MIRA
INFORM REPORT
|
Report Date : |
20.03.2007 |
IDENTIFICATION
DETAILS
|
Name : |
KONKOLA COPPER MINES
PLC |
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Registered Office : |
Stand M/1408,
Fern Avenue, P. O. Box Private Bag
KCM (C) 2000, Chingola |
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Country : |
Zambia |
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Date of Incorporation : |
31.03. 2000 |
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Com. Reg. No.: |
43628 |
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Legal Form : |
Public Limited
Liability Company |
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Line of Business : |
Mining of
copper, cobalt, pyrite and anode slimes. |
RATING &
COMMENTS
|
MIRA’s Rating : |
Ba |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal commitments. |
Satisfactory |
|
Maximum Credit Limit : |
KWACHA
4,000,000,000 |
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Status : |
Satisfactory |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
COMPANY NAME
KONKOLA COPPER MINES PLC
ADDRESS
Street : Stand M/1408, Fern Avenue
P.O. Box :
Private Bag KCM (C) 2000
Town : Chingola
Country : Zambia
Telephone :
(260 2) 350 000 / 350 026 (Corporate Relations) / 350 087 (Finances)
Fax : (260 2) 351 223
E-Mail : vinod.bhandawat@kcm.co.zm /
samuel.equano@kcm.co.zm
Shortform Name
KCM
SENIOR COMPANY
PERSONNEL
Name Position
Board of
directors
1. N. Agarwal Chairman - Vedanta Resources Plc
2. K.K. Kaura Deputy Chairman
- Vedanta Resources Plc
3. D. Bandyopadhyay Director
- Vedanta Resources Plc
4. C.V. Krishnan Director
- Chief Executive officer KCM
5. D. Jhaveri Director - Vedanta Resources Plc
6. S. Georgala Director
- ZCI
7. T.D. Kamwendo Director
- ZCI
8. J.M.D. Patterson Director
- ZCCM-IH
9. G.K. Chibuye Director
- ZCCM-IH
10. L.S. Nkhata Director
- GRZ
11. S. Muwamba (Ms) Company Secretary -
KCM
Executive
Management
12. Kuldip K. Kaura Chief
Executive Officer
13. Deb
Bandyopadhyay Resident Director
14. Pramod Unde Chief
Commercial Officer
15. Sophie Masupha Vice
President - Human Resources
16. Samuel Equamo Vice
President - Corporate Relations
17. Vinod Bhandawat Vice
President - Finance
18. Maxwell Mutale General
Manager - Nchanga IBU
19. Keith Kapui Operations
Manager - Konkola IBU
20. David Ngandu General
Manger - Nkana
21. Raj Kulkarni General
Manager - Konkola Deep Mining Project
22. Dr Sixtus
Mulenga Safety and Environment Officer
Total Employees
9,319
PAYMENTS
No complaints have been
heard regarding payments from local suppliers or banks.
Subject was established
in 2000 and is a subsidiary of Vedanta Resources Plc, of UK, which company is
listed in London Stock Exchange since December 2003. The group is a diversified
and integrated FTSE 250 metals and mining group with annual sales for 2005 of
US DLRS 1.9 billion. The Group operations are located in India, Zambia and
Australia.
Subject operates through
business unit divisions : Konkola division, Nchanga division, KCM Nkana
Division and KCM Smerterco Division.
In view of the company's
ownership and we consider it is acceptable to deal with subject for LARGE
amounts.
Opinion on maximum credit
: KWACHA 4,000,000,000
Trade risk assessment : Normal
Opinion on the credit
figure of SA RAND 20,000,000 / 180 months :
The above figure is
higher than normally seen in one amount, however could prove admissible in a
series of transactions provided the total indebtedness is strictly monitored.
It is normal accepted practice
for international suppliers to deal on secured terms with Zambian importers.
