The Association of Mine Suppliers and Contractors has appealed to government to enact into law the Statutory Instrument (SI)on local content to give local suppliers leverage for bargaining business opportunities in the mines.

Speaking in an interview with ZANIS in Kitwe yesterday, Mines Suppliers and Contractors Chairperson Augustine Mubanga said government should sign the SI for the local suppliers to also benefit from the current high copper prices on the international market.

Mr Mubanga noted that at present, due to the non-existence of the SI in place when mines go through challenges the powers that be tend to over-look the plight of the local suppliers and contractors.

“We are hoping that within this first quarter of the year, the SI on local content must be signed by the Ministry of Mines as this will give us leverage to bargain for contracts in the mines and also protection as it will give us a framework and basis for us to engage both the mines and other stakeholders,” he stated.

And when contacted, Mines Permanent Secretary Barnaby Mulenga said his Ministry is awaiting the Ministry of Justice to finally complete the process of enacting the SI into law.

“We are waiting for the ministry of Justice to finish the process of preparing the SI, they haven’t finished the process, that is what we are waiting for,” Mr. Mulenga said.

Once enacted, the SI on local content will ensure that local suppliers and contractors are given a significant value of business contracts by the mines.

And Mr Mubanga further called on the Ministry of Commerce, Trade and Industry to take a keen interest in the value of procurement transactions that take place in the mining sector to ascertain where the value goes.

He noted that most of the business transactions are given to foreigners and in the end the real value of these transactions goes outside the country.

Meanwhile, the Association has projected a positive business year in 2021 as a result of the acquisition of Mopani mine by government.

Mr Mubanga urged government to resolve the issues regarding Mopani Copper Mine to ensure increased production for the mine so as to benefit from the high copper prices with the suppliers enjoying the spill over benefits.

He noted that 2020 was a challenging year as it mainly consisted of battles between government and Mopani as the latter was insisting on putting the mine on care and maintenance which he said disadvantaged the suppliers.

“Now that Glencoe has handed over the mine to government, we expect that ZCCM-IH will start running by ensuring that the mine becomes productive, increase its production and begins to meet its obligations,” Mr. Mubanga said.

He also urged government to settle the issues surrounding Konkola Copper Mines to ensure that the mine begins to operate at its optimum capacity.

Government has expressed happiness that the fuel shortages that hit Monze District and other parts of Southern Province has since been addressed.

Speaking during a brief tour of filling stations in Monze District to check on the fuel situation, Minister of Energy Mathews Nkhuwa was pleased to note that the fuel shortage has been addressed and that all districts in the province are stocked with adequate fuel.

Mr Nkhuwa noted said government was deeply concerned with the fuel shortages that hit most parts of the country and disclosed that remedial measures have since been put in place to ensure uninterrupted and constant fuel supply.

Mr. Nkhuwa also appealed to Monze District Commissioner to alert government of any looming fuel shortages by constantly engaging owners of all the three filling stations in the District.

“It is nice to hear that there are no more fuel shortages here. Southern Province was hard hit by fuel shortages and that is why we took a tour to ascertain what was happening and we are happy that the challenge of fuel shortages is now over in the province,” said Mr. Nkhuwa.

“I want to appeal to you District Commissioner to be proactive to engage these owners of these filling stations from time to time and equally important actively coordinate with my office to avert another fuel shortage which affects economic activities,” he added.

Mr. Nkhuwa further pledged government support to private sector engaged in the construction or exploration of energy such the Kalahari geothermal power plant under exploration at a cost of about K90 million in the Lochnivar National Park Monze District.

The Minister noted that geothermal energy is stable power unlike wind or solar energy and that government desires to see the successful completion of the plant expected to generate 15 Megawatts once operational soon.

He further said the government would support all cascading geothermal energy uses such as the proposed industrial park that would use energy from the plant once operational.

And Monze District Commissioner Munachoongo Muleya has confirmed a stable flow of fuel at most filling stations.

And Kobil filling station Manager Mr. David Musonda has appealed to the government to allow for the construction of more filling stations to meet the growing demand for fuel in the District.

He said the two existing filling stations were old and had inadequate capacity of less than 200,000 litres to meet the demand and that such poses a challenge to have buffer stocks in case of prolonged fuel shortages.

Monze District experienced a shortage of both diesel and petrol for close to a week forcing some motorists to fetch the commodity on the black market at exploitative prices.

By Mrs. Bernadette Deka Zulu – PMRC Executive Director

On Tuesday the 19th of January 2021, the Zambian Government, through its mining investment arm Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH), completed the 100% acquisition of Mopani Copper Mines (MCM) following its negotiations with Glencore Corporation. In April 2020, Glencore Corporation had announced its intention to place the mine under care and maintenance sighting the impact of the COVID-19 pandemic and low copper prices. However, this was rebutted by Government because it would have resulted in the loss of employment for 15,000 employees.

ZCCM-IH has acquired the 90% shareholding of MCM previously held by Glencore Corporation through Carlisa Investment Corporation (73.1%) and First Quantum Mining (16.9%), giving ZCCM-IH 100% control of Mopani. The Government of Zambia and Glencore Corporation signed an off-take arrangement deal. An off-take arrangement is simply an arrangement between the producer and a buyer to purchase or sell all or portions of the producer’s forthcoming goods/commodities to the market. This sort of agreement is commonly done with the mines to secure a market for their future production purposes. In this case, Glencore Corporation has agreed to sell 90% of its shares to ZCCM-IH, which will fully own the mines after the transaction has been fully settled. This is because ZCCM-IH and Glencore deal is based on a no-cash transfer basis.

The deal is priced at $1.5 billion which will be funded by a loan that will be repaid from sales and profits moving forward. The loan is estimated to be repaid in a period of 10-17 years depending on copper prices which are currently at $8000 per tonne on the London Metal Exchange. For the debt to be paid, the Government and Glencore have put up terms and conditions as stipulated below. Firstly, the interest of the transaction debt will be capitalized for the first three months, implying that it will report to the balance sheet and not the income and expenditure sheet and thereafter, paid quarterly at the London Interbank Offer Rate which is at 3%. The principal outstanding payment will be paid using a dual mechanism approach. Firstly, 3% of the gross revenue of Mopani copper (2021-23) and thereafter, 10-17.5%. Secondly, 33.3% of the Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) minus (taxes, changes in working capital, royalty payments, and payments in the first mechanism).

The 100% acquisition comes with many socio-economic benefits such as employment security for the 15,000 mine workers. This will have a trickle down effect on their communities and the nation as large. The acquisition also provides an opportunity for local mine suppliers and contractors to conduct business with the mines. It is envisioned that this move by Government will increase the number of local contractors within the mining sector, which will enhance the establishment of local mining supply chains. Additionally, the deal comes at a time in which the price of copper has increased on the global market, trading at $ 8,014 per tonne as of the 20th of January 2021, with a projection of above $7000 per tonne in 2021. Government will therefore generate revenue which will not only be used to pay off its acquisition loan but will also be used to enhance economic development in the country.

In order for Government to maximize from this acquisition, there is need for them to amend the Mines and Minerals Development Act No. 11 of 2015 to ensure that Zambians benefit from the mining sector. The amendment of the Act will ensure proper coordination and an adequate legal framework governing the mine. Secondly, poor corporate governance has led to the fall of many private and stated-owned enterprises around the world. It is for this reason that PMRC strongly recommends that principles of corporate governance be embedded in the running of MCM.