Message Sam 19 Nov 2016 22:47

ZCCM-IH accuses mines of creating fake losses to avoid payin

By Mike Riley

ZCCM-IH chief executive officer Dr Pius Kasolo says some mining companies create artificial losses to avoid paying dividends to shareholders.

And Dr Kasolo says investment in Maamba Collieries Limited will yield positive results and will be a “cash cow” in the coming months.

In an interview, Dr Kasolo said there was need to explore alternative means of fairer distribution of mining revenue within the sector as some mining companies had not remitted dividends to the government through ZCCM-IH.

He said the mines should remit more dividends to shareholders because very little had been paid over the years.

ZCCM-IH incurred huge losses after tax of K987 million in the 2015 financial year ending March 31, 2016, mainly on account of impairment losses incurred at specific mining companies such as Konkola and Lubambe copper mines.

Additionally, copper prices on the international market remain subdued at below US$5,000 per tonne, presenting mining companies with persistent financial challenges in their operations.
“If we just look at counting cash-flow, to me that is not fair because the person running the mine, if he doesn’t want to pay tax, will overload the expenses. As shareholders, that is the thing we worry about because some of these big mining companies have been there for 15 years [and] have never paid a dividend. How do they survive? So, there should be some artificial losses they create,” Dr Kasolo said.

“So, we have to find a way of getting income from them. The best way to do it is to have ‘copper split’; you split the copper, sell your own copper and then you pay the expenses through the company.”

Asked whether the expected rebound of copper prices on the international market will translate into reduced financial losses given mining companies’ persistent challenges, he said this was possible once profits are made.

“Of course, if those guys start making profit, then they will be able to pay me a dividend because last year we hardly got a dividend from most of them,” Dr Kasolo added.

He also observed that mining companies should lower their costs of production to return to profitability and benefit the country’s economy.

“You have to do it; if you don’t, you are dead! So, you more or less [have to] invest in equipment, machinery, because labour is expensive,” Dr Kasolo observed.

And Dr Kasolo said ZCCM-IH’s investment in Maamba Collieries’ 300MW thermal power station would soon yield positive results.
ZCCM-IH has 35 per cent shareholding in Maamba thermal power plant.

“Diversifying to that will be our cash cow in very few months; we will start generating money from that. It is a cash cow; when you generate electricity, you sell at kilowatt-hour, so money will be coming,” said Dr Kasolo.