Good afternoon. Here’s what you need to know
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GreenCo, First Quantum Minerals, ZESCO sign electricity supply deal to ease power crisis in Zambia
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IMF’s Georgieva Urges Zambia’s Bondholders to Approve Revamp
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IMF tells Nigerian government to stop electricity and fuel subsidy
In Local Business and Finance News
Zambia’s international bondholders should quickly complete the restructuring of the notes after the government announced the start of the process, International Monetary Fund Managing Director Kristalina Georgieva said. The government of Africa’s first pandemic-era sovereign defaulter will meet eurobond investors June 4 to ask them to approve exchanging what’s grown to almost $3.9 billion of debt for new instruments. That forms part of broader efforts to rework more than $13 billion of loans under the Group of 20’s Common Framework mechanism. Read more: Bloomberg
In a bid to address Zambia’s ongoing power crisis, GreenCo Power Services Limited has reportedly signed a significant electricity supply agreement with the country’s leading copper producer, First Quantum Minerals (FQM), and the national utility company, ZESCO. The agreement entailed GreenCo supplying a portion of the 54,000 megawatt-hours of electricity that FQM planned to import monthly, thereby easing the strain on the national grid. Zambia Monitor had reported on Saturday that the mining firm was hit by a power crisis, in which FQM confirmed it was working with ZESCO to source imported power to ensure that production plans were maintained. According to a statement released in Lusaka on Tuesday, FQM currently procures an average of 224,000 megawatt-hours of electricity monthly from ZESCO. The recent invocation of the force majeure clause in power supply agreements with some mines by ZESCO underscored the necessity for supplementary power procurement from abroad. Read more: Zambia Monitor
Zambia has initiated consent solicitation concerning its outstanding Eurobonds, marking the next phase in the country’s debt restructuring process. The consent solicitation encompasses US$750 million notes due in 2022, US$1 billion notes due in 2024, and US$1.25 billion notes due in 2027. Ministry of Finance and National Planning Secretary to the Treasury, Felix Nkulukusa, announced the move through the London Stock Exchange on Monday. The comprehensive statement on consent solicitation outlined Zambia’s debt situation and the necessary steps along with timelines. According to the statement, the consent solicitation represented the subsequent stage in Zambia’s debt restructuring with Eurobond holders, following the Agreement in Principle (AP) reached with the government and the Steering Committee of the Ad Hoc Creditor Committee. Zambia Monitor
In ongoing discussions with the government, Vedanta Resources is pushing for the $24 million recently forfeited to the state by the Zambian Court, previously held by provisional Liquidator Milingo Lungu, to be redirected back into Konkola Copper Mines (KCM). Chief Operating Officer Malcolm Mewett of Vedanta expressed the company’s intentions during a meeting with leaders of Mine Workers Unions and the Executive of the Zambia Mine Suppliers Association. Mewett emphasized Vedanta’s commitment to exploring avenues to reinvest the forfeited funds into KCM, signaling a potential boon for the mining sector in Zambia. Amidst these deliberations, Mewett reaffirmed Vedanta’s overarching plan to inject $1.3 billion into KCM. This significant investment aims to facilitate the expansion, modernization, and enhanced production capacity of the mine, promising advancements in operational efficiency and output. Furthermore, Vedanta Resources has taken proactive steps to address outstanding debts. Mewett announced the arrangement of a creditors’ scheme meeting scheduled for May 24, 2024, targeting creditors owed more than One Million dollars. This will be followed by another meeting on May 30th. Lusaka Times
The Zambia Airports Corporation Limited (ZACL) has disclosed that Zambia’s aviation industry performance has seen an impressive start in 2024 with a significant increase in both international and domestic passenger traffic leading to a recovery of 119% to pre COVID-19 in the first quarter of the year. According to ZACL Communications and Brand Manager Mweembe Sikaulu, said the overall trend in passenger numbers is promising and optimistic adding that demand for air travel to key business and tourist destinations from Lusaka remains upbeat. “In the quarter under review, Zambia Airports Corporation Limited (ZACL) served 482,400 general passengers, this represents an increase of 20% when compared to the 403,478 passengers recorded in Q1 of 2023 and a recovery to pre COVID-19 levels of 119% when compared to the 404,581 passengers recorded in 2019.” The highest recovery rate was at Kenneth Kaunda International Airport (KKIA) at 133% recovery and the least was at Harry Mwaanga Nkumbula International Airport (HMNIA) at 71% recovery. International passengers recovered by 116% with KKIA recording the highest recovery of 133%. HMNIA which mainly serves the tourism industry continued with a slow pace to recovery at only 55%, an increase of 8 percentage points when compared to the same period in 2023. Read more: Zambian Business Times
