ZCCM Investments Holdings (ZCCM-IH) has prioritised investments in the mining sector particularly in other minerals such as gold and manganese. As mandated by Government to harness the gold potential in the country, ZCCM-IH strategy is to forge partnerships with any industry player with in the gold value chain. The partnership with Karma Mining Services and Rural Development is one such partnership were the joint venture (Consolidated Gold Company Zambia) is entirely focused on gold processing.
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The partnership between ZCCM-IH and Karma Mining Services and Rural Development (Karma)
Karma came into Zambia in 2016 and registered the company in November 2018. Just like any foreign investor they came in the country in search of investment opportunities in the gold mining sector. They first started with the Ministry of Commerce, Trade and Industry, and went through the Zambia Development Agency to apply for an investment licence. Their key interest was only in setting up gold processing lines in the gold value chain in which they possess vast experience and expertise from their country of origin – Sudan.
Karma first embarked on talking to existing local small scale gold mining licence holders in the country for partnerships in processing their gold ore, particularly in Eastern Province, before setting up the company in Zambia. With established potential partnerships with these local mining licence holders, they applied for a Mineral Processing Licence through the Ministry of Mines and Minerals Development to enable them set-up gold processing plants.
Instead of them doing it entirely on their own, and engage commercially with these local small scale licence holders, they were advised by the Ministries of Commerce, Trade and Industry and the Ministry of Mines to partner with ZCCM-IH, seeing that ZCCM-IH was now mandated to drive the gold national agenda, with gold being declared a strategic mineral. In fact, the granting of the Mineral Processing Licence to Karma was dependent on them partnering with ZCCM-IH.
The two Ministries should actually be applauded for their pro-activeness in seeing that any investor coming to invest in the gold sector now, should partner with ZCCM-IH.
We must also understand that the sole business of the JV between Karma and ZCCM-IH is ONLY in gold processing. Karma does not own any gold exploration or mining licences, and will not own any of these, except for Mineral Processing Licences.
Shareholding of 45% stake in Consolidated Gold Company of Zambia (CGCZ)
ZCCM-IH undertook its own due diligence on Karma who had already signed agreements with two existing local small scale gold mines to start processing gold. Seeing that Karma was bringing on board the machinery and vast technical expertise and know-how in GOLD PROCESSING, ZCCM-IH entered into a partnership with Karma to form the Joint Venture – Consolidated Gold Company Zambia Ltd – and negotiated for a 45% stake in the JV. In addition to this, it is enshrined in the agreement with Karma that ZCCM-IH will be able to increase its stake in CGCZ or own it entirely after five years. This period will ensure knowledge and skills transfer in running the operations of gold processing and ensure the business is established successfully.
Further, not only does ZCCM-IH have this significant minority stake, ZCCM-IH has strategic management control in the company and is actively involved in the operations for direction. For instance, the Chief Financial Officer and procurement officer are appointed by ZCCM-IH, and additionally a technical person, a metallurgist is attached to the JV.
Holding a significant minority or majority stake in new investments with investors coming to partner with ZCCM-IH, with some level of control and participation in strategic management positions, is part of our new strategy aimed at ensuring ZCCM-IH gets value and ensures checks and balances in the running of these new entities.