3.4 C
Alba Iulia
Thursday, February 27, 2020

IDC buys Zambeef’s Zampalm Ltd for USD$16 million

Headlines IDC buys Zambeef’s Zampalm Ltd for USD$16 million

Zambeef has announced that it has entered into a Share Sale Agreement with the Industrial Development Corporation (IDC) for the sale of 90 per cent shareholding in its wholly owned subsidiary, Zampalm Limited to the IDC for a cash consideration of US$16 million.

The US$16 million cash is to be paid on completion, with a further Performance Amount of up to US$2 million dependent on performance milestones over the three years from 2018 to 2020.

Zambeef Chairman Dr. Jacob Mwanza said the transaction is in line with and a continuation of the Group’s strategic vision, which will allow Zambeef to focus on growing its core business, which is the production and retailing of cold chain meat and dairy products, cropping and stockfeed, delivered through the Group’s extensive processing, distribution and retail network.

Dr Mwanza said the deal would further allow Zambeef to continue to reduce its overall gearing, and in so doing, reduce interest costs.

Zampalm was incorporated in 2009 following Zambeef’s acquisition of Zamanita Limited in order to develop an oil palm plantation and crushing mill in Zambia as a continuation of its strategy of vertical integration.

In addition to its position as a leading edible oil and soybean meal producer, Zamanita also owned the only solvent extraction plant in Zambia.

It is estimated that 50%-70% of Zambia’s edible oil consumption of approximately 120,000 Metric Tonnes per annum is imported as finished edible oil from the Far East, East Africa and South Africa.

Zampalm was created to substitute those exports and produce palm oil entirely in Zambia for the domestic market.

Zampalm owns 20,238 Hectares of land on title in the Northern Province of Zambia, on the Eastern side of Lake Bangweulu, to the North-West of Mpika town.

Zampalm currently has approximately 413,362 palms planted over an area of 2,911 Hectares in the main plantation, with another 172,000 seedlings in the main and pre-nursery.
As at 30 September 2016, the assets of Zampalm had a book value of US$19 million, representing approximately 6.3 per cent of the Group’s gross assets.

Following the disposal of Zamanita, the Board has reviewed its strategy for Zampalm and concluded that given the long timescales required to create value from a greenfield project, it was in the best interests of Zampalm stakeholders to seek a new majority shareholder.

Zambeef will however retain a 10 per cent shareholding.

[Read 169 times, 1 reads today]

40 COMMENTS

  1. not sure about this im not confident in government’s ability to run any private company they should have just become a sharedholder but with 90% the board will be made of friends of friends

    • During one of peacekeeping missions in West Africa we were deployed in an abandoned palm plantation- those trees require a lot of rainfall I don’t think our climate is suitable for palm trees so Zambeef have basically sold off a non performing asset, a liability in other words! I strongly disagree with this move!

      That 16 million dollars is exactly the equivalent additional funds required to purchase the 500,000tons of maize at the breakeven price of K1.5 and not the FRA’s K1.2 per kg! Wouldn’t it have been money better spent???

      I wouldn’t be surprised to hear that Dora and Mutati are somehow involved in this bad decision!

    • I thought IDC was established to develop the industrial base as a way of increasing employment.
      This move is not only suspicious but also not along the ideal model of industrial development.
      If the government is to build industries l would have thought simple things like garbage collection, recycling and production of power from food waste would provide good start ups these are not only labour intensive but can make use of both skilled and unskilled labour

    • PALM TREES ARE ONLY PRODUCTIVE IN HIGH RAINFALL, HOT AND HUMID AREAS. IN ZAMBIA THE PALM TREES ARE PRODUCTIVE IN THE VALLEY IN LUAPULA AND KAPUTA. IN FACT IN THESE AREAS PEOPLE GROW PALM TREES AND PRODUCE THE RED OIL. THE SUITABLE AREAS ARE WHERE THE EQUATORIAL AREAS, THAT IS WHY INDUSTRIAL PALM PLANTATIONS ARE FOUND IN DRC, GHANA, COSTA RICA, MALAYSIA, INDONESIA, ETC. IN MPIKA, IT IS A WASTE OF RESOURCES. ZAMBIANS HAVE AGAIN BEEN TAKEN FOR A RIDE BECAUSE OF THEIR DOCILITY.