In International News
UK mining giant Anglo American has announced plans to break up the business after rejecting a £34bn bid from rival BHP. The company said it will sell or demerge major parts of the firm including its De Beers diamond operation and its platinum division. Anglo American said the “radical changes” will allow it to focus on key areas such as copper, premium iron ore and crop nutrients. Demand for copper, which is used to conduct electricity, is growing as some countries make the shift to renewable energy and electric vehicles. A deal with Australian firm BHP would create the world’s largest copper producer but could face significant competition hurdles. Anglo owns two copper mines, in Chile and Peru, where BHP also has some operations. Anglo has rebuffed two bids by BHP and on Tuesday laid out its own strategy which it hopes will be backed by its shareholders. Read more: BBC News
US President Joe Biden is ramping up tariffs on Chinese-made electric cars, solar panels, steel and other goods. The White House said the measures, which include a 100% border tax on electric cars from China, were a response to unfair policies and intended to protect US jobs. China has already criticised the plans, which were signalled in advance. Analysts said the tariffs were largely symbolic and intended to shore up votes in a tough election year. They follow months of criticism by former President Donald Trump, who is running for the White House against Mr Biden and has argued his rival’s support for electric cars would “kill” the US car industry. The tariffs announced on Tuesday would hit an estimated $18bn worth of imports, the White House said. As well as a rise from 25% to 100% on electric vehicle tariffs, levies on solar cells would go up from 25% to 50%. Tariff rates on certain steel and aluminium products will more than triple to 25%, up from 7.5% or less. Read more: BBC News
The International Monetary Fund has again urged the Nigerian government to eliminate subsidies for fuel and electricity once the social protection scheme has been enhanced. According to a recent report titled “Nigeria: 2024 Article IV Consultation” by the IMF, these subsidies would consume three per cent of the nation’s Gross Domestic Product in 2024, compared to one per cent in the previous year. The IMF commended the Federal Government for several measures, including the gradual elimination of “costly and regressive energy subsidies.” However, the international lender said adequate compensatory measures for the poor were not scaled up promptly and subsequently paused over corruption concerns. IMF said about 15 million households or 60 million Nigerians will potentially benefit from an enhanced social intervention scheme the federal government developed with World Bank support. Read more: Business Insider
Sony on Tuesday reported a 7% drop in annual profits in the fiscal year 2023, dragged down by a decline in its financial services division. The company also narrowly missed its forecast for unit sales of its flagship PlayStation 5 gaming console for the full year. The Japanese gaming giant reported 2023 revenue of 13 trillion, an increase of 19% year-over-year. Sony’s operating profit for the full year, though, came in at 1.2 trillion yen, down 7% year-over-year. Sony narrowly missed its revised down target for PlayStation 5 sales. The firm said that sales of its flagship console totalled 20.8 million in the fiscal year 2023. Read more: CNBC
Finally, Capital Markets News
In 181 trades recorded yesterday, 113,522 shares were transacted resulting in a turnover of K785,258.75. The following price changes were recorded yesterday: -K0.20 in Airtel and -K0.02 in Zambeef. Trading activity was also recorded in CEC Zambia, Chilanga, PUMA, Standard Chartered Bank Limited, Zambia Breweries, ZANACO and Zambia Sugar on the quoted tier. The LuSE All Share Index (LASI) closed at 12,857.83 points, 0.05% lower than its previous day close at 12,863.81 points. The market closed on a capitalization of K100,149,085,010.20 including Shoprite Holdings and K65,366,399,570.20 excluding Shoprite Holdings.
A total of 7 Govt Bond trades with total face value of 65,000,000 and turnover 58,426,820 were processed yesterday.
