Zambia will set up entity through which to sell country's co

[LesCrozes]

Zambia will set up entity through which to sell country's copper
February 01, 2012 - 09:00 GMT Location: Windhoek

KEYWORDS: Zambia , Wilbur Simusa

Zambia plans to use a state-owned company, Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH), to establish an entity through which copper produced in the country would be sold as it seeks to ensure the country benefits from booming prices.

Metal Bulletin understands that mines and natural resources minister Wilbur Simuusa ordered a study into the possibility of Zambia setting up a metals trading centre, either in Lusaka or London.

Metal produced in Zambia could either be marketed in Lusaka or London through ZCCM-IH, for example.

Simuusa told Metal Bulletin that it is inevitable that Zambia will set up its own metal trading mechanism, but said that the finer details are being finalised.

This is one way through which the Zambian government hopes to cash in on exports of metal, in which prices are booming, he said.

“We are pursuing that initiative and I am waiting the outcome of a study which is going to guide us. We want to use ZCCM-IH but we want to look at the viability of whether we set it up as a metal market exchange or centre,” Simuusa said.

ZCCM-IH is listed on the Lusaka and London Stock Exchanges and is owned 87.6% by the Zambian government, with the remaining shares being held by private investors.

“We are narrowing down on exactly what we want to do, but we are weighing the pros and cons. We can either market the copper in Zambia before it goes to the London Metal Exchange, or ZCCM-IH can be the first company to handle the metal and this can either happen in Lusaka or London,” Simuusa said.

The Zambian government is plugging loopholes and strengthening its data-capturing systems to improve revenue collection, transparency and accountability in the mining sector.

The government says there is "poor accountability" in the mining sector and accuses companies of exploiting loopholes in the tax system.

Zambia is Africa’s leading copper producer.

The mining sector accounts for nearly 85% of export earnings and provides 10% of Zambia’s gross domestic product (GDP).

“New [export] procedures are going to be implemented any time now.

“We are finalising the statutory [legal] instruments. This process has taken long because two ministries, mines and finance, are involved in the process,” Simuusa said.

“While working on this process we realised that a lot of minerals got out of the country without the government capturing the data.

“We suspect the government is only able to capture about 50% of the data on exports.

“With the new system, we will capture 100% of the data from mining to exports,” he added.

Zambia said that copper exports leave the country apparently destined for Switzerland, but no information is available on Swiss customs data.

The Michael Sata-led government has been shaking up the copper-dominated mining sector ever since it came to power in October 2011.

It doubled royalty payments for metals to 6% last year and wants to raise its shareholding in existing and new mining projects.

Simuusa said that companies digging for copper in Zambia should list on the Lusaka bourse to afford locals the opportunities to trade in the shares.

“We are going to be looking at that issue [local listing] very seriously. It’s not a blanket approach and we are not nationalising, but companies should list,” he added.

Simuusa, who was trained as a mining engineer, said that the government expects any new mining projects to have government as a joint venture. The government is still keen to raise its shareholding in existing mining projects to 35%.

He cited an example of Maamba Collieries Limited, in which ZCCM-IH owns a 35% stake and Nava Bharat (Singapore) Pte Ltd a 65% shareholding.

“In greenfield projects we shall definitely seek to have reasonable representation in terms of shareholding.

“In existing operations, we are working to see how structures we have, such as at Maamba Collieries are implemented elsewhere.

“Those are the kind of figures other countries are talking about, that is now the international norm and we are not re-inventing the wheel,” Simuusa explained.


Felix Njini
editorial@metalbulletin.com


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