By Peter Sinkamba

DO WE REALLY NEED ROTHCHILD TO ADVISE US MOPANI?

So much has been said about trending news of ZCCM-IH engaging Rothchild to advise on the restructuring of Mopani Copper Mines.

We all know the problem at Mopani. It lacks sufficient capitalization to operate optimally. Rothchild is not going to bring the capital required. So, whatever advice Rothchild gives, that will not bring or generate the requisite money to pump into the operations to scale up production.

Remember the 1995 Kafue Consortium saga? The Consortium offered the Chiluba government to buy ZCCM as a single entity for US$1 billion cash payment and US$5 billion investment? The Chiluba government rejected the Consortium offer and instead hired Rothchild to advise. Rothchild advised the government to unbundled ZCCM. Ultimately, ZCCM was sold in unbundled format and government ended up realising peanuts for the assets.

What do we expect from Rothchild this time around? It will be unbundling of Mopani. The gem is Mufulira smelter and refinery which will be sold for less than US$300 million. Then the rest will fetch less than US$200. And consultancy fees will be in the range of US$20 million.

After the sale, ZCCM-IH will receive no more than US$500 million but still with a debt of US$1.5 billion dollars due to Glencore. So, Glencore will demand to be paid the US$500 million. After that, ZCCM-IH will still have a US$1 billion indebt to Glencore plus the US$20 million fees.

By the way, Rothchild is reported to own shares in Glenmore. So, it is like asking the a person you owe to advise you on selling your asset so as to raise money to pay off the debt. Do you really think that such a person can render sound advice to you?

All in all, I think the best way resolve the Mopani problem is to find money to capitalise the company. I have made proposals before on how to raise the funds, one of which is through Bank of Zambia. You may Google my several solutions to the Mopani problem. I think they are by far better than this Rothchild approach.