Zambia’s mining sector is still positive and looks forward to improved performance in the nearest future, given the outlook of the global commodity market.
Zambia Consolidated Copper Mines Investment Holdings, the preferred company that supervises privatization of the mining units and looks after the interests of the government and the unbundling of Zambia Consolidated Copper Mines conglomerate said it is happy that in the aftermath of the financial global crisis, the future of the mining sector is bright.
According to a report made available to shareholders recently, ZCCM IH said it was spurred by the profitability recorded at most of the subsidiaries in the country, including Ndola Lime Company Limited.
It said the Group’s outlook points to a steady recovery of the global economy and an increase in commodity prices as that is envisaged to impact positively on the mining industry and other sectors of the economy.
“This would allow ZCCM IH to maximize returns from its existing investments currently concentrated in the mining sector, as well as pursuing value added opportunities in other sectors of the Zambian economy.”
According to the report for the nine months ended 31 March 2010, Zambia Consolidated Copper Mines Investment Holdings made a profit of more than USD 87 million for the spurred by increased demand for the metal including China.
The report, though " belated but being its latest" said ZCCM IH the group’s profit for the year rose to USD 87.2 million compared to a loss of USD 97.1 million a year earlier, chiefly on account of the upturn in the world’s economy following the easing of the global financial crisis.
The aftermath of the global debt crisis prompted the group to focus on leveraging activities to exploit emerging opportunities in the business environment.
From a major slump in both demand and prices, which recorded prices as low as USD 1.64 per pound in the previous period, 1 July 2008 to 30 June 2009, copper made strong recoveries in the current period 1 July 2009 to 31 March 2010, with high prices of USD 3.30 per pound influenced by demand from China, positive sentiments about future economic expansion and supply disruption from Chile, the report added.
The upturn in the world economy manifested in significant increases in copper prices, scaling up of operations as well as strengthening of the Zambian Kwacha at the beginning of the financial year, 1 July 2009 and at the end of 31 March last year prompted the group to return to profitability in the 2010 financial period and ultimately reversed the net loss of the previous year.
Between the periods 1 July 2009 to 31 March 2010, the group recorded sale of USD 23.3 million. For the same period, the group recorded an operating profit of USD 8.4 million. Rising commodity prices saw increased revenues of most of the investee companies under ZCCM IH, recording profitability particularly in the last quarter of the financial year under review.
The strengthening of the Zambian Kwacha caused ZCCM IH group’s administration expenses to reduce by 72 percent chiefly as a result of the an impairment review on receivables and also the group to record an exchange gain of USD 25 million. The company continued to explore measures that could be undertaken to mitigate exposure to fluctuations in foreign exchange.
According to data, ZCCM IH owns 100% equity in Ndola Lime company, 35% in Maamba Collieries, 20% equity in Kansanshi, 20.6% in Konkola Copper Mines, 20% in Luanshya Copper Mines and 20% in Copperbelt Energy Corp
ZCCM IH until when the mines if finally disposed of to new owners, still owns 15% in Chambishi mines, a unit of China Non Ferrous Metals Africa Corp. Jinchuan Mining Group of China will after the final take over own Chibuluma mine for 100%. This is after agreeing to acquire 85% equity initially owned by Metorex.
ZCCM IH has 10 % in Chambishi Metals Plc and Mopani Copper Mines, with 2.8% in Lumwana Mines, previously owned by Equinox Minerals and has 1.61% in Albidon, Zambia’s sole nickel producer, presently under care and maintenance for lack of credible market for the metal coupled with low cash flow.
(Filed by SteelGuru Correspondent Zambia)