    • I just went on Zambeef website and found this:- “Zambeef Chief Executive Officer Francis Grogan said up to US$2.6 million has so far been pumped into the 4,000 hectare land in Mpika which if successful, would see the development of more land for palm tree plantation. “The pilot phase of the 4,000 hectare land is underway with $2.6 million already spent on it in 2011 alone. Should this be successful, it will lead to the development of the other land that we have,” he said.”
      This one is one of the best return on investment after investing $2.6M and 5 years later you reap $16M. basically only 2911 Hectares instead of 4000. Meaning they spend less than $2.6M. Zambeef know that it is expensive to run this plantation.

    • UPND DEMAGOGUES, THE PLANTATION IS CLOSE TO THE LAKE TO FACILITATE EASY IRRIGATION. ZAMBIA WILL NOT GOT ANYWHERE IF WE ARE AFRAID TO TRY. INSTEAD OF LETTING THE WATER IN ZAMBIA GO TO WASTE BECAUSE OF FEAR, LET US TRY SOMETHING DIFFERENT FROM OTHER COUNTRIES. IF IT DOESN’T WORK THEN IT DOESN’T WORK. BUT TO SIT ON OUR HANDS AFRAID OF TRYING WILL LEAVE US IN POVERTY AND WE ALL KNOW THAT POVERTY BREEDS VIOLENCE.

    • @ SHU SHU SHU, IT IS NOT ABOUT AVAILABILITY OF WATER, IT IS ABOUT THE RIGHT TEMPERATURES. THE TREES CAN BE GROWN BUT THEY CANNOT BEAR ENOUGH FRUITS AND THE FEW RUITS THAT MAY COME OUT MAY NOT YIELD ENOUGH OIL TO AN ECONOMIC LEVEL. THE DEAL IS BAD FOR THE ZAMBIAN PEOPLE WHO HAVE BEEN RIPPED OFF. IT A DIRTY DEAL. THE QUESTION TO ASK YOURSELF IS WHY DID THE COMPANY THAT BOUGHT ZAMANITA LEFT OUT THE PLANTATION, IDEALY A BETTER AND CHEAPER SOURCE OF THEIR RAW MATERIALS? THEY KNEW WHAT WAS THERE. THE OTHER QUESTION IS WHY IS IT THAT MORE THAN TEN YEARS SINCE THEY PLANTED THE PALM TREES, NO OIL HAS BEEN PRODUCED FROM THERE? BE PATRIOTIC TO YOUR COUNTRY AND THE NATION, NOT BEING BLINDLY LOYAL TO AN INDIVIDUAL OR ORGANISATION THAT WILL NOT THERE TOMORROW.

    • I smell a rat, why are bazungu’s selling and PF govt very eager to buy? Why didn’t private sector buy this asset from Zambeef?

  2. Great endeavour.. tho I agree also, government’s capability to run such a significant asset can be questionable at times, however, we are hoping for the best.

    • IT IS LIKE THROWING A COW IN A LIONS DEN AND HOPE THAT THE COW WOULD COME OUT ALIVE AFTER A WEEK. ZAMBIANS ARE NAIVE, DOCILE, GULLIBLE AND EASILY TAKEN ADVANTAGE OF.

    • GOOD LUCK! ZAMBEEF DIRECTORS ARE SMILING JUST LIKE DIEGO CASSILLI SMILED WHEN HE OFF-LOADED THE USELESS PLANTATION ON ZAMBEEF.

  3. Ok, from the story it is clear that Zambeef has realized that MAY BE they made a wrong investment decision as they seem to be interested in quicker returns! While diversification is important, the IDC NEEDED to come up with a SOLID BUSINESS CASE for pouring $16million into this venture. As @1 Copperbullet has said, as we have learnt from the past, we may just see another failure by government to run a business. I wish IDC CAN QUICKLY FIND OTHER PARTNERS WITH CREDIBLE TRACK RECORD IN RUNNING INTEGRATED PALM OIL INDUSTRIES in order to create value on this investment!! Otherwise, it will be another story!!

