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Monday, June 27, 2022

The Mopani $1.5 billion deal must be investigated, says ZCCH-IH minority shareholders

Headlines The Mopani $1.5 billion deal must be investigated, says ZCCH-IH minority shareholders

The minority shareholders of ZCCM-IH are calling for investigations into the purchase of the 90% shares of Mopani Copper Mines (MCM) by ZCCM – Investments Holding from Carlisa Investment valued at $1.5 billion last year.

The minority shareholders of ZCCM-IH have already written to Chairperson of the Anti-Corruption Commission Board Musa Mwenye and Director General Gilbert Phiri over their proposed investigations into the transaction.

The group has further written to Attorney General Mulilo Kabesha asking his office to review the detailed sale agreement.

Spokesperson of minority shareholders of ZCCM-IH Thierry Charles said buying Mopani at $1.5 billion in 2021 was too exorbitant.

“The Mopani $1.5 billion deal must be investigated in the light of the above-mentioned elements which we question, we ask Chairperson of the Anti Corruption Commission Board Musa Mwenye, Director General Gilbert Phiri and Attorney General Mulilo Kabesha to launch investigations regarding the conditions under which the contract for the purchase of shares in MCM was negotiated and drafted: to look for any undisclosed adverse clauses that explain the inconsistencies in the figures and to question all those who negotiated the exorbitant $1.5 billion deal,” Charles wrote.

“Contrary to the false claims of former Vice-President Inonge Wina, the acquisition of the 90% stake in MCM was not the best deal of the year but rather appears to be the worst ZCCM-IH deal of all time. We are well aware that other ongoing ACC investigations to track down the looters of the clique are very busy. However, the sums involved in Mopani are colossal, not only for the purchase but also for the financial consequences of the deficits, and therefore deserve a strong mobilisation of ACC and AG services to investigate this deal which seems to us to be leonine,” Mr. Charles stated.

He continued:”The Mopani $1.5 billion deal must be investigated In a letter dated 6 June 2022 to Chairperson of the Anti-Corruption Commission Board Musa Mwenye and Director General Gilbert Phiri, our shareholder group wished to express our questions and concerns regarding the purchase of the 90% shares of Mopani Copper Mines (MCM) by ZCCM – Investments Holding from Carlisa Investment Corporation. In a letter dated 8 June 2022 we also asked Attorney General Mulilo Kabesha to review the detailed sale agreement. 1. Background On 31 March 2021, ZCCM-IH acquired 90% of the shares in Mopani Copper Mines (MCM) from Carlisa Investment Corporation, owned by Glencore and First Quantum Minerals, following approval by ZCCM-IH shareholders at an Extraordinary General Meeting. The amount negotiated was $1.5 billion to be repaid annually over a period of 10 to 17 years.”

Mr. Charles expressed the misgivings of minority shareholders of ZCCM-IH in the deal.

“An appalling sale price Carlisa intended to put MCM into care and maintenance, so the $1.5 billion price for a company that had been making losses for many, many years was totally unjustified. The minority shareholders were in favour of ZCCM-IH finally becoming a full-fledged mining operator, and the takeover of Mopani seemed a good opportunity given the figures and information presented in the Circular to Shareholders issued on 9 March 2021. Opaque sales contract The detailed sale agreement was not disclosed to the minority Shareholders of ZCCM-IH, but we were given information in the Circular to shareholders. MCM’s copper production would be sold to Glencore at LME prices. Catastrophic and inconsistent figures .Visibly biased data and arguments put forward in the Circular to shareholders it was stated: Assuming current copper prices are maintained, it is forecast that the company will generate sufficient cash inflows to finance capital expenditure internally,” he said.

