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Plans for a 100 percent takeover of the Zambia’s sole nickel mine, a unit of Albidon Zambia Limited may probably take longer than was envisaged because of a protracted US$12 million debt the company owes.
According to the Government, the impending sale of Munali nickel mine to a British Company, Consolidated Mining Investment Limited (CMI) is dependent on how soon the nickel producer settles the outstanding debt of US$12 million it owes the Zambia Consolidated Copper Mines Investment Holding (ZCCM IH).
Mines energy and water development minister Christopher Yaluma says the sale will have to wait until the financial obligation by the sole nickel producer settles the US$12 million tax arrears owed to the country’s holding company- ZCCM IH.
Albidon Zambia should pay-off the tax arrears before Government approves the change of hands of the Mazabuka – based mine to CMI of the United Kingdom. This follows a series of natural and operational hiccups that afflicted the mining companies since it was commissioned in 2007, forcing to close down operations in 2011, a move compounded by lower metal prices on the international market.
This forced the owners to place the unit on care and maintenance until May 12, 2014. However Yaluma states that it was important for the license holder of Munali Nickel project, Jinchuan of China to
make it clear who was responsibly of settling the outstanding arrears of US$12 million. The sale of the mine was planned for June 2014.
“We have two outstanding issues to resolve……Jinchuan should explain or state who will settle the tax arrears it owes and we also need to get legal advice on the leasing arrangement entered into between Jinchuan and CIM before the takeover can be approved,”
Owners of Munali Nickel project should come up with a settlement plan on the outstanding tax arrears and later enter into an arrangement with Zambia Revenue Authority (ZRA) to resolve the tax obligations.
This development comes on the heels of Zambia’s finance minister Alexander Chikwanda indicating that the Government has no intentions of waiving the US$12 million tax obligation through a Statutory Instrument and that it was instead a sole responsibility of the revenue agency to ensure that owners of the Munali Nickel project settle the debt in full.
To the contrary, the 2013 annual report indicated that ZCCM IH Investment Holdings had stated that Zambia Revenue Authority (ZRA) had advised Albidon Zambia Limited that the only way the US$12 million tax liability could be extinguished would be by way of a Statutory Instrument being issued by the Government.
Yaluma further indicated on the lease and royalty agreement that the Government was
still seeking legal advice on the legality of the agreement since Ministry of Mines, Energy and Water Development was insures of the licenses.
Background:
CMI took over the Munali Nickel Mine on May 12, 2014 in a non-monetary handover and the UK Company will operate the Zambian facility under a lease and royalty agreement.
Jinchuan was the license holder of the Munali Nickel project and leasing the mine to CIM was very unusual hence the Government seeking legal advice before approving the takeover. The London-based privately-owned CIM will operate Munali Nickel Mine for a period of 10 to 20 years.
In January this year, Albidon Limited shareholders had approved a 100 per cent sale of Munali Nickel mine in Mazabuka to a Chinese firm, Jin Tuo Investments to improve operations for a cash value of US$0.0025 million.
The Chinese company is a wholly owned subsidiary of the Jinchuan Group Resources Holdings Limited, a majority shareholder of Albidon Limited with an estimated stake of 52 percent in the sole nickel producer.
ZCCM IH Company secretary Chabby Chabala had earlier stated that the shareholders of Albidon had approved the acquisition of the company to Jin Tuo.
ZCCM-IH has started negotiations with the Jinchuan Group Resources Holdings Limited to facilitate for sustained investment in Albidon Munali Nickel project.
According to the company’s half-yearly summary for the period ended September 30, 2013, the proposal was made to all shareholders other than Jinchuan Group via a statutory merger pursuant to the British Virgin Islands (BVI) business Companies Act 2004 as amended.
As a result, Chabala added, the company’s shares would no longer be listed on the Australian Stock Exchange (ASX) whilst Jin Tuo will be struck off the register of companies in the BVI.
“The company’s shares will now no longer be listed on the ASX whilst Jin Tuo will be struck off the register of companies in the BVI,” Chabala added.
