Minister of Mines and Minerals Development Paul Kabuswe has updated Parliament on the status of Konkola Copper Mines (KCM) liquidation process.
In a ministerial statement, Mr. Kabuswe said the liquidation of KCM has come with the task of sustaining mine operations by implementing several funding and strategic initiatives.
Mr. Kabuswe said KCM has been split into two subsidiary companies namely KCM Smelterco Limited and KCM Mineral Resources Limited (KMR) with two separate management structures and employee arrangements.
He said the splitting of KCM resulted in transferring of 5,588 employees from the company to the newly formed companies and subsequent payment of redundancy packages at a total cost of US$110 million.
“Konkola Copper Mines (KCM) has been under the full control of the provisional liquidator who has been tasked with sustaining its operations by implementing several funding and strategic initiatives. Effective 1 February, 2021 a decision was taken to split KCM into two separate business units; to improve operational and financial efficiencies. The split was done by formation of two subsidiary companies, namely KCM Smelterco limited and KCM Mineral Resources Limited (KMR) with two separate management structures and employee arrangements. Both companies are currently wholly-owned by KCM (in liquidation),” Mr. Kabuswe stated.
“Madam Speaker, Smelterco comprises the Nchanga smelter & refinery, the Nampundwe pyrite mine, the tailings leach plant, and the old east mill. KMR comprises the mining units (Konkola underground mine, Nchanga open pits and underground mines), support services such as hospitals, schools and corporate offices, the 500 tons per day acid plant, and the tailings dams. Madam speaker,The splitting of the business operations into two companies for the purpose of mining and processing as subsidiaries of KCM resulted in transferring of 5,588 employees from the company to the newly formed companies and subsequently payment of redundancy packages at a total cost of US$110 million. The redundancy package was phased in three (3) equal installments. As at 31 December 2021, the redundancy packages had been paid in full,” he stated.
Mr. Kabuswe confessed that KCM has had operational challenges in the past that include under-investment in the development of ore reserves.
“Following the resignation of Mr Milingo Lungu from his position as provisional liquidator for KCM on 17th March 2022, Ms Natasha Kalimukwa assumed the role of provisional liquidator by operation of law. I wish to acknowledge that KCM has had operational challenges in the past attributed to the following: Under-investment in the development of ore reserves which has resulted in failure to realise economies of scale to cover high production costs; poor de-watering infrastructure; liquidity and capital constraints and significant interest-bearing loans that have increased from us$1.188 billion to us$1.55 billion as at 31st December 2021;low equipment availability; and poor infrastructure among others,” the Chililabombwe Member of Parliament added.
Mr. Kabuswe said the future of KCM lies in the Konkola Deep Project (KDP) which has been partly implemented with the initial sinking of the number 4 shaft at Konkola.
“It is gratifying to note that the picture is showing a positive trajectory. For instance, integrated copper production over the past two months has increased from an average of 4,300 to 6,100 tonnes. This represents a 41% increase in production. It is also worth noting that this is the highest integrated production achieved ever since KCM was placed under liquidation. Furthermore, KCM has put in place plans to increase production to 7000 tonnes per month. I wish to inform the house that the future of KCM lies in the Konkola deep project (KDP). This project has been partly implemented with the initial sinking of the number 4 shaft at Konkola. However, additional work is required to complete the project. The project is estimated to take 4.5 to 5 years of construction, equipping and development before the company experiences increased production and the benefit of the investment,” he said.
Mr. Kabuswe concluded:”The completion of this project will result in the life of mine being increased to about 35 years as estimated by KCM management. Let me conclude by assuring the house that KCM is one of the mining companies in which ZCCM-IH has key interest. To this effect in order to establish the current state of the company, ZCCM-IH is undertaking a number of measures including carrying out review and technical evaluation of the company to ensure that the company is viable and remains competitive.”