  4. If a company like Zambeef is selling then future projections dont look great…the worst entity to buy is a PF cadre run entity like IDC.
    I remember reading about this project on LT in 2015 when it was commisioned…

    lusakatimes.com/2015/06/18/zampalm-pioneers-zambias-first-palm-oil-platation/

  5. Not a great deal from Zambeefs perspective.

    Those palm trees are under full centre pivot irrigation system.

    3000 odd hectares with irrigation rights from Lake Bangweulu, and they have had to wait for several years for the trees to grow and mature ?

    IDC got a good deal. But really speaking, does GRZ have the business acumen to run this operation. Surely, we have tried state parastatals before. They just degenerate into looting pots.

  6. IDC has no capacity to run Zampalm and Zambeef is selling because they have realized that it was a bad investment decision for them and CDC the new shareholders want out. It is interesting to note that Dr Lawrence Sikutwa who sits on Zambeef Board also sits on IDC Board and is behind the transaction just as he was the lead man in the IDC-Intermarket Bank transaction together with Robinson Zulu. Experts have advised Zambeef that Zambia is not favourable to growing of Palm which can yield profitable returns hence their decision to sell. The is definitely a state capture that is underway through IDC with the likes of Lawrence Sikutwa and Robinson Zulu and Mutati as the lead players. Government has to explain this corrupt deal!

    • I am equally bemused by this deal…back in 2015 ZAMBEEF invested over $20million for a project they launched in 2009 fast forward 2017 they offload it for $16 million….this is too risky for taxpayers funds.

  7. Thank you Lsk Times. This is the kind of news you should publish more of – business. Not lyonse its politics, politics!!! Awe, that’s why Zambians are poor, because they have all been made to believe life is in politics. There are other ways & these other things can be permanent. Not tu politics were you are only a bwana when in govt stealing public funds.
    More business news Ba Lsk Times!!!!!!

  8. LT Archives
    ZamPalm pioneers Zambia’s first Palm oil plantation – June 18, 2015Zampalm in Mpika is Zambia’s first ever palm plantation. The plantation boasts 2,800 hectares of palm plants, which when harvested will produce crude palm oil that is the basic ingredient in most vegetable oils on the market in Zambia.

    The locally produced palm oil will enable government to cut back on crude palm oil imports which currently stand at over US$70 million annually.

    With its first nursery set up 20 km away from the main plantation site, near Chief Kopa’s palace, Zampalm was keen to get the community involved from the very start.

    “This was something new and on a scale that has never been done in the area before so there were concerns on the part of the local community. However, with the…

    • However, with the help of Chief Kopa were able to communicate what was happening,” said Trusted Mwiinga, who has been in the agriculture sector for over 25 years and has worked on the project from its inception by Zambeef Products in 2009 as Zampalm’s plantation manager.

      Getting the plantation up and running was no easy task with little infrastructure in place and at a site that was cut off from the rest of Zambia, so management had its work cut out and only after overcoming the initial setbacks was the project truly able to move forward.

    • The Zampalm project was launched in 2009 and currently has some 370,900 palms planted over an area of 2,612 hectares in the main plantation, with another 39,000 seedlings in the main and pre-nursery. Zampalm owns 20,238 hectares of titled land, and the intention is to plant a total of 4,812 hectares in 2017 and similar areas in subsequent years as the business grows.
      A 2-tonnes-per-hour crushing mill was built this year, with plans for a second 2-tonne plant in 2017 and a further 10-tonne plant in the following year, taking crude palm oil production up to 17,000 tonnes a year.

    • The total investment cost is estimated at US$41.5 million, of which Zambeef has spent US$20 million so far. At current prices the average production of crude oil of 3 to 3.5 tonnes per hectare could generate more than US$170 million in revenue over the next decade.