TRADE REFERENCES
NAME :
TRADE IMPORT & EXPORT
PO Box :
6793
Town :
Rogge Baai 8012
Country :
South Africa
NAME :
SHELL CHEMICALS
PO Box :
748
Town :
Saxon Wold 2132
Country :
South Africa
NAME :
CYTEC
Street :
Bowling Park Drive
Town :
Bradford BD4 7TT
Country :
UK
NAME :
COGNIS
Town :
Little Island
County :
Cork
Country :
Ireland
NAME : TRADEDRIVE LIMITED
Street :
9 Market Street
Town :
Windsor
County :
Berkshire SL4 1pB
Country :
UK
PRINCIPAL BANKERS
NAME :
STANDARD CHARTERED BANK ZAMBIA LTD
Branch :
Excel Banking Centre
Street :
Kwacha Road, ZNCB Building
P.O. Box : 10136
Town :
Chingola
Telephone : (260 2) 313 827 / 312 088 / 312 271
Fax :
(260 2) 312 636
Account Number :
8700211453100
The company also has an
account with the following banks :
1. Barlcays Bank of Zambia
Ltd
2. Citibank Zambia Ltd
3. Stanbic Bank Zambia
Ltd
FINANCIAL INFORMATION
Consolidated balance sheets * as at 31 December 2003 showed :
Goodwill : US DLRS
55,995,000 - 2002 - exact
: 0 - 2003
Tangible fixed
assets : US DLRS
206,794,000 - 2002 - exact
: US DLRS 290,345,000 - 2003 - exact
Deferred secondary
development : US DLRS 29,159,000 -
2002 - exact
expenditure : US DLRS
25,771,000 - 2003 - exact
Deferred tax assets : US DLRS
87,453,000 - 2002 - exact
: US DLRS 87,520,000 -
2003 - exact
Total non current
assets : US DLRS 379,401,000 - 2002 - exact
: US DLRS 398,636,000 -
2003 - exact
Stocks : US DLRS 88,308,000 -
2002 - exact
: US DLRS 87,864,000 -
2003 - exact
Debtors : US DLRS
46,658,000 - 2002 - exact
: US DLRS 46,924,000 -
2003 - exact
Bank and cash
balances : US DLRS 37,695,000 - 2002 - exact
: US DLRS 2,553,000 -
2003 - exact
Total current assets : US DLRS
272,661,000 - 2002 - exact
: US DLRS 137,341,000 -
2003 - exact
Trade creditors : US DLRS (40,321,000)- 2002 - exact
: US DLRS
(19,525,000 - 2003 - exact
Other creditors and : US DLRS
(12,410,000)- 2002 - exact
accrued expenses : US DLRS (39,826,000)- 2003 - exact
Short term loans and : US DLRS
(5,824,000)- 2002 - exact
bank overdraft : US DLRS (25,933,000)- 2003 - exact
Taxation : US DLRS (123,000)- 2002 - exact
: US DLRS (33,000)-
2003 - exact
Total current
liabilities : US DLRS (58,678,000)- 2002 - exact
: US DLRS (85,317,000)-
2003 - exact
Net current assets :
US DLRS 113,983,000 - 2002 - exact
: US DLRS 52,024,000 - 2003 - exact
Total assets less
current : US DLRS 493,384,000 -
2002 - exact
liabilities : US DLRS
450,660,000 - 2003 - exact
Long term loans : US DLRS
(35,033,000)- 2002 - exact
: US DLRS (35,142,000)- 2003 - exact
Deferred taxation :
0 - 2002
: US DLRS (747,000)- 2003 -
exact
Provisions for
liabilities : US DLRS
(92,632,000)- 2002 - exact
and charges : US DLRS (89,429,000)-
2003 - exact
Total Liabilities due
after : US DLRS (127,665,000)- 2002 - exact
more than one year :
US DLRS (125,318,000)- 2003 - exact
Net assets : US DLRS
365,719,000 - 2002 - exact
:
US DLRS 325,342,000 - 2003 - exact
Share capital : US DLRS
64,784,000 - 2002 - exact
: US DLRS 64,784,000 - 2003 - exact
Share premium : US DLRS 473,568,000
- 2002 - exact
: US DLRS 473,568,000 - 2003 - exact
Deficit on revenue
reserves : US DLRS (180,133,000)- 2002 - exact
: US DLRS (216,774,000)- 2003 -
exact
Capital reserves : US DLRS 7,500,000 - 2002 - exact
: US DLRS 7,500,000 - 2003 - exact
Other reserves : 0 - 2002
: US DLRS (3,736,000)- 2003 - exact
Shareholders
interest : US DLRS 365,719,000 - 2002 - exact
: US DLRS 325,342,000 - 2003 - exact
CONSOLIDATED PROFIT
& LOSS ACCOUNT
Turnover : US
DLRS 394,096,000 - 2002 - exact
:
US DLRS 356,308,000 - 2003 - exact
Cost of Sales :
