Message Mar 17 Jan 2017 21:00

KCM pays 180,000 pounds, agrees to stagger payment of remain

Konkola Copper Mines last week paid 180,000 British Pounds to ZCCM-IH under a settlement agreement ordered by the London High Court.

ZCCM-IH successfully applied for default judgment against KCM, a subsidiary of Vedanta Resources and was ordered to pay ZCCM-IH US$103 million in outstanding sums owed to ZCCMIH by 13 January 2017.

KCM was further ordered to pay 180,000 British Pounds in costs incurred by ZCCM-IH in pursuing its application before the English court.

KCM paid 180,000 British Pounds on 13 January 2017 in accordance with the Court’s Judgment and both parties have agreed to amend the dates by which KCM will make the other outstanding payments.

KCM will now pay ZCCM-IH US$ 20 million on 31 January 2017, US$ 22 million on 28 February 2017 and US$ 2,550,000 at the end of every month commencing on 31 March 2017 until such time as the Judgment Sum has been paid in full.

The agreement to amend the dates by which KCM will make payments in respect of the outstanding sums owed to ZCCM-IH will be recorded in a Consent Order of the English Court.

“The English court’s further directions to determine whether KCM made payments to Vedanta Group Companies in breach of the prohibition on doing so under the Settlement Agreement remain unchanged. If and to the extent it is determined that such payments were made, ZCCM-IH will be entitled to recover additional sums from KCM. A further announcement will be made at that time,” a statement issued by ZCCM-IH said.

Meanwhile, ZCCM IH recorded losses after tax of around K2,303 million in the financial year ending March 2016.

The loss after tax jumped from the 2015 figure of K987million.

The firm also recorded an operating loss of K207 million which was however 91 percent down from the 2,179 million recorded in 2015.

Overall group performance continued to be impacted negatively by low global copper prices and low production coupled with the Kwacha depreciation.
The company saw its total assets increase by 29% from K8, 504 million to K10, 956 million largely on account of translation differences on equity accounted investees.

The Ndola Lime recapitalization project underwent hot commissioning and the K651 million shareholder loan that ZCCM-IH lent to Ndola Lime Company Limited (NLC) was converted into Equity in order to strengthen the company’s balance sheet.

During the year ZCCM-IH acquired Trinity Park, an Investment Property along Alick Nkhata road at a cost of K85 million (US$8 million).

ZCCM-IH will occupy one third of the building while two thirds will continue to be rented out.

In August 2015, Minister of Finance transferred 60.3% shares out of 87.5% previously held in ZCCM-IH to the Industrial Development Corporation Limited (IDC).

Subsequent to the period under review, significant progress was made on the Maamba Thermal Plant project with the first 150 megawatts production commissioned in August 2016 and the next 150 MW commissioned in November 2016.

Maamba is currently supplying 270MW to ZESCO.

Going forward Nava Bharat will be responsible for the operation and maintenance of the power plant.

And in June 2016, ZCCM-IH commenced legal proceedings in the London Courts to recover over K1 billion (US$ 100 million) owed by Konkola Copper Mine Plc relating to the Settlement Agreement (SA) signed in 2013.

On 16 December 2016, ZCCM-IH was successful in its application for default judgment.

KCM was ordered to pay all sums owed to ZCCM-IH pursuant to the Settlement Agreement (plus associated contractual interest) within thirty (30) days. The total amount to be paid by KCM amounted to approximately US$103 million.
And on the outlook for the company, ZCCM IH says the copper price has recently shown signs of recovery, and it would appear that beyond 2016 the price will continue to recover.

It says its investee companies that operate mines, have been undergoing restructuring in order to contain operating costs in the midst of the global copper price crunch and that this should have positive results going forward, though recovery will be slow.

It says in order to ensure survival, the company continues to explore diversification and introducing initiatives to achieve efficiencies at Ndola Lime Company Limited, investment into property and agriculture are activities expected to positively impact the Group in the medium to long term.