LUSAKA – Zambian Government believes bondholders won’t seize its mining assets because it defaulted on part of its debt last week, Mines Ministry told a news conference on Thursday.
The ministry has also confirmed Zambia had no plans to sell its shares in mining companies to raise money after the country failed to pay the $42.5 million interest on its Eurobond debt last week.
Zambia is Africa’s no.2 copper producer, after the DRC. Four big mines dominate Zambia’s copper production, complemented by several smaller players who also play an important role. All the mines are backed by a wide range of respected international investors.
The Zambian government, through its investment-holding company ZCCM-IH, is a minority shareholder in nearly all of them – and is, in effect, the biggest shareholder in Zambia’s mining industry.
The “Big Four” are Barrick Lumwana, FQM Kansanshi, Mopani and KCM (Konkola Copper Mines), accounting for around 80% of Zambia’s annual copper production. They account for most of the mining employment, most of the corporate social investment and most of the media publicity. They are the leaders in direct fixed investment in the industry, having ploughed approximately $20 billion into new mining projects between 2000 and 2020.
Barrick Lumwana, FQM Kansanshi, Mopani and KCM are a barometer for the state of health of the country’s mining industry – and by extension, of the Zambian economy.
Barrick Lumwana is wholly owned by the Canadian company Barrick, which is the world’s largest gold-mining company. The other three each have a majority foreign shareholding, as well as a minority shareholding by ZCCM-IH, the biggest overall shareholder in Zambia’s mining industry.
The majority shareholder in Kansanshi is FQM (First Quantum Minerals), a Canadian mining and exploration company; ZCCM-IH’s stake is 20.6%. The majority shareholder in KCM is Vedanta Resources (its ownership is being challenged by the government), an Indian diversified metals and mining group; ZCCM-IH’s stake is 20.6%. The majority shareholder in Mopani is Glencore, the Swiss-based commodity-trading and mining company; ZCCM-IH’s stake is 10%.
Zambia’s copper mines are concentrated in the Copperbelt, and are attached to the towns of Ndola, Kitwe, Chingola, Mufulira, Luanshya, Kalulushi and Chililabombwe. The Copperbelt is the most urbanised and developed of Zambia’s provinces.
The ministry said Zambia produced 646,111 tonnes of copper between January and September 2020, up from 590,321 tonnes in the same period last year, a 9.45% rise. Production in 2020 is expected to be 820,000 tonnes and is expected to continue increasing in the coming years.