Government has clarified that ZCCM Investments Holdings (ZCCM-IH) has not sold its shares in Kansanshi Mining Plc contrary to the misinformation that has proliferated surrounding the new agreement between ZCCM-IH and First Quantum Minerals (FQM) over the management of Kansanshi Mining Plc.
Govenment spokesperson Chushi Kasanda said under the terms of the deal announced on December 1st, this year, ZCCM-IH will receive a 3.1 percent royalty payment from the revenue of Kansanshi which is operated by 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,” she said.
Ms Kasanda said the advantage of this arrangement for ZCCM-IH is that the royalty will be paid out so long as Kansanshi is operational, creating a more predictable and consistent revenue stream that ZCCM-IH 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,” she said.
She said also that this will increase and make more consistent revenue stream , which 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.
“Government 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 USD$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,” she said. This is contained in a report published by Mwebantu.