Luanshya Privatisation - Zambian Copperbelt (sitios de interés)

Luanshya Copper Mines Plc  (LCM)

 

Assets: Baluba, Luanshya, Muliashi

15% ZCCM-Investment Holdings Plc (ZCCM)

85% Binani Industries Ltd

 

October 2000:  Power cut after $ 20M debt

December 2000:  Refinancing arranged by receiver

February 2001:  Production to resume at Luanshya, but disrupted by flooding after heavy rains

March 2001:  Offered for sale by Receiver

  

15% ZCCM-Investment Holdings Plc (ZCCM)

85% J&W Investment Group (IMR)*

 

*1/  J&W Investment Group subsidiary Enya Holdings BV purchased 90% of Chambishi Metals from Avmin in same period (June 2003)

*2/ Luanshya UG: Puku Minerals Ltd (100% WTI.L) still pursues its legal right on the flooded mine and surroundings - PLLS 239 (November 2005)

 

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BIDS RECEIVED:
At bid closing, 28 February 1997, bids were received from the following three bidders:
- Binani Industries Limited, a company incorporated in India.
- First Quantum Minerals Limited, a company incorporated in Canada.
- Sterlite Industries Limited, a company incorporated in India.
- On 19 June 1997, all the three bidders submitted their revised offers for Package "B" as follows:

i) Binani Industries Limited
Descriptions Revised offer
19 June 1997
Shareholding requested 85%
ZCCM retained interest (all free) 15%
Cash at close US$35 m
Equity investment at close US$21.7 m*
Committed investment US$69 m
Contingent investment US$103 m
Copper price participation **
* The equity investment at close was later negotiated down from US$21.7 m to US$20 m by Binani Industries Limited.
** Binani also offered a copper price participation mechanism whereby ZCCM will be receiving 20% of the incremental value when the copper price is above US$2,750/t.

ii) First Quantum Minerals
Descriptions Revised offer
19 June 1997
Shareholding requested 82.5%
ZCCM retained interest (all free) 17.5%
Cash at close US$34 m
Equity investment at close US$15 m
Committed investment US$70.4 m
Contingent investment US$26.3 m

iii) Sterlite Industries Limited
Descriptions Revised offer
19 June 1997
Shareholding requested 70%
ZCCM retained interest (all free) 30%
Cash at close US$12 m
Deferred cash US$22.6 m*
Equity investment at close US$1 m
Committed investment US$30 m
Contingent investment US$34 m
* Sterlite offered 5 additional and unconditional deferred cash payments over 5 years, totalling US$35 m (12% NPV of US$22.6 m). A further US$15m conditional payment in year 10 was offered.

SUCCESSFUL BIDDER:
Luanshya Division was sold to the Binani Group, an international company registered in both the United Kingdom and India. The transaction was completed in October 1997.

COMMERCIAL TERMS:
The key commercial terms on which this package was sold included the following:
a) ZCCM retained interest 15% (all free carried)
b) Cash consideration at close US $ 35 m
c) Equity investment at close US $ 20 m
d) Investment plan:
- Committed investment US $ 69 m
- Contingent investment US $ 103 m
e) Copper price participation
In addition to the commercial terms outlined above, Binani Group also offered a copper price
participation mechanism whereby ZCCM would be receiving 20% of the incremental value when copper price is above US$2,750/t.

MAJOR PROVISIONS OF THE SALE AND PURCHASE AGREEMENT AND THE DEVELOPMENT AGREEMENT
The business plan, which formed part of the sale transaction, through the Development Agreement included the following aspects:
a) an immediate investment of a total of US$ 20 million as new equity capital in the company;
b) a minimum investment commitment of US$ 69 million during the first five (5) years from the date of transaction close;
c) a conditional investment commitment of not less than US$ 103 million, subject to feasibility studies and other conditions, to be spent during the first 10 years from the date of transaction close; This may include the development of some downstream projects including, but not limited to, an acid plant and a fertilizer plant.
d) to provide employment to all the 6,200 labour force as at close and avoid immediate redundancies. Provide high calibre management and training opportunities to employees;
e) a commitment to support local business development;
f) a Human Resource Development Programme; and

g) recognition of the Mineworkers Union of Zambia (MUZ) and a commitment to provide social services at a standard no worse than that at the time of take over.

RAMC Trading (Ireland) Limited, a consortium company owned by the Binani Group, the Dallah Albarakah Group and Mr L M Mittal