MINING has for decades been Zambia’s economic mainstay, and anything which adversely affects this industry subsequently impacts, undesirably, the country’s economy. The mining sector is the second largest employer in Zambia after Government. So any disruption to its activities leads to mass job losses among Copperbelt residents employed by mines and trigger poverty in the province. Disturbances in mining also cripple various businesses, including in markets where traders fail to sell their merchandise because the purchase power of Copperbelt residents radically dwindles. On the other hand, companies that do business with mines also get unpleasantly impacted if operations of mining firms they depend on for survival get interrupted.
So, the news that ZCCM-Investment Holdings has agreed to offer corporate guarantees of up to US$15 million to Atlas Mara Bank to provide working capital to Mopani Copper Mines (MCM) is good news indeed. Going by a statement posted on the Lusaka Securities Exchange website by ZCCM-IH company secretary Chabby Chabala, the US$15 million corporate guarantee is for provision of a letter of credit and working capital to MCM. “The board wishes to inform the shareholders and the market that ZCCM-Investment Holdings Plc has agreed to provide corporate guarantees to Atlas Mara Bank for the amount of US$15 million,” Mr Chabala said. ZCCM-IH’s support to Mopani is crucial in seeing to it that the mine, which employs around 11,000 workers, meets pertinent obligations relating to its operations. “MCM needs working capital to urgently address issues such as the purchase of third-party concentrates, financing of mobile equipment, and recurring working capital needs,” he added. According to Mr Chabala, the corporate guarantees to Atlas Mara Bank comprise US$5 million letter of credit, and US$10 million overdraft facility for 12 months effective June 22 this year. We applaud ZCCM-IH for the landmark ingenuity which will certainly go a long way in helping MCM to sustain its operations. The financial deal with Atlas Mara Bank will enable Mopani to get back on its foot, having been embroiled in glitches ranging from the US$1.5 billion it owes Glencore – its former owner – to the funds it is obliged to pay its local suppliers and contractors. In April 2020, Glencore decided to put Mopani on care and maintenance, but this angered the Zambian government, which wanted the mine to remain operational to avert loss of thousands of jobs for Zambians. Later the same year, Glencore wrote down the value of the mine by US$1.041 billion to US$861 million, and claimed to have invested US$4.4 billion in MCM since 2000 when it took over the mine. Since then, there have been endless hitches at MCM, which we believe compelled ZCCM-IH to find a local solution, normalise things at Mopani, and boost copper production. At the time Government is targeting to start producing three million tonnes of copper per annum in the not so distant future, the agreement between ZCCM-IH and Atlas Mara Bank is most welcome.
The decision by ZCCM-IH to borrow locally is good because it is cheaper than borrowing from foreign financiers, which charge high interest rates.
The US$15 million deal will benefit so many people, not only in Kitwe and Mufulira where MCM operates, but the entire Copperbelt Province and the country as a whole. We find the transaction progressive because when mines are not doing well, many businesses get distabilised, including small and medium enterprises. Mopani’s agreement with Atlas Mara Bank should mesmerise local contractors and suppliers that Mopani owes huge sums of money. Because of the unpaid dues to local contractors and suppliers, which also employ a considerable portion of the Copperbelt population, these small-scale enterprises will be able to sustain jobs and pay their workers, who in turn will be able to support their families. Therefore, we once again extol ZCCM-IH for thinking outside the box and finding a local solution to the challenges at Mopani.