A FEW years ago, then Mines minister, Wylbur Simuusa was quoted by the local media as having said 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 a 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.
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, Lubambe 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.
Contribution call: 0977-246099, 0955-431442 or e-mail: jmuyanwa@gmail.com.