Contrary to rumors that have circulated regarding the new agreement between ZCCM Investments Holdings (ZCCM-IH) and First Quantum Minerals (FQM) over the management of Kansanshi Mining Plc, the government has clarified that ZCCM Investments Holdings (ZCCM-IH) has not sold its shares in Kansanshi Mining Plc.
According to the agreement published on December 1st, this year, ZCCM-IH will get a 3.1 percent royalty payment from the sales of Kansanshi, which is run by FQM, according to Information and Media spokeswoman Chushi Kasanda.
“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.
According to Ms. Kasanda, the benefit of this agreement for ZCCM-IH is that the royalty will be paid out for as long as Kansanshi is in operation, resulting in a more reliable and consistent revenue stream that ZCCM-IH can use to raise money and carry out 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 added that this would expand and generate a more reliable revenue stream, enabling ZCCM-IH to properly plan for the future and execute an ambitious investment plan that would boost employment and the nation’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.