A FEW years ago, then Mines Minister, Wylbur Simuusa was
quoted by the local media as having said that the government wanted to increase
its shareholding in mining firms up to 35 per cent.
The report was received with approval by a cross section of
the Zambian society especially those who believe in mixed economic system.
Of course the mines’ owners and some liberalists were
skeptical about that as they thought that could be the beginning of the
much-dreaded nationalisation by the new government then.
While the idea has died a natural death, the logic still
lives on and it will continue to exercise the minds of many a Zambian for a
long time to come.
The logic was and still is that since the government is
seemingly not getting enough from the mines in terms of taxes, direct
investment into the sector would accrue benefits for Zambians especially
whenever the prices of copper and other metals go up.
Currently, Zambians are more of spectators - over their own
resources - when it comes to the performance of the local mine, except for
dividends through the only mining investment vehicle for the government – the
ZCCM Investment Holdings.
SIMUUSA
The economic performance of ZCCM IH, therefore, gives a tip
of an iceberg vis-à-vis the operations and achievement or failure of the mines.
Take for instance this year, the firm has declared the first
dividends since its conversion into an investment holding company for the
Zambian government.
The total dividends it has declared translate into K250
million while it raised K257 million as capital.
Other feats the firm has recorded include the rise in
revenue by 163 per cent on the year to K803 million from the K481 million the
previous year.
The profit after tax went up by 57 per cent to K892 million
from K568 million while the total asset value rose by 20 per cent to K8.7
billion from K7.3 billion.
The company’s splendid performance continued in various
other financials.
Considering that the Zambian government currently owns about
87 per cent of the total shares in this company with the minority shareholders
holding the rest, most of the dividends will go to the Zambian government.
Indirectly, the ZCCM IH’s splendid performance should be
reflective of the performance of the mining houses in which it holds some
strategic shares.
ZCCM – IH wholly owns the Ndola Lime Company (NLC) while has
35 per cent shares in Maamba Coal Mine and 20 per cent each in Kansanshi mining
in Solwezi, Konkola Copper Mine (KCM), Copperbelt Energy Corporation (CEC),
Lubambe Copper Mine and CNMC Luanshya Copper Mine.
Further, the holding firm has 15 per cent shares each in NFC
Africa Mining and Chibuluma Mine while it has 10 per cent in Mopani Copper Mine
and Chambeshi Metals.
To put it in the most simplistic manner, if all the mining
companies in which ZCCM IH has shares were each to declare K100 million
dividends today, the investment holding will get the whole dividend from NLC.
It would get K35 million from Maamba and K20 million each
from Kansanshi, KCM, CEC, Lubamba and Luanshya mine and so on.
Eight-seven per cent of the amounts the ZCCM-IH would
receive would be for the Zambian people through the government while the rest
or about 13 per cent would be for the minority shareholders located in more
than 20 countries in the world.
The question which begs for an answer is, instead of relying
on taxes to reap from the good performance of the mines why can’t the
government increase the shareholding in all these firms?
Despite the expected uproar, this will ensure that the
government fully benefit from any unprecedentedly good performance while in the
time of price slump, of course, it will share in the woes with the mines.
At this juncture it should be noted that the Government is
about to offload 27 per cent shares in ZCCM IH to remain with only 60 per cent
in line with the Lusaka Stock Exchange (LuSE) listing requirement which limit a
single shareholder to a maximum of 75 per cent shares in a listed firm.
Given that the 27 per cent shares will be sold to the
Zambian citizens, however, the move will financially empower the citizens and
should not be seen as a loss in any way since it would be like government
transferring the shares from itself to its own citizens.
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