US DLRS (352,139,000)- 2002 - exact
: US DLRS (286,251,000)- 2003 -
exact
Gross profit : US DLRS
41,957,000 - 2002 - exact
:
US DLRS 70,057,000 - 2003 - exact
Other operating
expenses : US DLRS
(69,207,000)- 2002 - exact
: US DLRS (75,350,000)- 2003 - exact
Goodwill write back/ :
US DLRS (1,806,000)- 2002 - exact
(amortisation) : US DLRS
(1,806,000)- 2003 - exact
Negative goodwill written
off :
0 - 2002
: US DLRS 474,000 - 2003 - exact
Depreciation : US DLRS (30,272,000)-
2002 - exact
: US DLRS (29,539,000)- 2003 - exact
Operating loss : US DLRS
(59,328,000)- 2002 - exact
: US DLRS (32,552,000)- 2003 - exact
Other income : US
DLRS 4,696,000 - 2002 - exact
: US DLRS 2,011,000 - 2003 - exact
Net exchange gain :
US DLRS 271,000 - 2002 - exact
: US DLRS 68,000 - 2003 - exact
Impairment
adjustment : US DLRS (104,611,000)- 2002 - exact
: 0 - 2003
Write back of
provisions : US DLRS 7,676,000
- 2002 - exact
: 0 - 2003
Loss before finance
costs : US DLRS (151,296,000)- 2002 - exact
and taxation : US DLRS
(30,473,000)- 2003 - exact
Interest expense : US DLRS
(8,152,000)- 2002 - exact
:
US DLRS (1,121,000)- 2003 - exact
Loss before taxation :
US DLRS (159,443,000)- 2002 - exact
: US DLRS (31,594,000)- 2003 - exact
Taxation (charge)
credit : US DLRS 58,899,000
- 2002 - exact
: US DLRS (5,047,000)- 2003 - exact
Loss for the year :
US DLRS (100,549,000)- 2002 - exact
: US DLRS (36,641,000)- 2003 - exact
CONSOLIDATED PROFIT
& LOSS ACCOUNT
Turnover : US DLRS
394,096,000 - 2002 - exact
: US DLRS 356,308,000 - 2003 - exact
: not given - 2004 - 2005
: US DLRS 703,400,000 - 2006 - exact
EBITDA : US DLRS 206,300,000 - 2006 - exact
* The above figures apply
to the subject and its former subsidiary, KCM Smerteco Ltd, now subject's
division.
The following
consolidated financial information as at 31 March applies to Vedanta Resources
Plc, subject's parent company :
2006 2005
(in millions of US DLRS)
ASSETS
Non-current assets
Goodwill 12.1 12.2
Property, plant and equipment 2,763.0 2,288.6
Interest in associate 1.8 3.3
Financial asset investments 27.1 24.8
Other non-current assets 27.3 34.6
Other financial assets (derivatives) 63.2 -
Deferred tax asset 71.9 90.0
2,966.4 2,453.5
Current assets
Inventories 535.0 337.7
Trade and other receivables 593.0 339.6
Other current financial assets 49.0 -
Liquid investments 244.4 262.0
Cash and cash equivalents 1,847.3 1,185.6
3,268.7 2,124.9
TOTAL ASSETS 6,235.1 4,578.4
LIABILITIES
Current liabilities
Short term borrowings (239.8) (194.7)
Convertible loan notes - (23.7)
Trade and other payables (942.5) (675.0)
Other current financial liabilities (114.7) -
Provisions (12.2) (37.0)
Current tax liabilities (34.7) (15.1)
(1,343.9) (945.5)
Net current assets 1,924.8 1,179.4
Non-current liabilities
Medium and long term borrowings (1,236.0) (1,303.5)
Convertible loan notes (600.4) -
Trade and other payables (15.6) (41.2)
Other financial liabilities (derivatives) (93.4) -
Deferred tax liabilities (286.9) (234.9)
Retirement benefits (38.2) (38.6)
Provisions (222.5) (208.6)
Non-equity minority interests (59.4) (59.4)
(2,552.4) (1,886.2)
Total liabilities (3,896.3) (2,831.7)
Net assets 2,338.8 1,746.7
Equity
Share capital 28.7 28.7
Share premium account 18.6 18.6
Share based payment reserves 4.1 2.5
Convertible bond reserve 123.3 -
Hedging reserves (29.1) -
Other reserves 213.1 43.9
Retained earnings 1,058.4 1,016.8
Equity attributable to equity holders 1,417.1 1,110.5
Of the parent
Minority interests 921.7 636.2
Total equity 2,338.8 1,746.7
