Message Dim 19 Juin 2011 19:24

not affect its operations by EIB

Mopani Copper Mines in Zambia will not affect its operations by EIB
Sunday, 19 Jun 2011

The freezing of funding by European Investment Bank to Mopani Copper Mines in Zambia, a unit of global leading commodity trader and Swiss based Glencore AG International will not affect its operations.

Mr Emmanuel Mutati CEO of Mopani Copper stated that while the lender had every right to withhold funding on unverified reports of under valuing tax remittance to Zambia Revenue Authority and poor records of copper receipts, the company would still operate normally while allowing the banker to carry out its own investigations into the matter, described as flawed and incorrect.

Mr Mutati said that we will not be affected at all, our operations will remain normal despite that action. Despite the action by EIB, Mopani, through its parent company plans to invest an initial USD 250 million in mitigating atmospheric pollution with sulphur dioxide and general environmental cleanliness with an additional USD 60 million expected to be ploughed in to the project later. He argued that recent media reports about Mopani’s tax payments were incorrect adding that the miner’s accounts are audited each year by Deloitte and have always been given a clean bill of health.

Mopani is a public company with its financial results published in the newspapers and lodged at the Lusaka Stock Exchange, through the Securities and Exchange Commission, making them public documents.

Speaking during a debate organized by the British Broadcasting Corporation dubbed “Does Mining Benefit Africa?' described as unfortunate that a fundamentally flawed draft report that had been circulated in Zambia earlier this year had been given the level of attention it has received.

The report’s authors, despite several invitations to do so, had failed to visit the company or consult management and as a result fundamentally misunderstood the business model of Mopani, he claimed, citing the fact that the authors failed to take into account that about half of copper production from Mopani is third party concentrate processed by Mopani in return for a small tolling fee per tonne.

The authors took the total volume of the refinery and attributed it to Mopani. With this fundamental lack of understanding of mining it was no surprise that the authors failed to make sense of the accounts. He described Mopani one of the best sources of prosperity for the Zambian people adding that at Mopani private investors have sunk over USD 2 billion into the ground securing the livelihoods of around 20,000 people and their families and creating an engine for growth and prosperity in the region.

An additional investment earmarked for the mine is a new shaft complex at a cost in excess of US$300 million securing the long term future of the operations this at a time when the private investors are yet to draw a cent of dividends. Recently the EIB slapped a blanket ban on funding of all projects to Mopani copper mine through its parent company Glencore AG for alleged tax evasion and under declaration of copper production in Zambia.

The lender stated recently that it had commenced investigations into reports of alleged tax evasion accusations against the company, co owners of Mopani Copper Mine in Zambia.

According to data, the EIB provided Mopani with USD 50 million loan in 2005 to help fund renovation of the Mufulira copper smelter. The loan is due to be fully repaid by the end of 2016. The USD 50 million loan is the only one given to a Glencore entity and was used to partially fund the first phase of the renovation and modernization of the copper smelter at Mufulira mine in northern Zambia to reduce the emissions of sulphur dioxide.

According to the EIB, total project costs were USD 130 million with the remaining USD 80 million financed from Glencore's own funds. In 2005, the European Investment Bank signed a finance contract with Mopani Copper Mines, a subsidiary of Glencore for the amount of USD 50 million to partially fund the first phase of the renovation and modernization of the Mufulira copper smelter with the aim of reducing the emissions of sulphur dioxide.

Total project costs were USD 130 million and the remaining USD 80 million were financed from own funds of the borrower. The EIB loan was fully disbursed in April to August 2005. The project was successfully completed by mid 2007 and was effectively eliminating half of the SO2 emissions of the smelter.

A further and final reduction of SO2 and dust emissions was planned for latest 2015 when Mopani Copper Mines would have completed the construction of the second acid plant without co financing by the lender with a view that the efforts would render the smelter compliant with local and World Bank emission regulations. The Mufulira smelter was first built in 1937. Prior to privatization in 2000, 100% of all SO2 went into the atmosphere. So far the situation has improved since including notably through the investment financed by EIB's loan to Mopani copper mine for modernization of the copper smelter.

The lender said that "The project has successfully established the capacity to eliminate 250,000 tonnes of SO2 a year, materially contributing to the protection of the environment."