The Association of Mine Suppliers and Contractors has appealed to government to renegotiate the US$1.5 billion debt that Mopani Copper Mines Plc owes Glencore stating that the amount is questionable as there is not much to show for that investment.
Immediate former Association President Augustine Mubanga said the association anticipates that the value of the debt should not be more than US$700 million according to what can be seen from the current state of the mine.
Mubanga questioned what the US$1.5 billion investment into Mopani has done for the mine asking whether it has increased production or profitability noting that if none of those things have been done then the debt is questionable therefore the need to rearrange it.
Speaking in an interview with the Zambian Business Times-ZBT, Mubanga said some investment has taken place at Mopani mine but it cannot equate to US$1.5 billion because if such an investment was made, the face of Mopani would have changed drastically and production could have gone up.
He added that the profitably of the company would have changed if such an amount of money was invested in the mine and there would have no longer been a negative balance sheet but a positive one which would have been giving revenue to government.
He emphasized that the association believes that the value of the debt should not be more than US$700 million, which Mopani mine will have the ability to pay back within their own investment.
He noted that Mopani mine is overburdened by the US$1.5 billion debt that Glencore left, as it is too much for Mopani to settle or liquidate therefore government should bring Glencore back to the table and rearrange the debt.
“The issue of sales, where Glencore has taken over 80% of what Mopani produces also puts Mopani at a very blink standpoint. What we expected was that once there is this realignment in terms of the debt portfolio then Glencore could have probably 40% of production so that Mopani remains with 60% which will give itself leverage for recaptalisation and pay off the debt”, he said.
Mubanga said if the issues surrounding Mopani are not resolved, the company will still be overburdened and it cannot expand or contribute to the economic transformation of the country as expected.