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Group turnover :
US DLRS 1,289,500,000 - 2004 - exact
: US DLRS 1,884,200,000 - 2005 - exact
: US DLRS 3,701,800,000 - 2006 - exact
Cost of sales :
US DLRS (973,900,000)- 2004 - exact
: US DLRS(1,414,800,000)- 2005 - exact
: US DLRS(2,591,400,000)- 2006 - exact
Gross profit : US DLRS 315,600,000 -
2004 - exact
:
US DLRS 469,400,000 - 2005 - exact
: US DLRS 1,110,400,000 - 2006 - exact
Administrative
expenses : US DLRS (60,100,000)- 2004 - exact
: US DLRS (112,000,000)-
2005 - exact
: US DLRS
(127,000,000)- 2006 - exact
Other operating
income : US DLRS 17,200,000 - 2004 - exact
: US DLRS 25,900,000 -
2005 - exact
: US DLRS 41,500,000 -
2006 - exact
Group operating
profit : US DLRS 237,100,000 - 2004 - exact
: US DLRS 331,800,000 - 2005 - exact
: US DLRS 943,800,000 - 2006 - exact
Profit before
taxation : US DLRS 233,400,000 - 2004 - exact
: US DLRS 332,300,000 - 2005 - exact
: US DLRS 934,700,000 - 2006 - exact
Tax on profit :
US DLRS (76,000,000)- 2004 - exact
: US DLRS (97,600,000)- 2005 - exact
: US DLRS (280,400,000)- 2006 - exact
Profit for the
financial : US DLRS 72,300,000 -
2004 - exact
: US DLRS 120,300,000 - 2005 - exact
:
US DLRS 654,300,000 - 2006 - exact
Financial year ends 31
March.
LEGAL STATUS AND
HISTORY
Date Started : 31 March 2000
History
: The company was established
in Zambia on 31 March 2000 following the privatisation of
ZCCM’s Konkola, Nchanga, and Nampundwe
mines, when Anglo American plc, UK
(AAplc) led a consortium of the
International Finance Corporation (IFC) and the
Commonwealth Development Corporation (CDC)
and acquired 80% of shares in the
subject company. On 16 September 2002
subject undergone restructuring and a
change of ownership, ended in 2004. Since
August 2004 the subject's shareholders are:
Vedanta Resources plc (51.0%) ZCI Holdings
S.A. (28.4%) and ZCCM-Investment
Holdings Plc (20.6%).
C.R. No. : 43628
Authorised Capital : US
DLRS 300,000,001
Paid up Capital : US DLRS 70,386,775.73
Public Limited Liability Company with the following
shareholders :
Percentage
1. Vedanta Resources Holdings
Limited (VRHL) 51.0 %
UK
(Holding company)
(wholly owned by Vedanta Resources PLC
listed
on London Stock Exchange)
2. ZCI Holdings S.A. 28.4 %
Luxemburg
3. ZCCM-Investment
Holdings Plc 20.6 %
4. Government of the
Rupublic
of Zambia 1
special share
Parent Company
Vedanta Resources PLC
Berkeley Street No. 16
London W1J 8DZ
UK
Tel: (44 20) 7499 5900
Fax: (44 20) 7491 8440
Affiliates of Parent Company
1. Bharat Aluminium
Company Limited (BALCO) (38.7%)
India
2. Sterlite Copper Mines
of Tasmania Pty Limited (CMT) (75.9%)
Australia
3. Hindustan Zinc Limited
(HZL) (49.3%)
India
4. The Madras Aluminium
Company Limited (MALCO) (80.0%)
India
5. Monte Cello BV (MCBV)
(75.9%)
The Netherlands
6. Monte Cello
Corporation NV (MCNV) (100.0% )
Netherlands Antilles
7. Sterlite Industries
(India) Limited (Sterlite) (75.9%)
India
8. Sterlite Opportunities
and Ventures Limited (SOVL) (75.9%)
India
9. Sterlite Paper Limited
(SPL) (75.9%)
India
10. Thalanga Copper Mines
Pty Limited (TCM) (75.9%)
Australia
11. Twin Star Holdings
Limited (Twin Star) (100.0%)
Mauritius
12. Vedanta Alumina
Limited (VAL) (92.9%)
India
13. Vedanta Resources
Holdings Limited (VRHL) (100.0%)
UK
14. Vedanta Resources
Finance Limited (VRFL) (100.0%)
UK
15. Vedanta Resources
Cyprus Limited (VRCL) (100.0%)
Cyprus
16. Vedanta Finance
(Jersey) Limited (VFJL) (100.0%)
Jersey
ACTIVITIES
The Company is involved
in the following activities :
Mining of copper, cobalt,
pyrite and anode slimes.
