Washington, D.C., August 29, 2002—The
International Finance Corporation (IFC), the private sector lending arm
of the World Bank Group, advises that an agreement has been reached by
all parties concerned on the future of the Konkola Copper Mines (KCM).
The agreement involves the restructuring of KCM and the withdrawal
of Anglo American—the sponsor and major shareholder of KCM—IFC, and CDC
Group plc from the project. The restructuring, including the conversion
of KCM’s debt into equity will enhance the company’s prospects
to continue as a going concern.
According to the terms of the agreement—reached between the Zambian Government,
ZCCM Investments Holdings PLC (ZCCMIH), IFC, CDC Group plc (CDC), Zambia
Copper Investments Limited (ZCI) and Anglo American—KCM will own and operate
the Konkola mine, the Nchanga underground and open pit mine, the Nampunde
pyrite mine, and the Nkana smelter and refinery. KCM will now be
owned 42 percent by ZCCMIH and 58 percent by ZCI.
KCM was created two years ago by the privatization of Zambia Consolidated
Copper Mines (ZCCM). The World Bank Group had supported ZCCM’s privatization
as a necessary step to mobilizing the capital, technology, and management
needed to restore the ailing company and the copper mining sector to financial
and operational health. KCM’s original ownership was as follows:
65 percent by ZCI, which is 50.9 percent owned by Anglo American; 7.5 percent
by IFC; 7.5 percent by the CDC Group plc; and 20 percent by ZCCMIH, which
is 87.6 percent owned by the Zambian Government.
Under the agreements just reached, KCM will receive US$30 million in cash
and loans of up to $26.5 million from Anglo American to fund its operations
and capital expenditure program. In addition, as part of the restructuring,
IFC and CDC will assign all their respective loan interest in KCM to the
Anglo American group upon payment by Anglo American of $25.4 million
to each of them. Anglo American will in turn assign KCM loans to
IFC and CDC will each exchange their respective existing shares in KCM
for new shares to be issued by ZCI. These ZCI shares will be transferred
to the Copperbelt Development Foundation, an entity established by Anglo
American to invest in projects aimed at diversifying the economy of the
Zambian copperbelt and mitigating the social impact of the eventual closure
of the KCM mines.
The Zambian copper industry is going through a difficult time and, in reaching
this agreement on KCM’s future, IFC and the World Bank worked closely
with all parties with a view to minimizing the impact of the restructuring
on the country’s economic development, the workers, and their families.
IFC will continue to support the World Bank Group’s effort to encourage
the diversification of the Zambian economy through continued involvement
in an on-going KCM/Small and Medium Enterprise (SME) development initiative,
and through a concerted effort to identify investment opportunities in
other sectors. IFC will also consider participating in future investments
in Zambia’s mining industry.
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people's lives. IFC
finances private sector investments in the developing world, mobilizes
capital in the international financial markets, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956, IFC has committed more than $34 billion of its own funds and arranged
$21 billion in syndications for 2,825 companies in 140 developing countries.
IFC’s committed portfolio at the end of FY02 was $15.1 billion,
with an additional $6.5 billion held for participants in loan syndications.