Bloomberg News

Glencore, Vedanta Zambia Units Face Demands for Higher Dividends

February 05, 2013

Zambian subsidiaries of Vedanta Resources Plc (VED) and Glencore International Plc (GLEN) are among companies that should pay higher dividends to minority shareholder ZCCM Investment Holdings Plc, the state-controlled investor said.

ZCCM, 88 percent-owned by the Zambian government, also wants to negotiate increased stakes in local mines and has yet to start talks with companies on this, Chief Executive Officer Mukela Muyunda said in an interview in Lusaka.

“Clearly, it is a matter that keeps coming up regarding the level of shareholding that we should have,” Muyanda said. “It is something that we will have to deal with at some point.”

Zambia, Africa’s biggest copper producer, privatized its mining industry between 1996 and 2001, maintaining minority stakes ranging from 10 percent to 21 percent in the companies, which it holds through ZCCM. The degree to which the country benefits from its copper resources has become a point of political contention, with the government accusing mining companies of avoiding as much as $2 billion a year in tax.

ZCCM wants the companies in which it has shareholdings to alter their dividend policies to improve transparency and increase payouts, Muyunda said in the Jan. 31 interview. He said dividends are the last priority for some companies, and this “doesn’t work for us.”

Maamba Collieries

While ZCCM will focus on buying stakes of as much as 35 percent in new mining projects, such as Nava Bharat Pte Ltd.’s Maamba Collieries, it also wants to boost ownership of existing operations, Muyunda said. Any increase would have to come through negotiations, he said.

Representatives of Mopani Copper Mines Plc, which is 90 percent owned by Glencore, and Eurasian Natural Resources Corp., which owns 90 percent of Chambishi Metals Plc, declined to comment.

Konkola Copper Mines Plc, 79 percent owned by London-listed Vedanta, and First Quantum Minerals Ltd. (FM), the majority owner of the Kansanshi mine, didn’t immediately respond to e-mails seeking comment.

“Government has no intention of any compulsory acquisition, because that is going backward,” Finance Minister Alexander Chikwanda said in an interview today.

Private shareholders own about 12 percent of ZCCM, which is traded on the Lusaka Stock Exchange as well as the NYSE Euronext (NYX:US) Paris. The Zambian government agreed to convert about $425 million ZCCM owes it into equity through a rights issue, the company said on Dec. 12.

“The intention is for it to happen before the end of June,” Muyunda said.

To contact the reporter on this story: Matthew Hill in Lusaka at mhill58@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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