“The average expected Copper price average was US$ 7,000 yet, when copper prices are around US$ 9.500, the Management of ZCCM-IH indicated that the company is currently not generating free cash flows owing to the fact that the company requires capital investments in order to increase productivity during the Virtual Shareholder Open day on 27 April 2022. There have even been Press reports about MCM’s inability to pay suppliers on time, while the largest repayments to Carlisa have not even begun. Inconsistency of figures while copper production is in line with or above expectations and copper prices are very high, EBITDA is completely at odds with the figures presented in the Circular. The problem is not technical, copper production is indeed satisfactory.”

“The problem is elsewhere and the detailed contract seems to be the cause. Questionable verification of the sale contract by former Attorney General Likando Kalaluka Like any contract involving a parastatal company, the contract for the sale of the 90% stake in MCM had to be supervised by the Attorney General for compliance and to ensure that the interests of the Zambian people were safeguarded. However, former Attorney General Likando Kalaluka validated an illegal deal between Milingo Lungu and ZCCM-IH for the suspicious bonding of a loan to KCM just before the 2021 presidential elections. Likando Kalaluka’s competence and seriousness therefore raise questions about the quality of the audit and the legality of the contract signed with Carlisa in early 2021.”

11 COMMENTS

  1. It was only a matter of time before this deal which stinks to high heaven,was unmasked…
    Given Glencore’s global reputation of corruption,it is clear that somebody very high up in the PF government received a very golden handshake for letting this deal through……. & soon we shall know the truth…

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  2. ZCCM-IH shareholders endorse 90% acquisition in Mopani
    April 2, 2021
    “Shareholders in ZCCM-IH have overwhelmingly supported its acquisition of a 90% stake in Mopani Copper Mines (MCM).Glencore agreed the sale of its majority stake in Mopani to ZCCM-IH in a $1.5 billion deal, the miner and trader said in January.
    ZCCM-IH said in a statement that the extraordinary general meeting vote on the resolution was the last condition towards the completion of the transaction and ZCCM-IH now holds 100% ownership of Mopani.The deal is funded by borrowings from Carlisa Investments Corp – a British Virgin Islands-based company through which Glencore holds its stake – and other members of the Glencore group.
    ZCCM-IH Chief Executive Mabvuto Chipata said with increased ownership, ZCCM-IH would now be…

  3. What troubles me is that there were other parties, hired for expert advice, involved so I don’t agree with the push to single out Likando Kalaluka alone. Llkando just endorsed what was put on his table. If the GRZ through Minister were satisfied with the advice given by the experts or advisers then what could’ve done? If this is the turn of events then those that advised GRZ during privatization are equally liable

  4. Scandle after scandle……..

    Everything was driven by the amounts of commission to be earned by the gangsters in statehouse under lungu…. ……..

  5. $1.5 billion for what those are just Crooks they shouldn’t be given no money for that mine it’s not theirs but our mine,they stole alot from our mines those thieves true that sale should be investigated.

  6. This is a terrible scandal. Terrible one indeed. shame. That money can almost wipe out all problems the health sector is facing in terms of equipment, facilities and infrastructure.

  7. This should not be surprising, anything and I mean anything that has the foot print of the PF needs investigations, how can the toll gate between Kitwe and Ndola, that lousy shelter cost 80 million kwacha

  8. From a valuation point of view, the deal sure does make sense, and I say this from my business and finance background. Glencore exited Mopani just as Glencore has been exiting many jurisdictions due litigation over corruption. When you do not have the cash to pay upfront for an asset, you basically accept the terms you are given. The best way forward is to find an equity partner that is willing to invest an average of $2bn which includes settling the $1.5bn owed to Mopani and $500m for recapitalization.

  9. Where were the minority shareholders of ZCCM-IH (Thierry Charles) when Carlisa Investments or is it Glencore operated for 20 years in Zambia, without declaring any DIVIDEND to them, ZCCM-IH and GRZ. You only waken up today. We can only hope that, you are not being used to have Mopani being RE-PRIVATISIED with some preferred BIDDER by accusing those who wanted MOPANI to be in the hands of indigenous Zambians. May be you used to benefit from them.

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