• 3.1 percent Royalty model deal which it has signed with First Quantum Minerals Kansanshi mine will help ZCCM-IH expand its operations
• Government saw it fit to engage in the 3.1 percent royalty model deal with the FQM instead of the dividend deal
• Government did not generate the much needed resources from such investment deals.
Government says the 3.1 percent Royalty model deal which it has signed with First Quantum Minerals (FQM)’s Kansanshi mine will help ZCCM-IH expand its operations in the country.
Addressing the media in Lusaka, Minister of Finance and National Planning Dr. Situmbeko Musokotwane explained that government saw it fit to engage in the 3.1 percent royalty model deal with the FQM instead of the dividend deal because it will help the country generate the much needed resources from the investment.
Dr. Musokotwane stated that in the recent past, government did not generate the much needed resources from such investment deals, noting that from 2009 to 2021, the country got US$337 million Dividend from companies, while no dividend was collected from 2016 to 2017.
“When we assess the dividend model performance from 2009-2021, ZCCM-IH received a total US $337 million. You may wish to note that no amount was received in form of dividends in 2016 and 2017 as no dividend was declared. However, if the royalty model was in place during the same period, ZCCM-IH could have received a total of US $671 million,” Dr. Musokotwane he said.
“As you may be aware, companies are formed to earn profits and ultimately these profits are shared by the shareholders. Payments to shareholders in a company can take the form of dividends or royalty payments. The transaction that was announced, aims at converting the current ZCCM-IH dividend rights in Kansanshi Mining Plc into royalty rights. Unlike the dividend revenue model, the royalty revenue is more predictable, guaranteed and consistent,” he added.
Dr. Situmbeko further stated that the right to receive quarterly Royalty payments will ensure that ZCCM-IH is guaranteed a predictable and regular revenue stream over the life of mine of Kansanshi Mining Plc.
“We must hasten to mention that the signing of the Framework Agreement of the Royalty Transaction follows extended discussions over the past three (3) years between First Quantum Minerals (FQM) and ZCCM-IH. Completion of the Transaction is subject to regulatory and other relevant approvals, Dr. Situmbeko stated,” he stated.
And speaking at the same event, Minister of Mines Paul Kabuswe said government is keen to revamping the mining sector in order for it to attain the 3 million tonnes copper production target in the next 10 years.
Meanwhile, ZCCM-IH Board Chairperson Dolika Banda noted that the deal is good for the country as it will get the needed royalties from FQM.
First Quantum Minerals has signed a deal with ZCCM-IH where it will invest US$1.3 Billion in Kansanshi mines to boost operations at the mines.