A New Zambian Mining Entity Envisaged

1. Background

Mines Minister Paul Kabuswe has announced the creation of a new 100% Zambian mining entity.Following this announcement, many questions were raised in the media and on social networks, as the Zambian people already directly and indirectly own 92.6% of the emblematic mining company ZCCM-IH. Concerns have been expressed about the motives behind the creation of this new entity. Many believe that it is merely a means of escaping
the scrutiny of Authority Bodies and minority shareholders, in particular our Group which is seen as a watchdog for ZCCM-IH. Drawing on our decades of experience as a ZCCM-IH shareholder, we would like to
contribute our views and insights on this new entity to the debate.

2. Imperative transparency

As a listed company, ZCCM-IH is obliged to follow stock market rules. Everything is transparent. The regulatory Bodies – LSE, Euronext and particularly the Lusaka Securities Exchange – ensure compliance with stock market and accounting regulations, and safeguard the interests of all shareholders.Our group also monitors the company’s management. Indeed, we have publicly warned that we were denied access to crucial documents when ZCCM-IH acquired 90% of Mopani from Glencore and when the royalties deal with First Quantum was signed.

This new state-owned company will have no independent control and could be manipulated by bad eggs, for example. Indeed, the Parliamentary Committee on Parastatal Bodies only makes recommendations, it has no coercive powers. When over $120 million went up in smoke in suspicious circumstances at Ndola Lime, the Committee recommended thorough investigations and the involvement of Interpol, but nothing was done despite our insistence to former IDC CEO Mateyo Kaluba.

It is therefore imperative that the Committee on Parastatal Bodies can sanction and dismiss the Directors and Management of this new entity.

3. Governance and total independence

To protect this new entity from interference harmful to the country’s interests, the Board must be TOTALLY independent of the GRZ. Zambia has many competent people in this field who have the country’s interests at heart: former ZCCM-IH chairperson Dolika Banda, Bishop Mambo, Mwansa Chalwe, Bob Sichinga,

4. Financing in question

In an interview on 18 August 2024 on ZNBC, Mines Minister Paul Kabuswe indicated that financing could be provided by the Ministry of Finance. How is this possible when Zambia is broke?
As for the advance of equities by the partner with repayment from future profits, the minority shareholding is always miserable in this type of arrangement.

Moreover the assertions regarding the ease and capacity of financing thanks to the mining licences and the reserves in the ground held raise questions. Mopani Copper Mines held mining licences, shafts, a smelter, produced copper and yet was unable to borrow to invest in order to increase production and create working capital.Since IRH injected money, the situation has improved dramatically.

In this case, it is astonishing that the Minister has given the majority of Mopani to foreigners when he knew that Mopani had all the assets to succeed on its own according to his mining vision.

In the interview, in the face of relevant questioning of Franklin Tembo, the Minister indicated that this new entity would have ‘zero interference’ with ZCCM-IH. We acknowledge this commitment and will ensure that ZCCM-IH does not participate in the financing of this entity in any way whatsoever.

5. Proper and strong safeguards

Finally, it is entirely legitimate for the Zambian people to benefit 100% from the maximum of their wealth. However, the creation of this new entity must be accompanied by proper and strong safeguards set out above to ensure that the Zambian people can benefit fully from this new entity.

Issued by:
Thierry CHARLES
Spokesperson of Minority Shareholders of ZCCM-IH