LCM announces complete pullout

LCM announces complete pullout
Written by Zumani Katasefa in Kitwe
Saturday, January 17, 2009 5:45:54 AM

SHAREHOLDERS in Luanshya Copper Mine (LCM) have announced a complete pullout of their stakes in the mine. The shareholders made the announcement during a shareholders' meeting held at Pamodzi Hotel in Lusaka last Tuesday.

"They have pulled out because they are saying that they are not making any profit from the mine," said a highly placed source.

The source said the shareholders held two meetings, one with Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH) and the other with the LCM board.

The source said the announcement was made during the meeting with ZCCM-IH.

They said the shareholders however indicated that they would only re-open Chambishi Metals.

"But this will depend on government, whether they would give them a go-ahead," the source said.

According to the source, the investors were not interested in LCM but want to keep Chambishi Metals Plc.

"LCM has no smelter so if it is sold and the investor is still holding on to the smelter, where will they be smelting their copper? It will mean people that will run LCM will have to find a smelter," source said.

The source explained that the government had asked management at the mine to pay all obligations such as contractors and terminal benefits.

"Management has indicated that they will pay the workers and contractors. The biggest amount is the terminal benefits, which are in the range of US$13 million to US$15 million. The stance taken by government is that for them to take over the running of the company in the short term, LCM should offset all the debts," the source said.

The source also noted that it was wrong for investors to use the low copper prices as a reason for their exit because any mine could remain afloat with prices of US$2,000 per tonne.

"A mine can only be affected if the price of copper falls below US$2,000," the source said.

Both LCM chief executive officer Derrick Webbstock and operations manager James Bethel could not be reached for immediate comment as they were not answering their mobile phones.

LCM was owned by ENYA Holdings BV which is jointly controlled by Bein Stein Group Resources (BSGR) of Israel and the International Mineral Resources (IMR) with 85 per cent shares while 15 per cent shares are held by the government through ZCCM-IH.

LCM is currently under care and maintenance and government had expressed willingness to take over operations although it would not be immediate as it has to study the laws relating to the same.

Over 1,600 workers at LCM lost jobs following the closure of the mine last month.

LCM, which operates the Baluba Copper Mine and Chambishi Metals Plc, also suspended the US$354 million Mulyashi copper project, which was due to start producing 60,000 tonnes of copper in 2010.

Copper mining is Zambia's economic lifeblood and the mines are a major employer and accounts for about 63 per cent of the country's export earnings.