KCM to be reorganised and restructured into two subsidiary companies effective February 1, 2021

Konkola Copper Mines (KCM) is to be reorganised and restructured into two subsidiary companies effective February 1, 2021.

KCM Acting Chief Executive Officer Enock Mponda announced in a staff Memo that the move is in a bid to increase efficiency, foster optimization and boost business opportunities.

Mr Mponda said KCM will be split into two companies, namely KCM SmelterCo Limited, and Konkola Mineral Resources Limited.

The companies will begin to operate under the names KCM SmelterCo Limited, and Konkola Mineral Resources Limited, respectively, with two separate Management structures and employee arrangements.

KCM SmelterCo Limited has been in existence since 2002 and fully owned by KCM but has been dormant.

Below is the full Memo

1.0 PREAMBLE

1.1 Management takes this opportunity to inform employees that the Provisional Liquidator of Konkola Copper Mines (KCM), Mr Milingo Lungu, and the Company Management have been working towards restoration of the technical health of KCM, which commenced with the Winding up Petition by ZCCM-IH in the Lusaka High Court on 21st May 2019.

1.2 In this pursuit, a number of options have been considered to ensure KCM remains afloat while the matters relating to the liquidation of the company are ongoing in Courts in Zambia and abroad. In order to enhance the performance of the company, the Provisional Liquidator inexercising of the powers granted to him on 21st May 2019 by the High Court for Zambia, has
taken further steps after consultations with the Management team to enhance the technical,business and operational excellence of KCM under the current circumstances.

2.0 RESTRUCTURING AND REOGANISATION:

2.1 The Provisional Liquidator wishes to announce plans to restructure and reorganize KCM into two separate subsidiary companies, namely KCM SmelterCo Limited, and Konkola Mineral Resources Limited, in a bid to increase efficiency and business opportunities, as well as foster optimization. KCM Smelter Co Limited has been in existence since 2002 and has been a fully owned KCM company,save it has been a dormant subsidiary.

2.2 The restructuring decision has undergone wide consultations with key stakeholders, chief among them relevant Authorities, Labour Unions representing workers at KCM and the
Company Management. Most paramount in these consultations has been the welfare of our employees and our Business Partners.

3.0 COMMENCEMENT DATE:

3.1 1 February 2021, the new companies will begin to operate under the names KCM Smelter Co Limited, and Konkola Mineral Resources Limited, respectively, with two
separate Management structures and employee arrangements.

3.2 In restructuring KCM, it is the PL’s and KCM Management’s considered view that this will increase efficiency and business opportunities, as well as asset and resource optimization. This will inevitably result in segregating the processing and the mining components of KCM. The vertical organizational structure of KCM has posed some difficulties, which will now be resolved by the reorganization and restructuring of the company.

3.3 The restructuring and reorganization will also restore KCM’s technical health, integrity and
competencies, and ensure retention of the company’s position as a major asset in the mining
sector and a great contributor to Zambia’s Gross Domestic Product (GDP).

4.0 STATUS OF EMPLOYEES

All employees directly working for Konkola Copper Mines will be offered new contracts of employment in either of the two new companies i.e. KCM Smelter Co Limited or Konkola Mineral Resources Limited. What this essentially means is that all employees working in processing and refining plants, except for the Konkola Concentrator and the New East and West Mills at Nchanga, will be offered new contracts of employment in KCM Smelter Co Limited, while those working under mining operations, and all Shared Services will be offered new contracts of employment in Konkola Mineral Resources Limited. The Nampundwe Pyrite Mine will be part of KCM Smelter Co Limited, while the Konkola Concentrator and New West and East Mills at Nchanga will be part of Konkola Mineral Resources Limited. The 500 TPD Acid Plant and Tailings Dams will be part of Konkola Mineral Resources Limited.

5.0 CONDITIONS OF SERVICE:

The employees’ basic conditions of service will remain unchanged until after the Managements of the two Companies and Unions Collective Bargaining commences and is concluded as per agreed calendar
of negotiations. Further details on employees’ circumstances will be explained in individual letters to be
issued to all the employees. The employees, who are currently working for KCM, will all be paid severance packages in agreed form to ensure that all old liabilities are cleared, and reengaged seamlessly by the two separate Companies, with no job losses.

6.0 UNION REPRESENTATION:

There will be no changes to the existing structures of union representation for the unionised employees. Those represented by the Mineworkers Union of Zambia (MUZ), the National Union of
Mining and Allied Workers (NUMAW) and the United Mineworkers Union of Zambia (UMUZ) will continue to be members of their respective unions, which are the recognized partners of Konkola Copper Mines.

7.0 CONTRACTORS AND THEIR EMPLOYEES

All contracts for Contractors and Suppliers having existing contracts with KCM will be (transferred) to the two separate companies, which will be responsible for honouring and conditions and terms of those contracts starting from the effective date. This means employees for the third party companies will be retained by their employers because there material changes made that could alter the existing contracts, apart from the novation Commercial Contracts from KCM Plc to Konkola Mineral Resources Limited and/orSmelterCo Limited

CONCLUSION

The Provisional Liquidator calls on all employees, KCM business partners and concerned stakeholders a smooth transition following the operationalization of the two companies for the benefit of eemployees, other stakeholders and the Zambian economy. The two Companies will continue various stakeholders, including communities under mutually beneficial arrangements so that remain a part of the development of specific areas of their operations. Management will continuprovide updates whenever it is necessary. All employees, business partners and other stakeholders endeavor to protect this important organization, Konkola Copper Mines, which is not only private sector employer but also occupies a strategic position in Zambia’s economy.

Work Safely:

Continue to observe COVID-19 guidelines.

Enock Mponda
Acting Chief Executive Officer