ZCCM Investments Holdings has started the process of claiming up to $1.4 billion from First Quantum Minerals Ltd accusing the firm of engaging in fraud.
The claim includes $228 million in interest on $2.3 billion of loans that ZCCM-IH said First Quantum wrongly borrowed from the Kansanshi copper mine, as well as 20 percent of the principal amount, or $570 million, according to an internal company presentation, dated Nov. 4, obtained by Bloomberg.
The company is also seeking $260 million as part of a tax liability the Zambia Revenue Authority said Kansanshi owed it, as well as the cost of the mine borrowing money commercially that ZCCM-IH said could have been avoided.
ZCCM-IH said in papers filed in the Lusaka High Court on Oct. 28 that First Quantum used the money as cheap financing for its other operations.
ZCCM-IH also last month filed a notice of arbitration against Kansanshi in London over the same matter.
No figure was mentioned in the court filings.
ZCCM-IH owns 20 percent of Kansanshi.
But in a statement released Monday evening, FQM President Clive Newall said having carefully studied the claims made in both the Notice of Arbitration and Statement of Claim, First Quantum is firmly of the view that the claims are utterly without merit, or indeed any foundation in facts.
“It is notable that the Kansanshi Mining Plc deposits were fully repaid to KMP and were then used to fund a major investment program in Zambia, including the successful construction and commissioning of the Kansanshi smelter and expansion of the processing plant and mining operations.
“On October 28, 2016, KMP also received a Statement of Claim filed in the High Court for Zambia naming additional defendants, including First Quantum, its subsidiary FQM Finance Ltd., and a number of directors and an executive of the named corporate defendants. This dispute arises out of the rate of interest paid on deposits made by KMP with the Company’s financing entity, FQM Finance Ltd. The funds on deposits were retained for planned investment by KMP in Zambia.”
He said, “FQM Finance paid interest on the deposits to KMP based on an assessment of an arms-length fair market rate, which is supported by independent third party analysis. ZCCM disputes that interest rate paid to KMP on the deposits was sufficient. Unfortunately, ZCCM has taken the extra-ordinary additional step of commencing a further action in the High Court for Zambia, making allegations repeated from the Notice of Claim against certain First Quantum directors and an executive that are inflammatory, vexatious and untrue.”
“In fact, KMP is now indebted to FQM Finance for the funding of further investment in Zambia. The Company is currently engaged in constructive discussions with representatives of the Zambian Government, which holds a 92% direct and indirect majority shareholding in ZCCM, with a view to achieving an amicable resolution. We do not believe it is appropriate to comment further on the arbitration or court proceedings while they run their proper course, but we will provide further information as and when required.”
Meanwhile, Philippe Bibard, a spokesman for a minority shareholder group based in France said FQM is disregarding the rights of minority owners in ZCCM-IH in dealing directly with government.
*With Additional Reporting by Bloomberg
Comment: First Quatum has restated its game among others like smuggling of congolese ore into Zambia from its subsidiary company in Sakania which entailed the Congolese government to boot it out of Congo .
This ZCCM thing behaves like ZRA, try change director. Shut that mine like PF did to The Post.
Three weeks ago FQM was bragging about how much tax they have paid…Watch this Space …this story will disappear quietly and shelved once key people are greased.
Guys,
FQML is the proverbial “rags to riches” company, having started up by reprocessing Bwana Mukubwa’s tailings. The Pascall brothers are cunning, avaricious and rapacious. Being of Zimbabwean (Rhodesian) descent, they know how to exploit the indigenous African. It is for this reason that they recruited General Kingsley Chinkuli as their Country Manager. President Kabila was extremely perspicacious. The minute FQML sponsored the national soccer team, he became suspicious of their motives. He dispatched a high-powered team from Lubumbashi to go to Sakania and monitor every truck of copper concentrate which left the country. Based in their findings, he pulled the plug on FQML and booted them out of the 3 operations in the DRC. Well done ZCCM-IH, do not relent. Clive Newall is their…
…vociferous mouthpiece in the UK. He has never won a single case. In every instant, he settles on the steps of the court, on the morning of the case. Press on for your rights guys!
Well stated @Insider Chilufya. Look at the double-talking Clive Newall goes through by first rebutting the case, then saying they are negotiating directly with GRZ (is it Mutati who visited them a few weeks ago?), and then he claims that the case is subjudice and he cannot comment! All in one breath. These Rhodies take Africans for fools. I hope that the PF00Ls in govt will not take the bait. ZCCM-IH should be supported and left to defend Zambia’s interest. Let the professionals deal with this matter instead of using Swiss accounts and brown envelopes at State House.
Well said @insider Chilufya. My only fear is that the Zambian authority like playing Take Your Pick. They always pick the money when given the option to press on towards what is in the box… I hope we will recover what is owed; there is no where and no way a Zambian company would be allowed to do this in any European jurisdiction and get away with it.
@Nostradamus, good point.
ba ZCCM-IH, you have brought down ndola lime, now you want to do the same to fqml, forget. just concentrate on your failures maybe one day you will pick up the pieces. those are orgasmic statements which are frivolous and senseless. if you struggle to gather your so called claims who is going to hear your case. fqm is expanding in zambia and its the only mining firm thats employing at the moment. stop making noise like a fly or irritating mosquito.
ZCCM IH/ PF government plundered the Euro bond and other Chinese loans. Now they are busy to trying to look for another source of US DOLLARS.
Leave FQM alone, they are doing their best to develop N/Western province inspite of paying a lot of taxes to GRZ which is ending up in Muchinga and Nothern provinces.
A thief should not be the one to tell you where you must hit him when he’s cornered. Take the case to its logical conclusion.
@John chinena phiri & Luba Kaonde well said Guys. ZCCM IH has nothing to prove and just wasting their time. FQML is doing fine with massive expansions in NORTH WESTERN. FQML contributes a lot to GRZ than any of this now TUNTEMBA mines KCM & MOPANI mines. LEAVE FQML alone