a pure investment company to owning and operating a major mining asset in Zambia”. The Minister confirmed in his statement that ZCCM IH held a 100% shareholding in Mopani.
Furthermore, the cautionary announcement, hinted that “In line with Section 9.16 of the LUSE Listings Requirement, and upon confirmation that Mopani is a subsidiary of ZCCM-IH as defined by the Companies Act, ZCCM-IH confirms that the Articles of Association of Mopani will be amended to conform to Schedule 10 of the LUSE Listings Requirements“. The shares were transferred without full payment, with the government guaranteeing it. Shares were moved to ZCCM IH, which made Mopani a subsidiary. Mopani was 100% controlled by IDC through ZCCM IH. Therefore, the transaction should have been parliamentary-approved under relevant constitutional provisions. The compliance test should have been also conducted under the aforementioned laws and demonstrated in the statement.
Additionally, a Transaction Completion & Withdrawal Of Cautionary Announcement issued on March 21, 2024, re: Mopani Copper Mine deal, reveals govt.’s US$150 million payment. Includes $15 million upfront + 15-yr loan to pay Glencoe. The notice provided does not indicate whether the payment was for a 49% stake in ZCCM IH or the initial 90% ownership of shares in ZCCM IH. This lack of transparency and accountability raises concerns regarding the deal.
The ministerial statement raises uncertainty about the Mopani Copper Mine transaction, particularly about share transfers. The government denies share transfer allegations and explains new shares were issued from the government to Delta (IRH) via ZCCM IH. It’s vital to note shares rely on shareholders. After Glencore exited, shares moved to ZCCM IH, giving it full ownership of Mopani’s shares, irrespective of payment.
The transfer of 51% shares from ZCCM IH to IRH, and then to Delta, continues to be a puzzling aspect of the agreement. IRH is tasked with holding the purported 51% shares in Mopani, making the transfer to Delta somewhat mysterious. What is interesting is that the Companies Act of 2017 in Zambia prohibits companies from transferring their shares to their subsidiaries. It is necessary to comply with the regulations outlined in the Company Act, which dictate that shares can only be transferred if they are fully paid up. In the case of transferring IRH’s 51% shares of Mopani, valued at $1.1 Billion, to Delta, the shares must be paid for in full. Has this transaction been completed? There remain numerous unanswered questions that the Minister should have addressed, but unfortunately, he missed the opportunity to do so.
Given the circumstances described, why is the government avoiding taking responsibility for the mess that has been made? There is a need for the government to acknowledge and take responsibility. Through IDC and ZCCM IH, Mopani was a government asset that belonged to the people of Zambia, no matter how one views it. The procedure should have been followed as per provisions of various and relevant laws.
The recent ministerial statement regarding the Mopani Copper Mine deal has left many uncertainties. The lack of transparency, unclear share transfers, and potential legal loopholes emphasize the importance of conducting a comprehensive investigation and oversight of such transactions. Failure to provide satisfactory responses may result in accountability for those involved in the near future. All stakeholders must prioritize accountability and transparency to prevent similar controversies from arising again.
The Struggle Continues
Sensio Banda
Former Member of Parliament
Kasenengwa Constituency
1. Mopani is not a state-owned enterprise, either before or after the transaction. Review the Further Cautionary Announcement which was issued by ZCCM Investments Holdings regarding the acquisition of 90% of Mopani Copper Mines on March 10, 2021 it was stated that: ”The acquisition of 90% of the issued shares in Mopani will result in ZCCMIH being the holder of 100% of the issued shares in Mopani and represents an opportunity for ZCCM-IH to transform from a pure investment company to owning and operating a major mining asset in Zambia”.
2. Additionally, a Transaction Completion & Withdrawal Of Cautionary Announcement issued on March 21, 2024, re: Mopani Copper Mine deal, reveals govt.’s US$150 million payment. Includes $15 million upfront + 15-yr loan to pay Glencoe. The notice provided does not indicate whether the payment was for a 49% stake in ZCCM IH or the initial 90% ownership of shares in ZCCM IH. This lack of transparency and accountability raises concerns regarding the deal.
My question is the payment to Glencore. Why would we be paying Glencore if we own 90% of Mopani through ZCCM-IH?
Go back bwana and ask yourself why the Gencore Mopani deal was highly critised in 2021. Why everyone thought we signed a bad deal.
You keep harping that you owned KCM and PF did the right thing but you lost the case in the London courts over that issue. Similarly, if you owed Glencore and never paid them off on the sale of Mopani, you really never owned Mopani. You held the title but the title was never in your name cause of the liability that was hanging over head in the deal.
Please abena Zambia lets get our heads out of the sand. Stop following the empty rethoric some politicans keep saying.
The committee that looks at the debt engagement was very clear on some of the requirements for the loans we get. What is the COLLATERAL that is used. We have never asked these questions and a pertinent one in the name of transparency. We have given prior governments blank cheques to sign against national assets without asking questions. When MPs and the committees hold our leader to such questions, that is a check and balance. Not the chest pounding empty noise of Nakachinda and Sean Tembo. Sean see how people who dont even have ACCA use the little knowledge that they for the benefit of the people. Critical thinking as opposed to empty rethoric. When you put issues like that to the mind of a fellow like Situmbeko Musokotwane. You will see him smile. Cause he has to apply his mind as he does his job.
So the author of this article is a linear thinker, let be multivariate in our outlook. Permutation in the options of the law. We cant have such a narrow way of looking at things and spend years in court litigating a problem and not a solution.