Africa-Press – Zambia. The Zambia Chamber of Mines has defended the controversial agreement that ZCCM-IH has entered into with First Quantum Minerals (FQM) to convert its dividend rights and economic value in its 20 percent equity in Kansanshi Mining Plc into a life of mine royalty.
ZCCM-IH has entered into a transaction with First Quantum Minerals (FQM) to convert its dividend rights and economic value in its 20 percent equity in Kansanshi Mining Plc into a life of mine royalty.
According to the transaction details, ZCCM-IH has agreed to enter into an agreement and drop criminal charges against Kansanshi Copper Mine directors, as part of the conditions precedent for FQM to declare a dividend in the sum of the amount that the government had been claiming from the mining giant.
On 23 October 2019, ZCCM-IH reported a suspicious transaction entered into between Kansanshi Mining Plc and First Quantum Minerals Finance Limited to the Zambia Police Service.
But Zambia Chamber of Mines Chief Executive Officer Sokwani Chilembo said the deal will be good for the mining industry and good for the country. Mr. Chilembo has condemned stakeholder’s opposing the ZCCM-IH/FQM deal labeling them as sensationalists who are misrepresenting the FQM and ZCCM-IH agreement.
“Chamber of Mines slams sensationalist misrepresentation in commentary on FQM and ZCCM-IH agreement. Point scoring behaviour by pundits is willfully misrepresenting the benefits and history of a deal that will be good for the mining industry and good for the country. The negotiations between ZCCM-IH and First Quantum to provide ZCCM-IH with royalty income from Kansanshi mine have been ongoing for the past three years and were initiated by the previous administration. ZCCM-IH’s 2020-2026 Strategic Plan, which sets out the investment company’s intention to secure royalty revenue streams from its investment portfolio, was likewise devised during the tenure of the previous administration, received shareholder support, and has been in the public domain for years,” Mr. Chilembo said.
“Given this, one could have expected to see a broad apolitical support for this announcement, rather than the barrage of attacks we have seen in the media. So, this shocked outrage is misplaced, and being mostly fuelled from quarters that were privy to the historical background of the negotiations. The agreement that FQM and ZCCM-IH have entered into calls a halt to the tit-for-tat legal disputes between government and its main mining investor, that have caused great reputational damage, and come at a great cost for both parties in time, money and effort,” said Mr. Chilembo.
“Now the partners in Kansanshi can get back to the business of mining, and deliver upon the very positive and long-awaited development of the s3 expansion at the mine. This cessation of hostilities is extremely important for our optics in the global landscape and will be a comfort to other potential investors – because make no mistake, we need many, many more investors if we are to realise the objective of delivering anything like 3 million tonnes of copper a year,” Mr. Chilembo continued.
According to the Chamber of Mines, the 3.1% revenue-based royalty secured by ZCCM-IH in its negotiations is at the top end of the range normally seen for this type of arrangement.
“This is a good deal for ZCCM-IH, when you look at the international comparisons. They have secured a regular, consistent source of income from Kansanshi which will allow them to deliver on their strategy of becoming a real player in Zambia’s mining industry, throughout the mining value chain – and that is what ordinary Zambians need to see. It’s time we stop misrepresenting the facts, otherwise our opinions – and the quality of our public debate – will be detached from reality. We must start getting behind the industry as an engine for national development, rather than just scoring points for points’s sake,” Mr Chilembo said.
Meanwhile, Chief Government Spokesperson Chushi Kasanda this week refuted reports that ZCCM-IH has sold its shares in Kansanshi Mining Plc, saying the parties have simply entered into a new arrangement that provides a more beneficial revenue stream.
Kasanda says ZCCM-IH will continue to hold its shares in Kansanshi and will also continue to have pre-emptive rights in respect of the mining company.
ZCCM-IH recently announced that it had entered into a transaction with First Quantum Minerals (FQM) to convert its dividend rights and economic value in its 20 percent equity in Kansanshi Mining Plc into a life of mine royalty.
According to the transaction details, ZCCM-IH has agreed to enter into an agreement and drop criminal charges against Kansanshi Copper Mine directors.
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