After lengthy negotiations, the Zambian government and Anglo American Corporation have signed a memorandum of understanding for the acquisition of Nkana, Nchanga, Konkola and Nampundwe mines part of the Zambia Consolidated Copper mines (ZCCM).
According to a joint statement signed by Francis Kaunda, chairman of the Zambian government's negotiating team, and Glen Finnegan, a representative of Anglo American Corporation, the four mines have been pegged at a cash price of $90m. The statement said Anglo American Corporation, through a company called Zambia Copper Investment (ZCI), will hold 80% shares, while the Zambian government, through a reconstituted Zambia Consolidated Copper Mines, will retain 20% shares.
Pre-conditions must be satisfied
However, the statement said the memorandum of understanding specifies a number of pre-conditions that must be satisfied prior to the signing of a legally binding agreement of sale. All things going according to schedule, the agreement of sale will be finalised by March or April.
Among the pre-conditions are the formation of a consortium of partners by the ZCI which must include a substantial mining partner, the raising of non-recourse third party financing, confirmation of ZCI's due diligence on the state of the assets and conclusion of negotiations on all outstanding issues on a basis acceptable to the Zambian government, ZCCM and ZCI.
Once the legally-binding agreement of sale is signed, the Zambia Copper Investments and its partners are expected to make an initial capital expenditure of $300m during the first three years of operation. ZCI will also be expected to raise 'further third party project finance on satisfactory terms to implement as soon as possible the Konkola Deep mining project at a capital cost of $792m.'
Following the signing of the memorandum of understanding, ZCI will, 'with immediate effect relinquished its exclusive right held under a memorandum of understanding entered into in February 1997, to the Mufulira smelter and refinery. This will facilitate the sale of Mufulira mine as an integrated package.'
Francis Kaunda, chairman of the Zambian government's negotiating team, said, "These assets represent the remaining core assets of the Zambia Consolidated Copper Mines' production capacity."
The sale of Mufulira mine, the last major asset of the Zambia Consolidated Copper Mines (ZCCM), is also expected to be finalised soon, said Mines Minister Dr Siyamukayumbu Siyamujaye. Dr Siyamujaye...