Subject operates the
following integrated business unit divisions :
1. Konkola Division
2. Nchanga Division
(including the Chingola refractory ore stockpiles)
3.
KCM Nkana Division (KCM Nkana Integrated Business Units) :
It
comprises four operating units namely, Smelter, Refinery, Acid Plant and Support
Services specific to KCM-Nkana. The Nkana Smelter is the largest primary copper
production plant in Zambia. The plant treats concentrates mainly from Nkana,
Nchanga and Konkola mines which are wholly owned by KCM to produce up to
150,000 tonnes of new copper.
Nkana
Smelter:
The
smelter produces high grade anodes, which are electrolytically refined. Sulphur
dioxide gas produced by the Converters is converted into sulphuric acid which
is then used at the Tailings Leach Plant, Nchanga for recovering oxide copper.
The smelter also produces discard slag from the reverbs that is rich in cobalt
which is stored for future reclamation.
Nkana
Refinery :
The
Nkana Copper Refinery produces electrolytically refined copper in the form of
cathodes. The copper meets the LME premium quality grade.
The
tankhouse has a capacity of about 180,000 tonnes of finished copper per annum.
Nkana
Acid Plants :
There
are two single contact sulphuric acid plants at Smelterco, namely No. 3 and
No.4 plants. No.3, the largest is still operational.
The
plant has a design capacity of 1,050 tonnes per day acid.
4. KCM Smerterco Division
Production capacity
:
Refined copper 220 00MT p.a.
Pyrite 90 000T p.a.
Anode slime 250 250T p.a.
Production : copper cathodes: 68,000 tonnes - 2005 (5 months)
164,000 tonnes - 2006
mined metal :
99,000 tonnes - 2006
Imports from South
Africa, UK France, Sweden, Canada, USA, Australia and India.
Exports to China
(including Hong Kong), Egypt, Saudi Arabia, Thailand, Pakistan, South Korea and
India.
FACILITIES
The Company has the
following facilities :
Rented Head office
premises located at the heading address and additional offices in Lusaka and in
Chililabombwe (see "Branch Offices" below).
Subject has 3 mines :
Konkola Mmine, Nchanga Mine and Nampundwe Pyrite Mine.
BRANCH OFFICES
1. Konkola Integrated
Business Unit (IBU)
Chililabombwe
Tel: (260 2) 350 001-3
Fax: (260 2) 351 234
Comprises four operating units, namely No 1 shaft, No 3 shaft, the Concentrator and Support Services
specific to Konkola Mine.
2. KCM Nkana Integrated
Business Unit (IBU)
Kitwe
Tel: (260 2) 350 001-3
Fax: (260 2) 351 234
Comprises four operating units namely,
Smelter, Refinery, Acid Plant and Support Services specific to
KCM-Nkana
3. Nchanga Integrated
Business Unit (IBU)
Chingola
Tel: (260 2) 350 001-3
Fax: (260 2) 351 234
Comprises five operating units, namely, Nchanga Open Pit, Nchanga Underground, Nchanga
Concentrators (East Mill and West Mill) the Tailings Leach Plant (TLP) and Support Services specific to
Nchanga Mine.
4. Nampundwe Integrated
Business Unit (IBU)
Lusaka
Tel: (260 2) 350 001-3
Fax: (260 2) 351 234
Comprises three operating units namely,
Underground Mine, Concentrator and Support Services
specific to Nampundwe Mine.
SPECIAL NOTE
You enquired on : Kcm
Smelterco Ltd.
Please note that KCM
Smelterco Ltd is no longer an independent company but a division of Konkola
Copper Mines PLC (see "Activities" section division No 3).
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)