(TIMES) LuSE yet to attract mines

LuSE yet to attract mines
By Maimbolwa Mulikelela

MINING companies operating in Zambia are yet to be attracted to list on the Lusaka Stock Exchange (LuSE) because they are still managing to raise huge amounts of money for their investments through large international capital markets, Chamber of Mines of Zambia (CMZ) president, Nathan Chishimba has said.

Mr Chishimba said some mining companies had dual listings on the global capital markets and that any decision to list on an additional market like LuSE was seriously weighed against such market’s regulatory and compliance environment compared to current listings.

Mr Chishimba said although CMZ would not speak authoritatively on investment decisions and strategies of individual members, there was need to evaluate the resultant additional compliance work required to satisfy multiple exchanges versus the quantum of possible investment funds available in the additional markets.

In response to a Press query, Mr Chishimba said there was need to understand that mining houses in Zambia were not individual investors and that mining investments tended to be large, long-term and highly risky.

He said raising adequate funds for large scale investments required mining companies having to procure financial resources through the larger international capital markets mainly in Australia, United Kingdom, Canada and South Africa.

“For example, if a company needed to raise US$500 million but could only raise US$10 million on LuSE with the same amount of effort to raise US$250 million in London and US$250 million in Toronto, then on that basis alone, an economic justification to list on LuSE would be difficult.

However, if the quantum were only US$10 million it needed to raise, then the playing field would swing heavily towards LuSE for a local development,” explained Mr Chishimba.

He explained that this could be the reason why the market has seen more service and supply companies related to the mining industry list rather than mining companies themselves as their investment capital required is normally substantially less.

However, Mr Chishimba acknowledged that LuSE had in recent months demonstrated admirable growth rates that had attracted a lot of international interest.

The growth would improve the liquidity of the market and enable LuSe to acquire the depth to attract listings by larger players in the economy.

“Importantly, it needs investors whether individual, institutional, local or foreign who are prepared to take risk for better returns.

This is why it is important that the investment climate in the country continues to provide stability, maturity and attractiveness,” he said.

Finance Minister, Ng’andu Magande, observed yesterday that mining firms in Zambia preferred to list on the international capital markets rather than LuSe.

Speaking when he disclosed that the Government will not sell off some of its 87.6 per cent shares in Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH), Mr Magande wondered why mining companies were not floating some shares, saying it was unfortunate that mining agreements did not have compelling provisions.

“As you may be aware, the mines in Zambia are owned by foreign companies and they have their capital markets where they come from, so perhaps they prefer to float their shares there,” he said.