Konkola Resources expect empowerment of workers in 2011

[bingogo]

Wednesday, 24 Nov 2010

Stockbrokers Zambia Limited envisages that the planned listing of Konkola Resources Plc on the Lusaka Stock Exchange expected next year may empower about 9,000 Konkola Copper Mines workers through share ownership on the local bourse.

Mr Charles Mate MD of Stockbrokers Zambia is optimistic that the listing, the first by a mining company operating in Zambia, will deepen the LuSE market which currently has about 25,000 Zambian investors. He noted that KCM is Zambia’s largest private sector employer which will set pace for other mining companies to list on LuSE and accelerate capital market growth. ZCCM IH is trading on the Lusaka bourse but as a quoted company where shares are traded privately.

He said that KCM is setting a pace for other mining houses to list on LuSE. The listing of Konkola Resources will accelerate capital market growth and development in Zambia. Konkola Resources Plc is 79.4% subsidiary of Vedanta Resources Plc and 20.6% subsidiary in ZCCM Investment Holding Plc. Zambiahas registered huge investment in the mining sector, which is driving the country’s economic growth and creation of jobs adding that the boom is also underpinning the stability of the Kwacha.

Mr Mate said that Konkola Resources’ premium listing will be on the main board of LSE next month and subsequently on LuSE next year. We are going to LSE first because the domestic savings are not enough and London is hub of institutional investors. The listing of KCM is a demonstration that it is a successful company.

KCM hopes to raise USD 1.1 billion from the sale of 25% shares on LSE and the proceeds will be used to repay Vedanta Group’s loan of USD 500 million payment of USD 130 million to ZCCM Investment Holding as settlement price participation agreement. The balance from the proceeds is intended for capital expenditure program.

Mr Mate said that the share price for Konkola Resources will be determined next month, while listing is estimated around December 15th 2010. The London listing will be used to determine the share price for LuSE. The London prospectus will not have a fixed price on it but we will go through the process of scouting the market, talking to institutional investors, giving them information allowing them to do their own analysis and valuation for the share price.

He said that once the price is determined in London we will try to shorten the period between the London Initial Public Offer and the Lusaka IPO. The Zambian prospectus will come up with a minimum investment amount for the shares that can be set from USD 54 to USD 215.

Mr Mate said that the minimum investment required for local investors to buy Konkola Resources shares will address the issue of affordability. There will be need to sensitise Zambians on the importance of acquiring shares in KCM. The local listing of Konkola Resources will contribute to domestic savings mobilization and deepening of the capital market as well as allow the LuSE index to capture the mining sector. He said that this year, we see inflows of portfolio investors buying Konkola shares. The listing of Konkola will test the depth of institutional investors’ pockets in Zambia.

Meanwhile, Mr Kishore Kumar CEO of KCM praised the Government for putting up an investor friendly environment that would help the growth of the Zambian economy. My wish is that the Government continues to push for the growth of the mining industry as it is key to the economy.

With the favorable investor environment in Zambia, KCM anticipates that by 2012 it would reduce its production cost by about 50% from the present USD 2.80 per pound of copper to less than USD 1 for the same quantity of copper. Vedanta recently announced that it would float shares for Konkola Copper Mine on the London Stock Exchange at which it hopes to raise a minimum USD 1.1 billion. The company was hopeful that this would unlock the full potential the mine and spur it into exploiting the vast copper reserves. The current copper prices stand at USD 8,100 per tonne.

Dr Mwanza said that countries where copper mining was thriving with high production like Chile did not have the Windfall tax because of its negative effects on the industry. My wish is that the Government continues to push for the growth of the mining industry as it is key to the economy.

Vedanta recently announced that it would float shares for Konkola Copper Mine on the London Stock Exchange at which it hopes to raise a minimum USD 1.1 billion. The company was hopeful that this would unlock the full potential the mine and spur it into exploiting the vast copper reserves.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)

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