      The market for edible oils in Zambia, of which palm oil is one component, is estimated at 120,000 tonnes per year, and this is expected to continuing growing as the country develops further.
      More than half of Zambia’s edible oil consumption is imported from the Far East, East Africa and South Africa.

  9. This transaction needs to be investigated by the ACC as it smells of corruption there is too many related parties. First Lawrence Sikutwa sits on IDC and Zambeef Board, then Robinson Zulu and Jacob Mwanza sit on Investrust Board, then Mateyo Kaluba IDC CEO is Felix Mutati’s right hand man since Mutati’s days as Minister of Commerce. How did IDC agree to buy 90% of a company for which they have no expertise? Who is going to manage Zampalm until it starts production and where is IDC getting the US$16 million to finance Zampalm when they have failed to revamp the Zamtels, NCZ, Times of Zambia, Daily Mail, Mulungushi Textiles and many others. This transaction is corrupt and the people of Zambia deserve answers from Mutati and IDC CEO!!!

  10. There’s no value in the asset right now, the report has said it. Due to the fact that palm trees take ages to grow. It’s still a good investment, if well run the profits will come in future.

    • That reminds me of the hundreds of hectares of rubber tree plantations in Serra lone planted in the 60s by govt but abandoned over the years due to lack of political will, the civil war and investment…today they are big trees people still lack the market to sell the rubber though they know how to prep it in raw form but now good without a market. Only China man has both the money and market….and he is buying left right and centre.

    • I get where you are coming from Brother Jay Jay, the success of this national project will hinge obviously on the market demand for palm oil in Zambia as well as for export, and I believe this market does exist.. and finally on the kind of people who will manage the asset on behalf of the nation.

      If we get these things right the project could be a success with our economy positively benefiting.

      But of course one thing against us currently is our mentality when it comes to large scale business operations.

      I’m hoping for the best.

  11. Zambians love quick money, all you guys are opposing the transaction because it doesn’t smell of cash now.
    You can build and operate or you can build and sell your business. Nothing wrong with that.

  12. This is a bad case of Reverse privatization. If Zambeef can pull out, what capacities does IDC think it has.

    As it is, only National Airports, in its hole-riddled portfolio is a relative good standing as a parastatal.

    This a bad kind of subsidy. Private profits but public liabilities and assets. As taxpayers we have had it mwe.

    Zoona ni dununa Reverse!

  13. I feel Zambeef have stoped 30ft from Gold..wait until dividends start pouring in..The project was launched in 2009 and can only be fruitful after a decade or so..two years from now with continued proper management..we will be fine

  14. Jay Jay, you have never said anything nice about Zambia’s President Edgar Lungu. Your Lusaka Times comments are disgusting. Betting you cried like a baby on August 11th, 2017!

  15. I would like to appreciate the person who wrote this, its really capturing business strategy concept for private companies and to a large extent the comments here. There business related comments that have conceptualize on business strategy in general.we are really going somewhere as a country,good criticism from good minds.except for some few fake comments of course who just know how to say fake stuff.

Comments are closed.

- Advertisement -
Loading...

Latest News

4 Village fishermen fined a total of K 1. 4 million for unlawful fishing

The Itezhi Tezhi Magistrate Court has convicted four fishermen and fined them a total of K1, 440,000 for unlawful...

Government cautions media against being sensational on Gassing and Mob Justice

Government has cautioned the media against being sensational in reporting on issues relating to the ongoing gassing and mob justice activities that have terrorized...

ECZ expresses concern at the behaviour of the political parties during the just ended By-Elections

    The Electoral Commission of Zambia, ECZ, has expressed concern at the behaviour of the political parties during the just ended campaigns, where leaders and...

2 White Rhinos killed in Mosi Oa Tunya National Park in Livingstone

The Ministry of Tourism and Arts has announced the death of two rhinos that were hit by a truck along the Livingstone-Kazungula road in...

Kalusha Bwalya will not be on the Ballot for FAZ Elections as successful candidates are unveiled

Following the completion of the Appeals Committee hearings as part of the run up to the March 28 elective Annual General Meeting (AGM) the...

More Articles In This Category

- Advertisement -
[Read 25 times, 1 reads today]