LUSAKA – ZCCM Investments Holdings, the state-controlled Zambian company that holds minority stakes in most of the country’s copper mines, plans to claim as much $1.4-billion from First Quantum Minerals after accusing the Vancouver-based company of fraud. The Canadian company’s stock fell.
The claim includes $228-million in interest on $2.3-billion of loans that ZCCM-IH said First Quantum wrongly borrowed from the Kansanshi copper mine, as well as 20% of the principal amount, or $570-million, according to an internal company presentation, dated November 4, obtained by Bloomberg.
The company is also seeking $260-million as part of a tax liability the Zambia Revenue Authority said Kansanshi owed it, as well as the cost of the mine borrowing money commercially that ZCCM-IH said could have been avoided.
ZCCM-IH, in which the Zambian government has a 77% stake, said in papers filed in the Lusaka High Court on Oct. 28 that First Quantum used the money as cheap financing for its other operations. ZCCM-IH also last month filed a notice of arbitration against Kansanshi in London over the same matter. ZCCM-IH owns 20% of Kansanshi. No figure was mentioned in the court filings.
First Quantum says the claims are “inflammatory, vexatious and untrue,” and that the loans were at fair market rate. First Quantum is in talks with Zambian government representatives to resolve the matter, it said in a November 11 statement. It declined to comment on Monday.
FQM, as the company is known, is disregarding the rights of minority owners in ZCCM-IH in dealing directly with government, Philippe Bibard, a spokesman for a minority shareholder group based in France, said by phone November 11.