Press Releases

Zambia Agreement Reached on Future of Konkola Copper Mines

L. Joseph
Phone:  (202) 473-7700

Fax:  (202) 974-4384


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 ZCCMIH.

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.

Konkola Copper Mines plc