New Acquisitions in Zambia
ANGLO AMERICAN PLC
27 October 1999
ISSUED BY THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA (GRZ),
ZAMBIA CONSOLIDATED COPPER MINES LIMITED (ZCCM) AND
ZAMBIA COPPER INVESTMENTS LIMITED (ZCI)
ACQUISITION BY ZCI AND PARTNERS OF THE KONKOLA AND NCHANGA DIVISIONS OF ZAMBIA
CONSOLIDATED COPPER MINES LIMITED AND ITS NAMPUNDWE MINE
The Government of the Republic of Zambia (GRZ), Zambia Consolidated Copper
Mines Limited (ZCCM) and Zambia Copper Investments Limited (ZCI), a subsidiary
of Anglo American plc, announce that they have ratified Heads of Agreement
(HOA) regarding the acquisition from ZCCM by ZCI and partners, through a new
company to be formed, of an 80% interest in the assets of the Konkola Division
(including the Konkola Deep Mining Project), the Nchanga Division (including
the Chingola Refractory Ore) and the Nampundwe pyrite mine.
A detailed timetable has been included in the HOA with the objective of
achieving Close of this transaction by 31 January 2000.
In addition to a 5% free and 15% repayable carried interest in the new
company, ZCCM will receive a cash consideration of US$30 million payable at
Close, a deferred consideration of US$60 million and the benefits of copper
and cobalt price participation schemes with a cap of US$125 million over the
life of the company.
The new company will, subject to the terms of a Development Agreement to be
concluded, be committed to capital expenditure of US$208 million during the
first 3 years and will commence the implementation of the Konkola Deep Mining
Project, at a cost of US$523 million, within 18 months of Close, provided
satisfactory long term, limited recourse project finance is available and
other objective criteria, as agreed to by the parties, are satisfied.
Negotiations and drafting of the Development Agreement and other necessary
Agreements between the parties, which will set out the full terms of the
transaction, are well advanced and are expected to be concluded before the end
of the year.
In addition to acquiring the aforementioned assets, the new company will have
an option to acquire the Nkana smelter and refinery, which will be managed by
Anglo American plc during the option period. ZCCM intends to sell the Nkana
mines, concentrator and cobalt plant as a separate package within the
timetable for this transaction, but in the event a sale is not concluded,
Anglo American plc will manage these assets as well.
In a parallel transaction, ZCI has agreed to sell its 27.3% interest in ZCCM
to GRZ for US$30 million on a deferred payment basis.
These transactions are subject to obtaining all necessary regulatory and
shareholders' approvals. In respect of the latter, ZCI shareholders will be
informed by way of a circular which, inter alia, will address the financing of
the initial investment. Similarly, ZCCM will inform its shareholders by way
of a circular.
Meanwhile, ZCI has a continued presence of over 20 technical and financial
personnel on the Copperbelt and plans to increase this number in the period to
31 January 2000.
Mr Shalaulwa Shimukowa, Chairman of ZCCM said: 'This is a welcome development
in the privatisation of ZCCM, to which all stakeholders are committed, and
augurs well for the future of the mining industry and sustenance of the
national economy. It ushers in a new era in the mining industry and in the
new role of ZCCM as an investment holding company.'
Commenting on the agreement, the Chairman of the GRZ/ZCCM Privatisation
Negotiating Team, Mr Francis Kaunda, said: 'With the imminent sale of Mufulira
Division and the conclusion of negotiations of the sale of the assets in this
transaction, the complex privatisation of ZCCM will be accomplished at the
beginning of the new millennium.'
Jack Holmes, Chairman of ZCI, said the Company looked forward to completing
the transaction and commencing the process of reinvestment and economic
recovery of the mines. He went on to say: 'The proposed transaction differs
materially from that contemplated when Codelco was expected to join ZCI in a
partnership, in that the package of assets to be acquired and the initial
funding requirement are smaller and the projected returns enhanced. Thus,
while the equity involvement of the International Finance Corporation (IFC) is
still required, the reduced scale means the earlier pre-condition of a major
mining partner falls away.'
Enquiries:
London (Anglo American plc)
Mr Nick von Schirnding Ms Misha Naglemackers:
Tel: +44 171 698 8540 Tel: +44 171 698 8567
Johannesburg (Anglo American Corporation/ZCI)
Mrs Anne Dunn Mrs Glen Finnegan
+27 11 638 4730 +27 11 638 3217
+27 (0) 82 448 2684 +27 (0) 83 284 2129
Lusaka:
Mr Francis Kaunda
Chairman of the GRZ/ZCCM Privatisation Negotiating Team
+260 1 22 0450
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