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Zambia’s think tank,Center for Trade Policy and Development (CTPD), is unsettled by the continued reduction of government’s control or influence in critical large-scale mines through ZCCM-IH which is in charge of its stake in some mining companies.
This follows an agreement entered into by the ZCCM-IH and First Quantum Minerals (FQM) where it will convert its dividend rights and 20% equity value in Kansanshi Mining Plc (KMP) into a life of mine royalty.
The key features of the transaction includes: at closing, ZCCM-IH will de-recognise its equity stake in KMP as an investment in associate and recognise the acquired royalty as a financial asset and post-transaction, the economic value of ZCCM-IH’s 20% equity stake in KMP will be realised through the Value Added Tax (VAT) refunds.
Other features are: the varied rights attached to the ZCCM-IH Class A shares in KMP will be amended and prescribed in the amended KMP Articles of Association (“New KMP Articles”) to be adopted at Closing.
This news has been received with mixed feelings by stakeholders with CTPD advocating for some active equity interest to be retained.
CTPD Research Associate Webby Banda emphasised on Wednesday, December 08, 2022 in a statement that a certain level of involvement improves the governance process of these assets.
Banda has insisted that if this transaction is finally completed, it should serve as a litmus test for further undertakings in other assets.
“Mineral resources are the strategic assets that we have for our country. Therefore, they must be exploited for the benefit of the citizenry to steer socio-economic development.
“This transaction offers some leverage to extract maximal benefits through the conversion of the dividend rights and equity stake into a life of mine royalty on extracted mineral products at KMP,” Banda said.
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