Zambia’s troubled Konkola Copper Mines (KCM) will focus on raising production after the exit of parent Anglo American, CEO Robin Mills said on Tuesday.
Anglo and the Zambian government on Monday signed a memorandum of understanding that formalised the pullout by the London-listed miner from its loss-making KCM operations.
Mills said in a telephone interview from the copperbelt city of Chingola that copper production could well come in above a budgeted 220 000 tons as attention finally turned from the wrangling that has surrounded Anglo’s departure.
”We will now focus on raising production,” Mills said. ”We are looking at producing copper at even better levels…it will perhaps be better than the 220 000 tons budget.”
Mill said KCM management and staff were pleased that the period of waiting in limbo was over.
”We welcome the outcome of negotiations…it could not have come sooner. Last night we prepared briefing procedures for our employees and we expect a positive reaction from them,” he said.
”It is time to continue production to attain reasonable production levels,” Mills said. He added that KCM would also continue to keep safety a priority concern.
Analysts said KCM would continue to be viable, and management had proved over the past eight months that operations could survive well after Anglo’s departure.
”We are coming from an era where copper has been Zambia’s king and that cannot be changed overnight,” said analyst Max Honde, general manager of Industrial Credit Company.
DIVERSIFY AWAY FROM COPPER
But Honde added that Zambia must speed moves to diversify away from copper to bolster the economy in the wake of the shocks caused by Anglo’s sudden decision to leave Zambia.
Zambian President Levy Mwanawasa, vacationing in the Luangwa Valley of eastern Zambia, agreed, telling state media that it was time to switch to tourism and agriculture from copper.
Anglo on Monday said it had reached final terms for quitting KCM and would pay $30-million in cash to keep the operations running while new management took over.
In addition to the $30-million, Anglo would give $26,5-million as a loan on favourable terms.
Anglo said it would provide for a further $34-million against KCM, in addition to $350-million already written down against the poorly performing investment, which had been a drain on Anglo because of poor global metal prices.
Transitional management arrangements had been agreed and Anglo would continue to provide some services until the end of next March to ensure a smooth handover to the new management.
”Our objective is to maintain a sensible relationship with the shareholders and continue to produce better results,” Mills said, adding that he believed negotiations had been complex.
Anglo said it had agreed the restructuring with the Zambian government, investors and financiers, including the state ZCCM Investments Holdings, the International Finance Corporation, CDC Group Plc and Anglo subsidiary Zambia Copper Investments.
Under terms of the agreement, ZCI would own 58% and ZCCM 42% of KCM, which operates the Nchanga and Koknola copper and cobalt mines and the Nampundwe pyrite mine.
They account roughly for some 67% of total Zambia metals output and are a major source of hard currency receipts in this southern African country of 11 million people. – Reuters