Zambia’s state mining company weighs own metals trading unit

Zambia’s state mining company is developing plans to start trading commodities to capture more value from building competition over the country’s mineral wealth.

ZCCM Investments Holdings Plc wants to access production from its portfolio companies equivalent to its ownership stake to sell internationally, chief executive officer Kakenenwa Muyangwa said in an interview last week.

African nations including Zambia and neighboring Democratic Republic of Congo are looking for new ways to boost domestic gains from their mineral riches. As global interest over critical minerals grows, it’s providing host governments with greater leverage, including allowing them to sell their share of production on international markets.

“There’s significant value being attached to having access to physical units of production,” Muyangwa said in an interview on the sidelines of the Investing In African Mining Indaba conference in Cape Town. “And we’re in a position where we can participate in that.”

ZCCM-IH has minority shares in copper mines owned by companies including Indian billionaire Anil Agarwal’s Vedanta Resources and Abu Dhabi-based International Resources Holdings’ Mopani Copper Mines Plc.

The company’s metals trading strategy could be separate from another partnership that the Zambian government set up with Mercuria at the end of 2024, Muyangwa said. ZCCM-IH is talking with Mercuria and other companies about the plans, he added.

The majority state-owned mining company, which has shares in copper operations in Africa’s second-biggest producer of the metal, is also looking to switch from relying on dividends from its joint-venture companies to royalties.

In 2023, the company struck a deal with First Quantum Minerals Ltd. to receive a 3.1% royalty in lieu of dividend payments for its 20% shareholding in the Kansanshi mine. Where previously dividends were unpredictable and intermittent, ZCCM-IH now reaps royalty payments yearly.

‘Worked out beautifully’

“It’s been a great idea and which has worked out beautifully,” Muyangwa said. “So what we want to do now is to see how we can expand that into other companies.”

ZCCM-IH has approached China Nonferrous Metal Mining (Group) Co., Ltd. about following a similar model at its operations in Zambia, he said. The company has also asked JCHX Mining Management Co. Ltd., which owns the Lubambe mine, to follow suit, but won’t force mine owners to switch to the royalty model.

At Vedanta’s Konkola Copper Mines Plc and IRH’s Mopani Copper Mines, the focus is on stabilizing and increasing production for now.

“We don’t want to bring confusion by asking for too many things all at once,” Muyangwa said.

(By Matthew Hill)