It’s an Intended Sale of Kansanshi Shares and Requires Parliamentary Approval
By Amb. Emmanuel Mwamba
I have noted a response from Government insisting that no sale of 20% Shares held by ZCCM-IH in Kansanshi has(or will) taken place.
It is clear that the shares are being sold.
● Act of conversion of the shares from dividend shares to royalty payments.
● Transaction Announcement provides details of the sale of these shares.
● Conditions being attached to the deal such as the dropping of criminal charges against First Quantum Minerals Directors, and to fund the transaction through VAT Refund owed by ZRA to Kansanshi, requires wider consensus and approval process beyond the shareholders and board members.
● Article 210 which provides for Public Procurement and Disposal of State Assets, states that any sale, transfer or disposal of major State assets requires parliamentary approval signified by a two-thirds majority vote.
HON. CHUSHI KASANDA’S STATEMENT ON ZCCM-IH SHARES IN KANSANSHI
Government wishes to inform the public that ZCCM Investments Holdings (ZCCM-IH) has not sold its shares in Kansanshi Mining Plc contrary to the misinformation that has proliferated surounding the new agreement between ZCCM-IH and First Quantum Minerals (FQM) over the management of Kansanshi Mining Plc (Kansanshi).
Under the terms of the deal announced on Thursday, 1st December, 2022, ZCCM-IH will receive a 3.1% royalty payment from the revenue of Kansanshi, which is operated by First Quantum Minerals (FQM). This royalty is estimated to be in the region of USD $50-70 million per year, depending on the gross value of metal products, mostly copper and gold, sold or otherwise extracted at Kansanshi.
This arrangement is valid for the entire life of the mine and follows extended discussions between ZCCM-IH and FQM over the past three years. It replaces the previous dividend-based model and is expected to provide up to twice the revenue to ZCCM-IH compared to the previous arrangement.
The advantage of this arrangement for ZCCM-H is that the royalty will be paid out so long as Kansanshi is operational, creating a more predictable and consistent revenue stream that ZCCM-H can use to raise financing and follow its ambitious investment strategy.
Dividends, by contrast, would only be paid out when the mine makes a profit. They are also paid out at the discretion of the mine’s Board of Directors.
ZCCM-IH will continue to hold its shares in Kansanshi and also continue to be represented on the Board of Kansanshi in order to ensure full visibility and transparency regarding the mine’s operations. ZCCM-IH will also continue to have pre-emptive rights in respect of Kansanshi.
This increased and more consistent revenue stream will allow ZCCM-IH to effectively plan for the future, enabling it pursue an ambitious investment strategy that will create jobs and promote growth in the country’s economy.
Govenment advises citizens to remain vigilant and ignore misinformation which claims that ZCCM-IH is abandoning its stake in Kansanshi.
This is simply a new arrangement that provides a more beneficial revenue stream while still maintaining ZCCM-IH’s ownership in Kansanshi, oversight of operations, and exposure to its future growth, including the $1.25 Billion Kansanshi expansion which was approved earlier this year.
This arrangement provides a win-win opportunity for both ZCCM-IH and Kansanshi. This is in line with the Government’s vision of promoting sustainable investment in the mining sector.
Hon. Chushi Kasanda, MP
MINISTER OF INFORMATION AND MEDIA AND CHIEF GOVERNMENT SPOKESPERSON
2nd December, 2022
