NewsSouthern AfricaZambia President steps into row with First Quantum Minerals

Thu,17Aug2017

Posted on Thursday, 11 May 2017 08:59

Zambia President steps into row with First Quantum Minerals

Zambia's President Edgar Lungu speaks during the 71st session of the United Nations General Assembly, Sept. 20, 2016. Photo: Frank Franklin II/AP/SIPAZambia's president Edgar Lungu has called for an out of court settlement with First Quantum Minerals, which is being sued for $1.4 bn by a state-owned firm, the presidency said on Thursday.

 

First Quantum asked a Zambian court in February to dismiss the suit from Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH), which is 77% state-owned and holds minority stakes in most of the country's copper mines.

"The president decided that the finance minister leads a government team to engage First Quantum for a speedy and amicable conclusion of this matter," presidential spokesman Amos Chanda said.

"The government team includes the minister of mines and should start work by next week so that we can quickly have an amicable settlement as directed by the president," he said.

Cheap financing

Zambia is Africa's second-largest copper producer and differences with mining companies over taxes, electricity prices, environmental concerns and labour matters often arise.

The $1.4 bn claim by ZCCM-IH includes $228m in interest on $2.3 bn of loans that it said First Quantum wrongly borrowed from the Kansanshi Copper Mine, as well as 20% of the principal amount, or $570m.

ZCCM-IH said in papers filed in the Lusaka High Court on Oct. 28, 2016 that First Quantum used the money as cheap financing for its other operations.

First Quantum says the loans were at a fair market rate.

Chanda said another team headed by the minister of energy would engage mining companies, including First Quantum Minerals, regarding a proposed increase in electricity prices.

Zambia said in April it plans to introduce a flat tariff of 9.30 U.S. cents/kilowatt hour (kWh) backdated to January for mining companies, rather than individually negotiated rates that have averaged 6 U.S.

 



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