THE Southern Africa Resource Watch has asked the Zambian government not to sell its 20 per cent stake a joint venture with First Quantum Minerals’ Kansanshi Mine.
In a statement, SARWatch executive director Edward Lange stated that his organisation was very concerned at the news that the Zambian government was considering selling its 20 per cent shares in Kansanshi mine to First Quantum Minerals.
Kansanshi mine in Solwezi produces copper and gold.
“This would be a mistake and a departure from what is happening elsewhere on the continent.
The Zambian government’s intended sale contradicts the aspirations of the African Mining Vision (AMV), which encourages African countries to increase state participation. We are fully aware that the Zambian Government is supportive of the AMV and would not want to go against the continental initiative to ensure full ownership and control of minerals,” Lange stated.
“State participation in mining, through outright ownership or share participation, either on a mandatory basis or through the exercise of option rights, remains common practice on the continent.”
Lange stated that copper in Zambia has had a special strategic significance since independence.
“The State has always believed that it needs to maintain a high degree of control over its strategic minerals. This is not unique to Zambia. It would therefore be a mistake for the government to give away the limited control that it still has over Zambian minerals,” stated Lange.
“In Africa today, many countries are considering how to increase state shares in all licenses. We, therefore, strongly urge the government of Zambia not to go ahead with such a transaction, but instead to work towards increasing its stake in the many mining licenses and maintain some control over its minerals.”
First Quantum Minerals has offered to buy the Zambian government’s stake in Kansanshi Mine, which Mast sources say is illegal as no cautionary notices have been issued as per stock exchange rules.
On Monday, Bloomberg News reported that the Vancouver-based FQM has offered to buy the Zambian government’s 20 per cent stake in Africa’s biggest copper mine for as much as $700 million.
According to the report, First Quantum already owns 80 per cent of the Kansanshi Mine Copper and Gold Mine in North-Western Province, while state-owned ZCCM Investments Holdings Plc holds the rest. The proposal, which was submitted last year, includes $300 million to $400 million in cash, and an equal amount in special royalties, over more than 10 years.
“The deal would also include ZCCM-IH dropping a $1.4 billion legal claim against First Quantum over a loan the company received from Kansanshi,” reported Bloomberg, adding that the government is still considering the proposal.
“There are multiple unsolicited offers on the table, including from FQM, which are based on preferential share conversions,” a Ministry of Finance spokesman is reported as saying. The offers relate to the ministry’s 17 percent holding in ZCCM-IH and a sale would be subject to cabinet approval, it said
However, a source told The Mast that such a proposal, since neither FQM nor ZCCM-IH had issued cautionary notices, meant they had contravened stock exchange rules.
“ZCCM-IH and FQM are both publicly listed companies and if what finance minister Margaret Mwanakatwe says that she has received unsolicited bids, then it’s illegal and in contravention of stock exchange rules at Lusaka Stock Exchange, the London Stock Exchange and the Toronto Stock Exchange where FQM is listed,” said the source.
Last year, the Zambia Revenue Authority handed FQM a $7.9 billion tax bill, while an increase in royalties this year prompted First Quantum to announce plans to fire 2,500 workers. The company has since backtracked on the proposal.
Kansanshi is First Quantum’s biggest mine and accounted for more than half the company’s revenue in 2017.